$ 13 million worth of penalties has been slapped on ride-sharing companies Grab and Uber by the Competition and Consumer Commission of Singapore (CCCS). The CCCS has just finished a review and determined that the merger of the two companies is “anti-competitive.” Grab has been meted a $6.58m fine, while Uber faces a fine of $6.42m.
The review by CCCS took such factors into account such as the turnover of both parties, the seriousness, nature, and duration of the infringement, and other factors including determining whether both parties were cooperative.
Toh Han Li, the chief executive of the 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.”
The review showed that the merger between Grab and Uber allowed Grab to raise their prices when their greatest rival was removed.
According to the review, “CCCS has examined internal documents of the parties, and found that Uber would not have left the Singapore market by simply terminating its business if the transaction had not taken place. Instead, Uber would have continued its operations in Singapore, whilst exploring other strategic commercial options, such as collaboration with another market player, or a sale to an alternative buyer.”
Additionally, the CCCS found that would-be entrants into the ride-hailing market were unable to scale to compete against Grab because of Grab’s obligations of exclusivity. The company presently has 80 percent of the market share.
“CCCS’s assessment is confirmed by feedback from potential new entrants which indicated that without any intervention from CCCS, it would be difficult for them 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.”
The review also shows that the merger between Grab and Uber transgressed section 54 of the Competition Act because it effectively removed opportunities for competition.
Grab responded to the report from CCCS by issuing a statement, attributed to Lim Kell Jay, Head of Grab Singapore, saying that the company maintained their innocence and that it “did not intentionally or negligently breach competition laws.”
Grab also decried the “narrow approach” that the CCCS took in defining competition, since it is not the sole ride-hailing company in the market, although it is one of the most visible ones.
In its statement, Grab reiterated its commitment to fair pricing and said that the company has not increased fares since the merger occurred. The company has consistently submitted their pricing data to the CCCS.
The statement also said that the company has received support from other South East Asian nations, “Grab is heartened to receive the support of governments across Southeast Asia to enable us to serve Southeast Asians better. The recent decisions by Philippine Competition Commission and CCCS in not pursuing the route of unwinding the Transaction demonstrate a deeper appreciation of Grab’s potential to serve the region.”
The statement also included a statement from Daren Shiau, the co-head of Allen & Gledhill’s Competition & Antitrust practice. “Grab had, with its advisers, assessed that the transaction would not result in a substantial lessening of competition. Nonetheless, in the spirit of cooperation and knowing that the ride-hailing sector is of public interest, Grab had, within its legal rights and as permitted under Singapore competition laws, made a notification to the CCCS for the transaction following its completion, in order to proactively correct any misconceptions and address any potential CCCS’s concerns arising from such misconceptions. The fact of parties proceeding to complete the transaction after receiving a letter from CCCS explaining Singapore’s merger notification regime and powers to investigate also does not suggest that there is any intentional or negligent breach of competition laws.”
The CCCS announced in July the possibility that Grab and Uber would be facing fines and that the body would provide solutions to the anti-competitive nature of the merger.