SINGAPORE: Singapore's competition watchdog has fined Grab and Uber a total of S$13 million over the two firms' merger, saying that the deal has led to the substantial eroding of competition in the ride-hailing market.
Uber was fined S$6.58 million while Grab was fined S$6.42 million. The Competition and Consumer Commission of Singapore (CCCS) said the penalties were imposed to “deter completed, irreversible mergers that harm competition”.
Advertisement In levying the fines, CCCS said it considered the companies' turnovers, the nature, duration and seriousness of the infringement, and aggravating as well as mitigating factors.
On Mar 26, Grab announced it had acquired Uber’s Southeast Asia operations. The following day, CCCS said it would launch an investigation into whether the transaction infringed anti-monopoly laws.
[h=3]READ: Grab defends position in Uber deal to Singapore's anti-monopoly watchdog[/h]As part of its investigation findings, the watchdog highlighted that Grab increased its prices after the removal of its closest competitor, Uber.
Advertisement Advertisement It found that Grab trip fares, net of rider promotions, have increased by between 10 and 15 per cent after the acquisition deal.
Additionally, CCCS said it has received "numerous complaints" from both riders and drivers on Grab's fares and commissions.
It highlighted changes Grab made to its loyalty programme GrabRewards, such as reducing the number of points earned by riders per dollar spent, as well as a decrease in the number and frequency of driver promotions and incentives.
[h=3]READ: Grab users rail against revised reward system; lament lack of competition[/h]CCCS also found that Grab currently holds about 80 per cent of the market share, and that the “strong network effect” makes it difficult for potential competitors to scale and expand in the market, particularly given that Grab imposed exclusivity obligations on taxi companies, car rental partners, and some of its drivers.
MEASURES TO ADDRESS COMPETITION CONCERNS
The competition watchdog also announced on Monday measures to address competition concerns and to lessen the impact of the deal on drivers and riders.
It ordered Grab to remove exclusivity arrangements with drivers and taxi fleets, and to maintain its pre-merger pricing algorithm and driver commission rates.
"This protects riders’ interests against excessive price surges, and drivers’ interests against increases in commissions that they pay to Grab," CCCS said.
Uber will be required to sell the cars under its vehicle rental unit Lion City Rentals to any potential competitor that "makes a reasonable offer based on fair market value", the watchdog said.
[h=3]READ: Commentary: Grab-Uber merger will lead to monopolistic prices? Flawed thinking[/h]“Mergers that substantially lessen competition are prohibited and CCCS has taken action against the Grab-Uber merger because it removed Grab’s closest rival, to the detriment of Singapore drivers and riders," CCCS chief executive Toh Han Li said.
“Companies can continue to innovate in this market, through means other than anti-competitive mergers.”
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