Grab, Trans-Cab say merger will not substantially lower competition
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The acquisition includes about 2,200 cabs and more than 300 private-hire vehicles that Trans-Cab owns.
PHOTO: LIANHE ZAOBAO
SINGAPORE – The competition watchdog is seeking public views on ride-hailing firm Grab’s proposed takeover of Trans-Cab, the country’s third-largest taxi company, as it looks to decide if the acquisition will infringe the Competition Act.
The Competition and Consumer Commission of Singapore (CCCS) said on Monday that GrabRentals and Trans-Cab had stated in their submissions that the proposed acquisition would not result in a substantial reduction of competition in the platform and ride-hailing rental markets.
The takeover is helmed by GrabRentals – Grab’s car rental arm.
On July 20, The Straits Times broke the news that Grab, the dominant ride-hailing operator here, would be buying Trans-Cab by the fourth quarter of 2023.
In explaining why the proposed merger would not substantially lower competition, they said there is a lack of prohibitive barriers to enter the rental and platform markets. The expansion of rivals in the rental market, they said, shows it is possible for competitors to grow their offerings.
There are also no barriers to entry or expansion in the platform market, given that it is “not prohibitive” to develop such know-how through the acquisition of or investments in research and development. Competitors, they said, can and do pursue asset-light models that allow them to create such a platform without owning a fleet.
Second, the firms said there are minimal overlaps between them. GrabRentals provides private-hire cars that drivers can rent, while Trans-Cab primarily operates a fleet of taxis with a limited supply of private-hire cars for rent.
Meanwhile, Grab’s platform offers ride-hailing services that match private-hire car and taxi drivers with riders, while Trans-Cab offers phone booking services just for its taxi fleet.
Third, the firms told CCCS the rental and platform markets are highly fragmented and competitive, and customers can choose from a wide range of options.
Drivers and riders can also move between ride-hailing platforms at “no costs”, and already use different platforms.
They would not hesitate to make a switch in response to better prices, service quality, availability or higher incentives, the firms added.
Lastly, they are of the view that Grab will continue to be constrained by the strong competition from other technology companies and taxi operators.
The firms also said there are no “vertical relationships” between GrabRentals and Trans-Cab, said CCCS.
At present, Trans-Cab’s vehicle workshop serves only its taxi and private-hire car fleets. Even if GrabRentals relies fully on Trans-Cab’s workshop after the proposed acquisition, third-party workshops would still be able to service other rental fleets and private cars more generally, they said.
As for the platform market, the firms said drivers are free to use Grab or any other ride-hailing platform, and the number of drivers on Grab’s app is not expected to rise significantly with the takeover.
If regulatory permission is granted, it would make Trans-Cab the first Singapore taxi company to be acquired by US-listed Grab.
The acquisition, which has drawn questions from MPs combined $13 million for their merger,
CCCS is seeking views via its website on how the proposed merger could affect the price, quality, quantity and other aspects of the rental of taxis and private-hire cars, and the provision of street-hail and ride-hailing services.
Submissions will close on Aug 25 at 5pm.
