Fines and penalties loom for Grab and Uber over merger decision.
The Competition and Consumer Commission of Singapore (CCCS) is looking to fine Grab and Uber and impose remedies to enhance competition as its investigation found that their merger is anti-competitive.
According to an announcement, CCCS wants Grab to remove exclusivity obligations, lock-in periods, and termination fees for the ride-hailing platform, as well as users of Grab Rentals and Lion City rentals. "This will give drivers and riders with more choices and improve market competition," it said.
Also read: Lion City Rentals drivers slam Grab takeover
In addition, the agency urged Grab to go back to its pre-merger pricing algorithm and driver commission rates until the competition is revived again for the benefit of users and drivers. CCCS is also looking into requiring Uber to sell Lion City rentals to a potential competitor except Grab.
“This prevents Grab and Uber from aligning Lion City Rentals with Grab to the disadvantage of Grab’s potential competitors, and will facilitate a new entrant’s access to a vehicle fleet,” the agency said.
According to the agency’s findings, Grab’s purchase of Uber has infringed section 54 of the Competition Act which prohibits substantial lessening of competitors through mergers. CCCS is looking into fining both companies for the merger’s effects to competitions on ride-hailing platforms.
“Without any intervention from CCCS, it could continue to hamper the ability of potential competitors to access drivers and vehicles,” the agency explained.
CCCS found that the competitiveness of taxi booking services was constrained compared to the merger. They also think that entering the ride-hailing platform has been barred given Grab’s bigger network as well as its imposition of exclusivity obligations on taxi companies, car rental partners, and some of its drivers.
The agency had received feedbacks from potential entrants saying that without the agency’s intervention, it would be difficult to attain a sufficient network of drivers and riders to provide a satisfactory product and experience to both drivers and riders so as to compete effectively against Grab.
“Such expenditure includes driver incentive schemes and rider promotions, in addition to acquiring a sufficient fleet of vehicles and pool of drivers, as well as partnerships with taxi operators,” the agency explained.
Additionally, complaints from both riders and drivers who experienced price increases post-merger have been filed to the agency.
Grab and Uber has yet to prove to the agency that their merger’s efficiencies that would outweigh the harm to competition, CCCS said. Both companies have been given 15 working days to represent themselves to the agency before they arrive with their final decision.
The agency is encouraging public feedback about the merger from users and drivers of the ride-hailing platform until 19 July to help them better access the issue.
CCCS had sent a letter to both on 9 March to explain Singapore’s merger notification regime and the agency’s corresponding powers to investigate, give directions, impose financial penalties and/or impose interim measures on the Parties.
Under Singapore’s merger notification regime, Grab and Uber had the option of notifying the merger for CCCS’s clearance or seeking CCCS’s confidential advice prior to completing the Transaction. "However, the firms proceeded with the transaction on 26 March 2018, despite knowing that the outcome would be irreversible, thus rendering it practically impossible to restore the status quo pre-merger," it added.
CCCS’s investigations also revealed that both parties even provided for a mechanism to apportion eventual antitrust financial penalties.
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