Ryde calls Grab-Uber merger 'detrimental' to innovation for ride-hailing industry

Players in the ride-hailing scene have joined the conversation surrounding a consumer watchdog's recent provisional findings that Grab’s buyout of Uber had “lessened competition”. Echoing the sentiment that the merger decreased competition was Ryde which told the Competition and Consumer Commission of Singapore (CCCS) that it disagreed with Grab's statement to the findings that CCCS’ decision was "overreaching and goes against Singapore's pro-innovation and pro-business regulations in a free market economy".

“In truth, the merger is detrimental to innovation for Singapore’s ride-hailing industry,” the open letter read. Ryde added that while the proposed remedies do not go far enough, it is a step in the right direction to mitigate negative post-merger effects.

These remedies include financial penalties and the proposing the removal of Grab’s exclusivity arrangement with any taxi or chauffeured private hire car fleet to increase consumer and driver choice. Exclusivity obligations such as lock-in periods or termination fees were also tackled, along with the maintenance of Grab’s pre-transaction pricing algorithm and driver commission rates prior to the merger with Uber.

It added that in the event that the merger cannot be unwound, imposition of a meaningful and substantial financial penalty on the relevant parties would “signal CCCS’s resolve” in stamping out anti-competitive practices in Singapore. In addition, the financial penalty should also annul the “’supposed’ financial gain” which resulted from the merger, Ryde’s letter added. Doing so would deter future errant companies with similar intentions in ride-hailing and in other industries.

“Anything less would not be an appropriate censure,” the statement sent to Marketing added.

In a statement to The Straits Times, Terence Zou, CEO and founder of Ryde, added that the measures proposed by CCCS which includes a fine did not define how much the fine should be, and needed to be significant in order to “reverse” the unfairness and having meaning. He added that the proposed measures are well directed to help alleviate post-merger consequences on the ride-sharing market to ensure it remains competitive. This includes disallowing exclusive contracts between Grab, taxi companies and drivers, which Zou added is the most important move to practice to prevent “suffocation of other applications”.

Meanwhile, similarly, a spokesperson for taxi company Trans-Cab Services also said the removal of exclusive contracts would help drivers and the industry. This is because drivers will be able to use the applications which allot them the maximum benefits.

The move comes on the back of CCCS’ recent provisional findings that the sale of Uber’s Southeast Asian business to Grab earlier this year had led to a “substantial lessening of competition” in ride-hailing platform services. According to the news release, CCCS determined that the sale has removed competition between Grab and Uber, which were each other’s closest competitor.

CCCS also proposed the imposition of financial penalties upon Grab and Uber respectively, as both parties carried out the sale despite having anticipated potential competition concerns and caused a substantial lessening of competition within Singapore’s ride-hailing service platform market.

Grab has also since hit back at the CCCS’ findings, confirming that it “disagreed” with the latter’s analysis, adding that “The CCCS appears to have taken a very narrow approach in defining competition.” It added that while Grab is one of the most visible players in transport, it is not the only player in the market.

“This provisional decision and proposed remedies are overreaching and go against Singapore’s pro-innovation and pro-business regulations in a free market economy,” Grab said in a statement to Marketing at the time. The spokesperson added that Grab will submit its written representations to the CCCS before the deadline, and will take all appropriate steps to appeal against this decision.

In April this year, CCCS banned Grab from taking over operational data from Uber, which can be used to enhance its market position post-merger talks against other transport providers such as ComfortDelGro. This includes data such as historical trip data, the watchdog said.