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Grab and Uber have each been fined more than S $ 6 million for preventing competition in the Singapore market.
The Singapore Competition and Consumer Commission (CCCS) has stated that it has imposed financial penalties on both companies to "deter irreversible mergers that harm competition". Uber had been ordered to pay 6.58 million Singapore dollars (4.83 million dollars), while Grab would have to pay 6.42 million Singapore dollars (4.71 million dollars) in penalties.
Many complaints from local drivers and riders have been filed about Grab's fee and fee increases following the acquisition of Uber in Southeast Asia, according to a statement released Monday by the watchdog from the country.
The agreement prompted the CCCS to launch an investigation to determine whether the decision had violated Singapore's market competition laws, which subsequently became the case. Grab, in March 2018, announced the acquisition of Uber regional business and the return to a 27.5% stake in the US carpool company.
The agreement, noted the CCCS, had resulted in "a significant lessening of competition" in the provision of these services in Singapore. Among the complaints received, the government agency indicated that Grab, in July 2018, had made radical changes to its rewards program, which had significantly reduced the number of points needed for redemptions.
According to the CCCS, Grab prices have also increased from 10% to 15% after the Uber agreement. After evaluating the internal documents of both companies, she added that she would not have left the Singapore market if the Grab agreement had not been signed.
Instead, the US operator would have continued its local operations while pursuing other strategic business options, such as collaborating with another market player or selling to another buyer.
CCCS stated that the transaction had the effect of removing Grab's closest competitor on the racing market, in particular, Uber.
He added that with an estimated 80% market share, Grab's mandate for the exclusivity of its partnership agreements with taxi companies, car rental partners and some of its drivers made it difficult access of drivers and vehicles to other competitors. These would have been essential for smaller suppliers to grow and develop in the local market.
The reactions of potential new entrants to the market have confirmed that these companies would have difficulty accessing the network of drivers and riders needed to compete with Grab, had the CCCS not intervened, he added.
"At the conclusion of its investigation, CCCS found that the transaction was anti-competitive and had been enforced.It violated Section 54 of the Competition Act by significantly reducing competition in the carrier platform market. in Singapore "said in his statement.
In addition to financial penalties, the competition watchdog has put in place a number of solutions that Grab needs to put in place to open the market and level the playing field for new players, as well as to "reduce the impact of competition. competition". [Uber] transaction "on drivers and runners.
On the one hand, Grab drivers should be free to use any calling platform and not be forced to use Grab exclusively. All exclusive agreements with taxi fleets in Singapore should also be removed, said CCCS. The Grab pricing algorithm before the merger and driver commission rates must also be maintained, in order to protect the riders' interests against excessive price increases and risk factors for peaks in commissions due to Grab.
In addition, Uber should sell the vehicles of Lion City Rentals, its local car rental company, to any competitor with a reasonable offer. This would not only prevent the company from selling these vehicles to Grab without the prior approval of CCCS, but also to accumulate them and prevent them from accessing them.
According to the competition watchdog, the financial penalties were calculated based on various elements, including the business turnover of both parties, the seriousness of the offense and the mitigating factors such as business cooperation.
Grab refutes its violation of competition laws
In its response, Grab described the CCCS decision as "unfortunate" and assuming a "very narrow market definition". He stated that commuters were free to choose between street taxis and private hire cars and that he "advocated" a regulation allowing drivers to freely choose the platform on which they drove. This, however, should then apply to all market players, he noted.
Grab said in his statement: "For drivers to have a maximum choice, all transport stakeholders, including taxis, should also be subject to non-exclusivity conditions." Grab should not be the only actor that is incompatible with the standards of the taxi industry. "
Referring to the Land Transport Authority, she noted that the country's regulatory framework for point-to-point transport was currently under study and hoped that this would mean that the issue of non-exclusivity would be settled.
Grab also rejected suggestions that he would have increased his rates since the Uber transaction and said he would "continue to adhere to our pre-transaction pricing model, our pricing policies and our management fee" .
It reiterated its previous position that the company's contract with Uber was within its legal rights and that Grab "did not intentionally or negligently violate competition laws".
Grab, in August, raised another $ 1 billion in its latest round of funding, bringing its total amount to $ 2 billion. Among its investors was Toyota Motor, which had already disbursed $ 1 billion to facilitate the development of connected cars and mobility. The Japanese automaker has been granted a seat on the Grab Board of Directors as well as a leadership role in the company.
Grab said the funds would be used to develop its O2O (online-to-offline) portfolio of services and promote its ambition to be a "super daily application" in order to facilitate essential consumer services, including transportation, food, and payments.
In addition to its car pooling service, the company's current product line includes its GrabPay mobile payment platform, GrabFood food delivery service and GrabExpress parcel delivery service.
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