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SINGAPORE – Regulators have fined Grab Inc. and Uber Technologies Inc. and imposed operating restrictions on the company after concluding that a merger earlier this year was anti-competitive.
The Singapore Competition and Consumer Commission announced on Monday that it would fine Singapore $ 6.6 million (US $ 4.8 million) and S $ 6.4 million. Restrictions on Grab will include a ban on exclusive agreements with drivers.
The agreement reached in March, in which Uber left Southeast Asia in return for a 27.5 percent stake in local competitor Grab, has been criticized by the Philippine competition authorities. Last month, while approving the agreement, they imposed restrictions and threatened fines in the event of an offense.
Both companies were aggressively competing in this region of 600 million people, offering discounts and incentives to drive. The merger, which gave Grab a dominant position, put an end to these benefits for consumers.
The agreement "has eliminated Grab's closest rival, to the detriment of Singapore's pilots and pilots," said the Singapore regulator, adding that Grab's current market share was around 80%.
In July, the regulator threatened to untie the deal and penalize the two companies, but said it would invite both companies and the public to comment before making a decision.
Brooks Entwistle, Director of International Operations at Uber, said he was disappointed with the decision. The company is looking at it carefully and will consider its options, including an appeal, he said.
"We believe that it is based on a too narrow market definition and that it incorrectly describes the dynamic nature of the sector, among other concerns," he added in an e-mail. .
Lim Kell Jay, director of Grab in Singapore, echoed this sentiment but added that the company was "happy" that the regulator did not ask for the deal to be settled.
Uber had previously left Russia and China in exchange for stakes in local competitors he was fighting against. The company seeks to consolidate its finances through such transactions, in anticipation of an initial public offering of 2019.
In Southeast Asia, Grab faces Go-Jek, which operates in Vietnam and Indonesia, and plans to enter other markets, including Thailand and Singapore this year. Some new players have recently joined the ride industry in Singapore.
"Mergers that substantially reduce competition are prohibited," said Toh Han Li, chief executive of Singapore's regulator, in a statement. "Companies can continue to innovate in this market, by other means than anticompetitive mergers."
Write to Saurabh Chaturvedi at [email protected] and Jake Maxwell Watts at [email protected]
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