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Grab and Uber fined SG$13m by competition watchdog for ‘substantial lessening of competition’

The Competition and Consumer Commission of Singapore (CCCS) has fined Grab and Uber a total of SG$13 million over the two firms’ merger which led to a “substantial lessening of competition” in Singapore. Grab was fined SG$6.42 million while Uber was fined SG$6.58 million.

Singapore’s competition watchdog, CCCS, said that the penalties were imposed to “deter completed, irreversible mergers that harm competition”. In levying the fines, CCCS said that it considered both companies’ turnovers, the nature, duration and seriousness of the infringement, and aggravating as well as mitigating factors such as if both parties were cooperative.

“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,” Toh Han Li, chief executive, CCCS said.

He added that companies can continue to innovate in this market, through means other than anti-competitive mergers.

This comes as CCCS concluded its investigations on the Grab-Uber sale, and said that the sale has infringed section 54 of the Competition Act. The section prohibits mergers that have resulted, or may be expected to result, in a substantial lessening of competition in Singapore.

At that time of its conclusion in July, CCCS issued directions to lessen the impact of the deal on drivers and riders, and to open up the market and level the playing field. It proposed the removal of Grab’s exclusivity arrangement with any taxi or chauffeured private hire car fleet in Singapore. This is in a bid to increase choices for drivers and riders, as well as improve market contestability.

It also proposed the removal of exclusivity obligations, lock-in periods or termination fees on all drivers who drive on Grab’s platform, or rent from Grab Rentals, Lion City Rentals or rental partners of Grab. Other proposed remedies also include the maintenance of Grab’s pre-transaction pricing algorithm and driver commission rates until competition is revived in the market, as well as requiring Uber to sell Lion City Rentals to any competitor that makes a reasonable offer. This is to prevent Uber from selling Lion City Rentals or any of its assets to Grab without prior approval from CCCS.

Soon after CCCS put out its proposed measures, Grab called CCCS  “one-sided” for allowing  new entrants to maintain or sign exclusivity arrangements with drivers, private hire rental fleet and taxi operators “without restrictions”, read a CNA report. Grab, according to CNA, described this move to be a “double standard” that goes against essence of offering more choices for drivers and riders.

In a statement to Marketing at the time of writing, Lim Kell Jay, head of Grab Singapore explained, “While we don’t agree with some of the measures in the CCCS PID, we are committed to working with the CCCS to improve upon its proposed remedies to ensure a vibrant and dynamic transport sector. He added today’s transport sector is fiercely competitive with numerous public and private transportation choices for consumers.

“We believe a level playing field where participants compete fairly to provide innovative services and better user experiences will benefit consumers and drivers in the long run,” Lim said.

Read also:
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Ryde calls Grab-Uber merger ‘detrimental’ to innovation for ride-hailing industry
Competition watchdog: Grab-Uber merger ‘lessened competition’ in ride-hailing
Grab says less than 20% of former Uber SEA staff no longer with company
Competition watchdog bars Grab from accessing Uber’s operational data
Grab-Uber merger: Did internal communications fall short?
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