TRANSPORT & LOGISTICS | Staff Reporter, Singapore

Grab's fines should cancel out Uber merger gain: Ryde

The firm supported the CCCS' remedies to “bring back” competition.

Ride-hailing firm RYDE Technologies challenged Grab's statement that the Competition and Consumer Commission of Singapore’s (CCCS) decision on the Grab-Uber merger is "overreaching and goes against Singapore's pro-innovation and pro-business regulations in a free market economy.”

Ryde previously said that it supported the CCCS’ decision as it “will promote competition and is healthy for ride-hailing in Singapore,” however it also argued that more could be done.

The ride-hailing firm wrote in an open letter the financial penalty that CCCS is considering should annul the ‘supposed’ financial gain resulting from Grab-Uber merger and that anything is less is not an appropriate censure. “This would deter future errant companies with similar intentions in ride-hailing and in other industries,” it said.

Ryde added that it supported the removal of Grab’s exclusivity obligations, lock-in periods, and termination fees. “Removing exclusive obligations is imperative. A new entrant starts off with a ‘major disadvantage’ because having fewer riders and drivers makes it very difficult for it to reach a sufficient scale to challenge the incumbent’s “network effect” advantage,” it said.

It backed CCCS’ proposed remedies to remove Grab’s exclusivity arrangements with any taxi/CPHC fleet in Singapore and the maintenance of its pre-transaction pricing algorithm.

Ryde also supported the CCCS’ decision to require Uber to sell Lion City Rentals (LCR) to any potential competitor who makes a reasonable offer. “Furthermore, LCR should be able to work openly and immediately with Ryde to onboard drivers and also with any future entrant post-acquisition,” it added.

Meanwhile, DBS Equity Research analyst Andy Sim commented that despite the measures, the strong escalation of competition in the ride-hailing landscape is unlikely and a “death-match” could happen instead. “Overall, in our view, having seen a full cycle of entrants and eventual exits (since 2013 with Uber's entry) of private hailing app players, we believe that a strong escalation of competition and reversion to high incentives and discounts (where participants incur sustained losses) seem unlikely,” he said.

Instead, the situation could provide a window of opportunity for Go-Jek, given its financial backing. “We believe this could also provide an opportunity for ComfortDelGro (CD) to have a more dominant presence in the private car rental space, assuming it is able to partner Go-Jek, similar to its original plan with UberFlash/acquisition of 51% stake in LCR,” Sim added.

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