Grab free to change its pricing policies and driver commission rates after two-year freeze by consumer watchdog

Grab's managing director of transport Andrew Chan said the company will be prudent in its pricing structure and policies.
Grab's managing director of transport Andrew Chan said the company will be prudent in its pricing structure and policies.PHOTO: ST FILE

SINGAPORE - Restrictions on Grab's ride-hailing service have been lifted, allowing the company to change its pricing policies and driver commission rates after a two-year freeze.

The operator is also free to charge an extra fee of about 30 cents for each ride in the coming months.

The Competition and Consumer Commission of Singapore (CCCS) had in September 2018 imposed a freeze on Grab's pricing algorithm and driver commission rate after the company's merger with ride-hailing rival Uber was found to have infringed Section 54 of the Competition Act.

The consumer watchdog on Friday (Nov 20) said that it lifted restrictions following the introduction of a new point-to-point transport regulatory framework kicking in.

Grab, in response to news that restrictions were lifted, said it is committed to maintaining its current pricing structure and policies "for at least the next six months, given the Covid-19 situation".

But a new platform fee for its transport services will be rolled out later, said Mr Andrew Chan, managing director of transport for Grab Singapore.

"The platform fee will enable us to maintain and improve safety measures, cover other relevant operating costs as well as look after our driver-partners' welfare sustainably.

"This introduction of a platform fee will be the only change we will be making to our fares for the time being," said Mr Chan. More details about the fee will be announced at a later date. 

He added that Grab will be prudent in its pricing structure and policies, and offer relevant services at a competitive price.

The consumer watchdog had imposed extensive restrictions on Grab after it infringed rules that prohibit mergers that could significantly reduce competition in any market here.

Grab and Uber were issued a combined $13 million fine for the merger.

Grab was also required to implement several measures to lessen the impact of the transaction on drivers and riders, and to keep the market open to new players.

It had to ensure its drivers were free to use any ride-hailing platform and remove Grab's exclusivity arrangements with any taxi fleet in Singapore.

It also had to maintain its pre-merger pricing algorithm and driver commission rates. Uber was required to sell the vehicles of Lion City Rentals to any potential competitor who made a reasonable offer based on fair market value.

Lion City Rentals was a car leasing firm owned by Uber.

CCCS had said in 2018 that the restrictions would be suspended if a competitor to Grab manages to secure 30 per cent or more of total rides matched in the ride-hailing platform service for one month.

But the CCCs said the start of a new point-to-point transport sector regulatory framework in October this year triggered the decision to lift the restrictions.

The consumer watchdog noted that there are a number of other licensed ride-hail operator under the new framework, such as Gojek and Tada Mobility.

The framework also ensures that all licensed operators cannot prevent their drivers from driving from other operators, noted CCCS.

"The regulatory framework also ensures that P2P (point-to-point) fares are transparent and clearly communicated to commuters, while leaving fare levels to be determined by market forces," it added.

"CCCS will continue to work closely with the Land Transport Authority and Public Transport Council to ensure that the P2P sector remains open and contestable," the consumer watchdog said.

The National Private Hire Vehicles Association (NPHVA) said in a Facebook post that it will continue working with Grab on issues of drivers’ welfare and income sustainability following CCCS’ announcement. 

It called for any fare adjustment or commission fees levied to be reasonable.

Meanwhile, Ms Yeo Wan Ling, director of the National Trades Union Congress (NTUC), said the labour movement will support NPHVA in their discussions with Grab so as to balance the interests of commuters, driers and company. 

“In the long run, we want to ensure that our drivers’ livelihood are not unfavourably affected by fare adjustments or changes,” said Ms Yeo.