Regulators to ensure Grab-Uber deal will not erode competition

Observers said ComfortDelgro's alliance with Uber had now been overshadowed by Grab's bold move.
Observers said ComfortDelgro's alliance with Uber had now been overshadowed by Grab's bold move. PHOTO: REUTERS

Competition watchdog, LTA to study deal; ComfortDelGro reviews alliance with Uber

Ride-hailing firm Grab may have acquired rival Uber's South-east Asian business, but it will not be allowed to run a monopolistic operation on Singapore's roads.

Regulators said yesterday that they were prepared to step in if they saw competition being eroded.

The Competition Commission of Singapore (CCS) said that if it deemed this was happening, it could ask for the merger to be modified or even unwound.

The Land Transport Authority, too, said it was watching the development closely.

"We will ensure that no one single market player dominates the sector to the detriment of commuters and drivers," an LTA spokesman said.

The LTA added that it was reviewing a regulatory framework to license private-hire car operators "to keep the private-hire car and taxi industries open and contestable".

The CCS said Singapore's competition laws prohibit mergers that may result in a "substantial lessening of competition", and indicated that it could "require the merger to be unwound or modified" to prevent an erosion of competition. It said it could also issue "interim measures" before it made up its mind.

A Grab spokesman said: "We will make a merger notification to the Competition Commission of Singapore."

She said UberFlash - a dynamic pricing app which Uber launched with ComfortDelGro in January - will cease on April 8, while the UberEats app will run until the end of May.

Observers said ComfortDelgro's alliance with Uber had now been overshadowed by Grab's bold move.

Singapore University of Social Sciences senior lecturer and transport economist Walter Theseira said: "A bigger company can drive efficiency and value. The problem is when it has that increased market power, it can take more value for itself."

National University of Singapore transport researcher Lee Der-Horng said: "Surely there will be less competition. Otherwise, why would they pursue the merger? Whether the reduced competition will translate into less efficiency or less quality... is something beyond the consumer's immediate control."

Meanwhile, Uber's Paya Lebar office was shut for the day amid confusion and concern that jobs would be lost. But a Grab spokesman said last night that Grab is committed to finding jobs for all Uber employees in the region in the merged entity.

Grab also said that consumers would not be worse off. "Passengers have plenty of transport options, including street-hailing taxis, taxi apps and public transport like trains or buses," its spokesman said.

"We have always believed in an open-market model, and are building a marketplace platform that partners can use to provide their own services."

Meanwhile, taxi giant ComfortDelGro, which had entered into an alliance with Uber, said it is now reviewing "all aspects of its proposed tie-up" with the American firm.

The taxi company agreed in December to pay some $640 million for a 51 per cent stake in Uber's Singapore rental car fleet.

ComfortDelGro spokesman Tammy Tan said: "We are reviewing all aspects of the proposed tie-up with Uber Technologies, which is currently under review by the CCS."

Meanwhile, investors remained positive. ComfortDelGro shares ended five cents, or 2.5 per cent, higher at $2.04 yesterday.


A version of this article appeared in the print edition of The Straits Times on March 27, 2018, with the headline 'Regulators to ensure Grab-Uber deal will not erode competition'. Print Edition | Subscribe