Grab calls watchdog's definition of market 'too narrow'

Citing lawyers, Grab noted that under current laws, there is no obligation for it to inform the Competition and Consumer Commission of Singapore of the merger, though it did so.
Citing lawyers, Grab noted that under current laws, there is no obligation for it to inform the Competition and Consumer Commission of Singapore of the merger, though it did so.ST PHOTO: KELVIN CHNG

It says there is 'intense competition' between street-hail taxis and private-hire car drivers

The Competition and Consumer Commission of Singapore (CCCS) took a "very narrow" definition of the market by not including street-hail taxis, ride-hailing firm Grab said yesterday.

Responding to the CCCS' ruling that the Grab-Uber merger was in violation of the Competition Act, Grab said that it would be more accurate to include street-hail taxis when analysing the point-to-point transportation market, noting "intense competition" between private-hire car drivers and taxis.

Grab said it recognised why the CCCS wants to guard against exclusivity arrangements. In fact it is also a long advocate for industry-wide regulations that would allow drivers to freely choose which platform or operator they wish to drive with.

But to truly give drivers a full range of options, "all transport players, including taxi operators, should also be subject to non-exclusivity conditions", said Grab Singapore head Lim Kell Jay.

The CCCS said street-hail taxis were excluded as private-hire cars are not allowed to pick up street-hail passengers.

"Even if we include street-hail taxis, Grab's market share would still be close to 60 per cent," said the commission's chief executive Toh Han Li. The commission had noted that Grab has an 80 per cent share of the ride-hailing market.

In March, the Land Transport Authority ruled that ComfortDelGro cabbies could not drive for Grab's JustGrab service, as taxis should offer metered fares unless their companies had endorsed a third party to offer flat fares.

 
 
 

Mr Toh said fares for Grab had "effectively" gone up by about 10 to 15 per cent due to a reduction in discounts.

However, Mr Lim - who in May confirmed Grab was rolling back incentives for both drivers and riders - insisted the firm had not raised fares.

"Grab will continue to adhere to our pre-transaction pricing model, pricing policies and driver commissions," he said.

"We have been and will continue to submit weekly pricing data to the CCCS for monitoring," he added.

Grab and Uber were fined a combined $13 million for their merger.

The CCCS said its directions could be suspended if a competitor attains a 30 per cent share of the ride-hailing market for one month.

Both Uber and Grab would have their penalties lifted if these competitors maintain their position for six consecutive months, CCCS said.

Grab welcomed the commission's "willingness to review the remedial measures as market conditions change". It added that it would "abide by the remedies set out by the CCCS".

However, it noted that under current laws there is no obligation for it to inform the CCCS of the merger, though it did so.

Grab and Uber completed their union on March 26, in spite of the CCCS sending both parties a letter on March 9 explaining Singapore's merger notification regime and CCCS' corresponding powers to investigate and penalise anti-competitive mergers.

Grab cited Queen's Counsel Michael Bowsher as saying that under Singapore's regime, the deal should be permissible and "should not be subject to financial penalties".

Co-head of Allen & Gledhill's Competition & Antitrust practice, Mr Daren Shiau, said that the fact that both parties proceeded to complete the deal despite the CCCS letter "does not suggest that there (was) any intentional or negligent breach of competition laws". Allen & Gledhill acted as transaction counsel for Grab during the merger.

Uber's chief international business officer Brooks Entwistle said the American firm was "disappointed" with the decision.

He said: "We believe it is based on an inappropriately narrow definition of the market, and that it incorrectly describes the dynamic nature of the industry, among other concerns."

Both firms said they are reviewing the CCCS decision before deciding whether to appeal.

Meanwhile, Indonesian ride-hailing start-up Go-Jek, which is expected to launch here by the end of the year, said it welcomed the CCCS decision.

"We are glad that the commission has come to the same conclusion that we have - that new entrants to the market are facing a very high barrier to entry," said a Go-Jek spokesman.

Correction note: This report was edited for clarity.

A version of this article appeared in the print edition of The Straits Times on September 25, 2018, with the headline 'Grab calls watchdog's definition of market 'too narrow''. Print Edition | Subscribe