Grab, Uber fined a combined $13 million by competition watchdog for March merger

PHOTO: The Straits Times

SINGAPORE - Singapore's competition watchdog on Monday (Sept 24) fined ride-hailing firms Grab and Uber a combined $13 million for their merger in March, which saw the sale of Uber's South-east Asian business to Grab for a 27.5 per cent stake in Grab.

Grab was fined about $6.4 million while Uber was fined about $6.58 million by the Competition and Consumer Commission of Singapore (CCCS).

In a statement, the CCCS reiterated its decision that the deal between the two firms had reduced competition in the ride-hailing scene and said it had infringed Section 54 of the Competition Act, which prohibits mergers that could significantly reduce competition in any market here.

"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," said CCCS chief executive Toh Han Li.

"Companies can continue to innovate in this market, through means other than anti-competitive mergers."

In addition, the CCCS directed both parties 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.

The measures include ensuring Grab drivers are free to use any ride-hailing platform, removing Grab's exclusivity arrangements with any taxi fleet in Singapore, maintaining Grab's pre-merger pricing algorithm and driver commission rates, and requiring Uber to sell the vehicles of Lion City Rentals to any potential competitor who makes a reasonable offer based on fair market value.

Uber had announced in March that it was exiting South-east Asia - including Singapore - and that its business in the region would be acquired by its rival Grab.

This was in exchange for the American ride-hailing giant getting a 27.5 per cent stake in Grab, as well as a seat on the Singapore-based firm's board.

The CCCS later started investigations into the deal, believing it had infringed competition laws.

These investigations were completed on July 5, when the watchdog said it found the merger had "substantially lessened" competition in the sector and proposed measures

The watchdog noted at the time that both parties had proceeded with the merger, despite knowing they could have violated competition laws, and even had measures in place to split any possible financial penalties.

On Monday, the CCCS said: "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."

The commission said Uber would have instead continued its operations here while exploring other strategic commercial options - pointing to the now-defunct tie-up between Uber and taxi giant ComfortDelGro - or sale to another buyer.

The CCCS noted that despite its proposal that Grab maintains its pre-acquisition pricing and driver commissions, effective fares for commuters had risen between 10 and 15 per cent after the deal.

The commission also stated that Grab has an 80 per cent share of the ride-hailing market, and the market share of other smaller players which emerged after Uber's exit remained "insignificant" .

It added that exclusivity deals between Grab, taxi companies, car rental firms and drivers hampered the ability of these potential competitors to expand.

This article was first published in The Straits Times. Permission required for reproduction.