The Competition and Consumer Commission of Singapore (CCCS) has fined Grab and Uber S$13 million for their anti-competitive merger under the Section 54 of the Competition Act.
After a 3-month investigations into the merger of Grab and Uber where Uber sold it's Southeast Asian business to Grab for a 27.5% stake in Grab in return, CCCS has found that the merger these two ride-hailing platforms is in fact an anti-competitive merger. According to their investigations, CCCS believes that Uber would not have left the Singapore market if the merger had not happened. As a result, the merger has removed Grab’s closest competitor in ride-hailing platforms on the island.
In a press release, CCCS also noted that it has received numerous complaints from both riders and drivers on the increase in fares after the merger. For example, Grab announced changes to the GrabReward scheme which reduced number of points earned by riders per rolled and increased number of points required for redemption.
The investigations also concluded that Grab now holds 80% of the market share, making it extremely difficult for potential competitors to enter the market effectively, scale or expand. What makes this particularly difficult, CCCS says, is the exclusivity obligation that Grab has imposed on taxi companies, car rental partners and some of its drivers which hampers the ability of potential competitors expand their business.
As stated in the press release, “CCCS has found that the Transaction is anti-competitive, having been carried into effect, and has infringed section 54 of the Competition Act by substantially lessening competition in the ride-hailing platform market in Singapore.”
Mr. Toh Han Li, Chief Executive of CCCS said, "Mergers that substantially lessen competition are prohibited and CCCS has taken action against the Grab-Uber merger because it removed Grab’s closest rival, to the detriment of Singapore drivers and riders. Companies can continue to innovate in this market, through means other than anti-competitive mergers.”
Apart from the S$13 million financial penalties, CCCS has proposed several remedies to lessen the impact of the merger and open up the market for new players. These include ensuring that Grab drivers are free to used any ride-hailing platforms, removing Grab’s exclusivity arrangements with any taxi fleet in Singapore, maintaining Grab’s pre-merger pricing algorithm and driver commissions rates, and requiring Uber to sell their vehicles of Lion City Rentals to potential competitors who makes a reasonable offer. That last measure is to prevent Uber from selling the vehicles to Grab without CCCS’s prior approval.