Grab says it did not breach competition laws in Uber merger; watchdog using 'very narrow' market definition

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

SINGAPORE - Ride-hailing firm Grab said on Monday (Sept 24) that it did not "intentionally or negligently breach competition laws" when it acquired rival Uber's business here earlier this year.

The Singapore-based firm added, however, that it would abide by the remedies set out by the Competition and Consumer Commission of Singapore (CCCS), aimed at restoring the contestability of the point-to-point transportation market.

On Monday, the CCCS said it had fined both firms a combined $13 million for the merger. The competition watchdog said the deal was an infringement of Section 54 of the Competition Act, which prohibits mergers that could result in a "substantial lessening of competition" in any sector here.

The deal resulted in Grab having an 80 per cent share of the point-to-point transportation market, up from about 50 per cent prior to Uber's exit, the CCCS said.

Grab Singapore head Lim Kell Jay said that Grab was glad the merger was not unwound.

However, he reiterated the firm's stand that the commission had taken a "very narrow" definition of the market by not including street-hail taxis, noting the "intense competition" between private-hire car drivers and taxis.

He added that while Grab supported the non-exclusivity arrangements proposed by the CCCS, these should apply across the industry - including taxi operators - to allow drivers "full maximum choice".

 
 
 

The Land Transport Authority (LTA) ruled in March 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.

Though the CCCS said its studies had shown Grab fares had effectively gone up by about 10 to 15 per cent since the deal with Uber, Mr Lim insisted the company had not raised fares.

"Grab will continue to adhere to our pre-transaction pricing model, pricing policies and driver commissions. We have been and will continue to submit weekly pricing data to the CCCS for monitoring," he said, adding that the firm was committed to "fair pricing".

In its ruling, the CCCS said its directions were "proportionate and flexible", adding that they 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 are maintained for six consecutive months, CCCS said.

Mr Lim said Grab welcomed the commission's "willingness to review the remedial measures as market conditions change".

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

Queen's Counsel Michael Bowsher said 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 Grab had assessed that the deal "would not substantially lessen competition".

Uber's chief international business officer, Mr 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. We are reviewing the decision carefully and will consider our options, including an appeal."

Both parties will be given up to a month to appeal.