The Grab and Uber merger from this past March led to an investigation over competition infringement conducted by Singapore's competition watchdog.
After a months-long investigation, on Monday, September 24, the Competition and Consumer Commission of Singapore (CCCS) ruled that the Grab-Uber merger has led to a "substantial lessening of competition" in the ride-hailing market, which violates Section 54 of the Competition Act, Sgsme reports.
As a result, both Grab and Uber will be subjected to a total financial penalty of over SG$13 million (over US$9.5 million). Grab will have to pay a fine of approximately SG$6.4 million and Uber SG$6.6 million.
To alleviate the impact of the merger deal, CCCS ordered Grab to remove exclusivity in its arrangements with drivers and taxi fleets, and maintain its pre-merger pricing and commission rate. It also requires Uber to sell its car-rental business Lion City Rentals to any competitor that makes a fair and reasonable offer.
The decision was made based on CCCS's investigation findings. The commission found that if it were not for the merger, Uber would have stayed in the market. Grab also increased its pricing by between 10% to 15% after the merger. It currently has 80% of the market share and its strong network advantage makes it harder for other ride-hailing companies to enter the market, according to the commission. CCCS also reported receiving many complaints from riders and drivers about Grab's fares and commision rates.
Responding to the findings, Grab issued a statement saying that it will obey the remedies laid out by the commission but disagrees with the decision, saying that "the CCCS is taking a very narrow market definition."
“Commuters are free to choose between street-hail taxis and private-hire cars, and it is a fact that private-hire car drivers’ incomes are directly impacted by intense competition with street-hail taxis," wrote the statement.
Uber also released a statement saying it's disappointed with the decision and thinking of appealing it. Replying to Grab and Uber's pushback, the commision maintained its view that the ruling is fair.
"CCCS has been accused of not being pro-business, but it does not help to promote innovation if other ride-hailing providers cannot easily operate in Singapore," said Stefanie Yuen-Thio, the joint managing partner of TSMP Law Corporation, adding that it's the commission's role to ensure some equality in the market so that consumers "do not get held to ransom by monopolies or near-monopolies."
[Photo via Sgsme]
