Singapore Says Grab-Uber Hurt Consumers, Proposes Penalties
(Bloomberg) -- Singapore threatened to force Grab to lower prices and revamp parts of its business, accusing the ride-hailing company of abusing its dominance after acquiring Uber Technologies Inc.’s Southeast Asian business.
Grab will have to abolish some driver restrictions, restore pre-merger pricing formulas and pay unspecified financial penalties, the Competition and Consumer Commission of Singapore said in a statement Thursday, citing complaints from riders and drivers. Uber will have to sell Lion City Rentals to any potential competitor with a reasonable offer, and not be allowed to sell the car-rental service for drivers to Grab without the agency’s approval, the agency said.
The move comes as Indonesia’s Go-Jek, a challenger in the ride-hailing and food delivery business in Southeast Asia, prepares to enter Singapore and three other markets in Southeast Asia, escalating competition with arch-rival Grab. Uber agreed to sell its Southeast Asian operations to Grab in March, getting a 27.5 percent stake in Grab as part of the deal. While the agreement was part of a broader push by Uber to get out of money-losing operations ahead of a planned initial public offering in 2019, any changes to it could potentially impact Uber’s plans.
“The current situation is classic results of a monopoly,” said Zafar Momin, associate professor at Nanyang Technological University in Singapore. “The regulator is concerned about Lion City Rentals because it’s quite big and this will really fortify Grab’s monopolistic situation and give few choices to drivers. This bodes well for Go-Jek.”
Grab responded by saying it disagreed with the watchdog’s assessment of the market, arguing that it isn’t the only player in ride-hailing and that regulators hadn’t taken into account the influx of new players.
“This provisional decision and proposed remedies are overreaching and go against Singapore’s pro-innovation and pro-business regulations,” the company said in an emailed statement. “We will take all appropriate steps to appeal against this decision.”
The Grab-Uber deal was aided by the deep pockets of SoftBank Group Corp. In January, SoftBank Vision Fund, with almost $100 billion to spend, closed a deal to take a 15 percent stake in Uber. Prior to the Grab-Uber merger, Uber sold its business in China to Didi Chuxing and negotiated a similar move in Russia.
“CCCS has provisionally found that the Transaction has removed competition between Grab and Uber, which were each other’s closest competitor,” the agency said in the statement.
Other proposed remedies include removal of exclusivity agreements with drivers and taxi fleets. The agency said it’s seeking public feedback on remedies, and may even require Uber and Grab to unwind the transaction unless “public feedback confirms remedies are sufficient.” The two ride-hailing companies have 15 working days to respond, CCCS said.
Uber’s Lion City Rentals has a fleet of about 14,000 vehicles in the city-state. ComfortDelGro Corp., Singapore’s largest taxi company, in December 2017 struck a deal to buy 51 percent of Lion City Rentals. But the transaction collapsed following Grab’s merger with Uber three months later.
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