Grab-Uber deal faces interim action to ensure competition

The commission said that Grab and Uber can make written representations, and it will consider them before making a decision on whether to issue the directives.
The commission said that Grab and Uber can make written representations, and it will consider them before making a decision on whether to issue the directives. ST PHOTO: DESMOND FOO

Watchdog wants both firms to maintain independent ops while it probes merger

Singapore's competition watchdog says it has grounds to suspect that Grab and Uber have infringed the Competition Act, and has proposed interim measures to preserve competition while it investigates their merger.

This is the first time that the Competition Commission of Singapore is proposing interim measures for companies that it is investigating.

The measures, if implemented, will require Grab and its American ride-hailing rival Uber to maintain independent pricing, pricing policies and product options as they were before the sale.

Grab, a Singapore-headquartered firm, had said on Monday when it announced the acquisition of Uber's business in South-east Asia that it planned to cease operation of the Uber app on April 8, and the UberEats app at the end of May.

The commission said in its release yesterday that both companies must not take any action that will lead to the integration of their businesses in Singapore, and affect the viability and saleability of the businesses.

They also should not take actions that could prejudice the commission's ability, power and options to subsequently direct the divestment of business operations in the affected markets.

 

Another measure requires that the companies do not obtain any confidential information about each other. This includes pricing, formulas, customers and drivers.

Grab should also ensure that Uber drivers joining its platform of their own accord "are not subject to any exclusivity clauses, lock-in periods and/or termination fees".

Lastly, both companies must not take actions that could affect the commission's ability to im-pose remedies.

The commission said that Grab and Uber can make written representations, and it will consider them before making a decision on whether to issue the directives.

The commission's directives will take effect immediately from their date of issue until the completion of its investigations, or unless otherwise specified.

When asked if Grab would undo any of the measures that it has taken since the merger, which included placing Uber employees on paid leave, head of Grab Singapore Lim Kell Jay said the company will submit its response to the commission and propose measures to reassure the watchdog, including maintaining its fare structure and not increasing base fares.

Grab will make a voluntary no-tification of the acquisition to the commission no later than April 16, he said.

He added that Grab had engaged with the commission prior to the deal and had conducted due diligence and legal analysis before entering into and concluding the merger.

Uber did not respond to queries.

Experts said the interim measures can be viewed as a stop-work order to freeze the state of the market and stop the integration process, which could result in the dominance of Grab.

Singapore University of Social Sciences senior lecturer and transport economist Walter Theseira said: "The commission needs to know the full ramifications of the merger and if public interest is being harmed."

 
A version of this article appeared in the print edition of The Straits Times on March 31, 2018, with the headline 'Grab-Uber deal faces interim action to ensure competition'. Print Edition | Subscribe