Grab and Uber Fined S$13 Million by Competition Watchdog for Merger
(Photo Credit: Reuters)
Grab and Uber were fined millions of dollars by the Competition and Consumer Commission of Singapore (CCCS) for merging earlier this year.
The Competition and Consumer Commission of Singapore (CCCS) has found Grab and Uber guilty of violating the Competition Act. Uber was fined S$6.5 million, while Grab was fined S$6.4 million.
The two ride-hailing companies merged back in March, with Uber announcing that they would be leaving the South-east Asian market. The California-based company then sold its South-east Asian business to Grab for a 27.5% stake in the Singapore-based company.
In a statement, the CCCS maintains that the Grab-Uber merger dampens competition in the ride-hailing market, therefore finding both companies in violation of section 54 of the Competition Act. Section 54 prohibits mergers that could significantly reduce competition in any market here in Singapore.
The CCCS also told both parties to make transactions less difficult for both drivers and riders, and to allow new players to enter the rail-hailing market with ease.
Some measures taken include letting Grab drivers to sign up with other ride-hailing companies, maintaining the prices charged for rides and commission rates taken from the drivers before the merger, and making Uber sell their vehicles from Lion City Rentals at around fair market value to any competitor who makes a fair offer.
CCCS chief executive Toh Han Li commented on the Grab-Uber deal, mentioning that "mergers that substantially lessen competition are prohibited and CCCS has taken action against the Grab-Uber merger because it removed Grab's closest rival, to the detriment of Singapore drivers and riders".
The watchdog said that both companies went ahead with the deal earlier in the year despite knowing that they might be in violation of the Competition act. The two companies even had a deal in place to split any potential fines.
The CCCS also said that they examined documents from both companies and found that Uber would not have left the Singapore market by simply terminating its business if the transaction had not taken.
In addition, the commission said Uber could have continued its business here in Singapore while exploring other options, like selling to another buyer or tying up with other companies, like the attempted deal between Uber and taxi company ComfortDelGro.
The CCCS has found that the deal has already affected the pricing for riders, with a 10 to 15% increase in fares following the merger.
The CCCS also noted that after the merger, Grab has around 80% market share in the ride-hailing market, and its competition’s market-share remained low. The watchdog cited Grab’s consolidation of taxi companies, car rental firms and private-hire drivers made it hard for smaller players to gain a foothold in Singapore’s ride-hailing market.
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