Grab & Uber: Should this merger even be happening?

Anthony Tan, Co-Founder and CEO of Grab

Obbana Rajah

The Competition and Consumer Commission of Singapore (CCCS) has pushed back the expiry date for the Uber app until the 7th of May, in lieu of the Grab and Uber merger.

What Could Go Wrong

The CCCS cites the following concerns they have:

-The large combined market share that Grab and Uber have, as reflected by the quick rise in Uber fares during Grab app outages.

-How the drivers have “exclusivity arrangements such that they can only drive for one ride-hailing platform”, making it hard for new ride-hailing platforms to enter the market as they might face a shortage of drivers.

-Since the process of transferring Uber’s assets of Grab, the CCCS is conducting their own investigation to prevent them infringing the Competition Act. This added time allows the CCCS to “prevent further transfers and preserve CCCS’s ability to make appropriate directions if CCCS makes a finding of infringement at the end of CCCS’s investigations to remedy, mitigate or eliminate any adverse effects of such infringement”.

Discounts That Are No Longer Sustainable

With the merger of Uber and Grab already beginning, many have seen outrageous surges in fares, extended periods of waiting time before they are able to get a ride and or just being stranded because drivers cancel at the last minute in search of longer distances at better rates.

$72 for Grab ride between Punggol and Dover shocks netizens

Where previously Grab offered numerous discounts to compete with Uber for market share, these discounts will be neither sustainable nor necessary after the merger. Furthermore, Grab will be looking to cover its costly expenses from buying over Uber’s operations in Southeast Asia.

Grab user Jasmine Pearlyn wrote to us, “I refer to the yet again deferred merger of Uber & Grab, which is only a delaying tactic that does not solve the crux of the issue.

When I tried to board a “Grab Share” yesterday at 7am from Liang Court to Geylang East Central, the fare was a whopping $26! There is no justification and transparency whatsoever, for the extreme price surge on a non-peak period”.

She added, “I hope the government will look into price speculation and manipulation of our open economy that favours the conglomerates at the expense of the blue-collared working class, whether it be at Private or State entities like the Judiciary, where litigants with deep pockets always prevail over those who cannot afford to fight rampant injustices”.

A Veiled Monopoly

Many cite the complacency of Grab, its current lack of competition and how deep its roots already are in the ride-hailing market.

Many fail to also realise the number of partners that Grab has. This ranges from their exclusivity arrangements with drivers, they partnership with other taxi companies and the rewards they offer on their app. By taking a ride with Grab, one accumulates points, which can be used to either offset fares or as discounts with companies such as Zalora.

Their partnership with local taxi companies allows them a larger database of passengers and drivers, along with passengers who are likely to stick to using the app just to use up their rewards points that no other ride-hailing app currently offers.

Why It Shouldn’t Happen

 The CCCS cites reasons as to why they have delayed the merger, but have failed to register the detriments of that is to come, should this merger continue.

Another Grab user, CS Tan wrote, “I would like to register my concerns and displeasure on governmental inability to effectively enforce legislation which prevents monopoly and dominance in our Country”.

He said, “The continued deafening silence and inaction by the government towards this post-development has been most frustrating. Hence, I hope an amicable solution will work out on this even as income inequality, displacement of blue collared workers and an inaccessible Justice system to the low income families continue to dominate headlines”.

It is imperative that this, which seems to be turning out to be a monopoly, be stopped.

In an ideal world, the acquisition should lead to greater economies of scale for Grab, consequently lowering operating costs. This should lead to cost savings being transferred to customers, translating into lower fares.

However, this merger may be anything but.


obbana@theindependent.sg

20 COMMENTS

  1. It is simply between provider and consumer. All full time Uber and Grab driver I talked to say they are losing money. Only those part time with their own car can earn some pocket money.

  2. this so call merger is going back to Comfort Monopoly era again. back stepping if you will. Grab will crawl back all market share again. We need another provider to keep the competition open. else it will be high fare, fare raise every year, before midnight no taxi, changing shift no taxi, COE sky high etc etc. When Uber came to singapore, did we still hear news about commuter can’t find rides before midnight? we should be embracing changes for the better and moving forward and not back tracking to the same old ways that doesnt work all for the name of $$$!! comfort monopoly era, they cant solve any problem with the taxi industry for ages and uber solve everything by filling up the gaps in between the imperfections in a very short time frame.

  3. Can’t afford to take.. Don’t take.. Take public transport.. If mrt and buses breakdown or can’t make it. Go find ur MPs and million dollar ministers running the first World country.

  4. As I have said before, competition as it is called in SG is fake. Telco, power supply, public transport, call cabs, medi dental care, you name it, none of them have real competition. Even our humble coffee shop coffee price is cartel controlled. Lol.

  5. be fair . when grab is giving discount giving free rides and high incentives everyone jolly well took advantage but now finally grab maybe can or get a chance to earn back losses all ” red eye ” step in .

  6. I’m curious whether Grab and Uber apprised the CCCS of their merger b4 moving ahead and concluding it.
    If they did, CCCS would have to answer for their oversight but which doesn’t mean the merger is allowed to go through as a result of such oversight.
    If they didn’t…a fine or penalty should be levied on both parties. And this delay in approving the merger is the right step.
    Consistency and fairness in applying the law should be a critical issue here. Particularly when tens of thousands will be affected.

  7. Consumers are only concerned with what they pay for a ride but forget that the people driving also have families to feed. We cannot expect Grab to keep subsidising our rides, they are a business entity, they invested in SG to make profits. If anything, the government should help subsidise part of the costs involved in providing phv services. They keep insisting that phv is not public service transport when it is clear and plain for all to see that it has not only served the public well but have improved beyond taxi services. If they really want to, they could work with Grab to allow only a certain number of tdvl holders to drive PHVs and help control the number of PHVs so that it continues to serve the public efficiently and allow drivers to have a sustainable income. A middle ground has to be found. Our government should do a lot more to cooperate with Grab rather than finding ways to penalise them. Afterall, Uber sold it’s stake willingly and not through any devious means used by Grab. The stronger competition won the day.

  8. Lol ….CCCS has yet to come in term with how much shares grab is suppose to tender to the garmen so chut pattern to keep uber app again and again …. fact is , most of the drivers have switch to grab …. uber is just an empty shell now . Riders are still booking with uber for the cheaper rate …. well happy waiting for a driver

  9. Bottomline – they are signalling that we are supposed to be supporting public transport ie mrt and buses

Comments are closed.