Grab & Uber: Should this merger even be happening?

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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