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Uber and Grab were hit with combined fines of $ 9.5 million after their merger agreement was considered a violation of Singapore's anti-competitive laws.
Grab acquired (then merged / closed) Uber's Southeast Asia's operations in March, but the Singapore Competition Commission said the agreement was "anti-competitive" after a multi-month investigation into its impact on Singapore.
The CCCS fined Uber $ 6,582,055 ($ 4.8 million) and a fine of $ 6,419,647 ($ 4.7 million), but that will not solve the problem, which was an option. The fines only apply to Singapore companies, one of eight markets in which Uber and Grab were in competition. Grab has raised $ 6 billion from investors so he should not have a problem with repayment.
Primarily, the CCCS found that Grab had increased its prices 10 to 15% after the transaction, while its market share had increased to 80%. Despite this, Grab co-founder Hooi Ling Tan says there is still a lot of competition in Southeast Asia.
"As a result of its investigation, CCCS found that the transaction was anti-competitive and had been implemented and that it had violated section 54 of the Competition Act by significantly reducing competition on the market. carrier platform market in Singapore. agency wrote.
Grab, worth $ 11 billion, is an all-in-one 'super-application' and has not been legally required to inform the CCCS of its agreement with Uber. But the commission warns companies to consider contacting it if the agreement in question leaves more than 40 percent market share, or the cumulative market share of the three largest companies after the merger is 70 percent or more. Grab contacted the CCCS only after the announcement of the agreement.
It should be noted that the Philippines, the only other country in Southeast Asia to have initiated an investigation into this agreement, approved the no-impact merger last month.
As part of its investigation, the CCCS asked Grab to respond to a number of inquiries regarding its activity. He has reinstated rates and commissions before transactions, reduced exclusivity agreements with taxis and eliminated drivers or Uber's Lion City Rentals. These are pretty much the same – and the commission noted that Grab had changed its loyalty program after the transaction.
"Mergers that substantially reduce competition are prohibited and CCCS took action against the Grab-Uber merger as it eliminated Grab's closest rival, to the detriment of Singapore's riders and riders. Companies can continue to innovate in this market by means other than anti-competitive mergers, "Toh Han Li, chief executive officer of CCCS, said in a statement.
In line with traditional statements about recent CCCSs, Grab has produced a long answer. One of the things to point out is its apparent insistence that the merger agreement has not had a significant impact on the competition.
"Grab, along with its advisors, felt that the deal would not result in a significant lessening of competition," said Daren Shiau, co-head of Allen & Gledhill's Competition & Antitrust Department.
The Shiau statement is something that the statistic of the 80% market share suggests is wrong. There is no doubt that many consumers and drivers, who today have fewer options, will not agree.
Here is the complete statement of Grab in all its splendor:
We have worked with the Singapore Competition and Consumer Commission (CCCS) during its review in recent months. Today, we are pleased that the CCCS has completed its investigation of the Grab-Uber transaction and has not required that the transaction be settled. Grab completed the transaction as part of its legal rights and still maintains that we did not intentionally or negligently violate the competition laws.
Grab agrees that keeping markets open and questionable is best for consumers and drivers, and we will respect the remedies established by the CCCS. However, it is unfortunate that the CCCS adopts a very narrow market definition to conclude that the transaction has resulted in a significant lessening of competition. Commuters are free to choose between street taxis and private hire cars. It is a fact that the incomes of private rental car drivers are directly affected by intense competition with street taxis.
We recognize that the CCCS position on non-exclusive arrangements is to set the tone for the transportation sector. Grab has long approved and advocated industry-wide regulations that allow drivers to freely choose which platform or operator they want to drive with. For drivers to have the maximum choice, all transport stakeholders, including taxi operators, should also be subject to non-exclusive conditions. Grab must not be the only transport player subject to non-exclusive conditions. This is inconsistent with the practices of the taxi industry and we will continue our dialogue with the CCCS and the Land Transport Authority (LTA) to create a level playing field for all. In this regard, we welcome the willingness of the CCCS to review corrective actions as market conditions change. We also note that ALT is reviewing the regulatory framework for the point-to-point transmission sector, which we hope will address non-exclusivity across the industry.
Grab is committed to establishing fair prices and has not increased its rates since the transaction. Grab will continue to adhere to our pre-transaction pricing model, pricing policies and distribution fees. We have been and will continue to submit weekly price data to the CCCS for monitoring.
Grab makes every effort to better serve our customers and we are adding new features that will enhance the user experience for customers and drivers alike. We want to make a significant contribution to Singapore's solutions to improve the quality of urban life.
For example, we are studying data and vehicle sharing services to fulfill our role of optimizing Singapore's global transportation network. As one of the country's largest technology employers, Grab significantly contributes to Singapore's economic development and will continue to develop Singapore's talent in product development and design, data science, artificial intelligence , machine learning and engineering.
Grab is encouraged to receive support from Southeast Asian governments to better serve Southeast Asians. The recent decisions of the Philippine Competition Commission and the CCCS, which have not followed the settlement of the deal, demonstrate a deeper appreciation of Grab's potential to serve the region.
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