Singapore fines Grab & Uber S$13m for merger that harms competition

SINGAPORE: The Competition and Consumer Commission of Singapore (CCCS) has imposed financial penalties of S$6,419,647 (RM19.4 million) on Grab and S$6,582,055 (RM19.9 million) on Uber, respectively, to deter completed, irreversible mergers that harm competition.
In a statement today, CCCS said in levying the financial penalties, it has taken into account the relevant turnovers of both, the nature, duration and seriousness of the infringement, aggravating and mitigating factors such as whether Grab and Uber were cooperative.
This is part of CCCS Infringement Decision against Grab and Uber in relation to the sale of Uber's Southeast Asian business to Grab for a 27.5% stake in Grab in return.
The transaction was completed on March 26, 2018.
CCCS found that the Transaction has led to a substantial lessening of competition in the provision of ride-hailing platform services in Singapore.
On March 27, 2018, CCCS commenced an investigation on the basis that the transaction may have infringed the Competition Act as an anti-competitive merger.
CCCS proposed Interim Measures Directions on March 30, 2018 and finalised them on April 13, 2018 to lessen the impact of the transaction on drivers and riders, while continuing with the investigation.
On July 5, 2018, CCCS completed its investigation and issued a Proposed Infringement Decision (PID) against both parties and invited public feedback on the possible remedies to address the harm to competition resulting from the transaction.
In reaching its final decision, CCCS said it has carefully considered the written and oral representations from Grab and Uber, feedback from industry players, stakeholders and the public, as well as all available information and evidence.
In its findings, among others, the commission found that Grab increased prices after removal of its closest competitor.
CCCS said it has examined internal documents of Grab and Uber, 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, while exploring other strategic commercial options, such as collaboration with another market player, or a sale to an alternative buyer, it said.
CCCS said it has received numerous complaints from both riders and drivers on the increase in effective fares and commissions by Grab post-transaction, such as via a decrease in the amount and frequency of rider promotions and driver incentives.
For example, Grab announced changes to its GrabRewards Scheme in July 2018 which generally reduced the number of points earned by riders per dollar spent on Grab's trips, and increased the number of points required for redemptions.
Indeed, CCCS has found that effective fares have increased between 10% and 15% post-transaction, it said.
Besides imposing the financial penalties, CCCS has issued directions to both to lessen the impact of the transaction on drivers and riders, and to open up the market and level the playing field for new players.
These include ensuring Grab drivers are free to use any ride-hailing platform and are not required to use Grab exclusively; removing Grab's exclusivity arrangements with any taxi fleet in Singapore so as to increase choices for drivers and riders; and maintaining Grab's pre-merger pricing algorithm and driver commission rates. — Bernama