Grab & Uber – The competition watchdog finally speaks out and proposes financial penalties on both companies

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In an announcement today, the Competition and Consumer Commission of Singapore (CCCS) has found that the merger between Grab and Uber has “led to a substantial lessening of competition”. They add that the merger also led to prices rising.

The CCCS’s Findings

In their statement, the CCCS address a few aspects of the Grab-Uber merger. In it, they say that if not for the merger with Grab, Uber was not likely to have left Singapore’s markets in the medium-term.

They also add that taxi booking services are not competition enough as they only have less than 15 per cent of market share. It is also difficult for new players to enter the market “given that Grab had imposed exclusivity obligations on taxi companies, car rental partners, and some of its drivers”.

The CCCS acknowledged the numerous complaints from both riders and drivers about the increase in price and the lack of incentives. The CCCS said, “Without sufficient competition post-Transaction, Grab would be able to raise fares for riders and commission rates for drivers, lower the quality of its services and reduce innovating its product offerings”.

The CCCS’s proposed solutions

The competition watchdog has also proposed to remove any exclusivity obligations, lock-in periods and termination fees on all Grab drivers or those who rent from Grab Rentals, Lion City Rentals or rental partners of Grab. They hope this will increase choices for drivers and riders and improve market contestability.

They also will maintain Grab’s prices and driver commission until competition enters the market.

There are also implications on Uber. The company is now required to sell Lion City Rentals to any other competitor but Grab.

What drivers think

TISG spoke to two drivers, one still driving for Grab, and another who jumped ship and currently drives for Ryde, a competitor of Grab’s.

JP, a 35-year old driver for Grab said “it’s a wake up call for Grab. Otherwise they’re likely to carry on with what they think is best for themselves. This is good for drivers and riders to benefit as well”.

Another driver, 42, who now drives for Ryde said, “its about damn time”.

He added that he hopes things change in the market and told TISG, “You know, when I was driving Grab, my daily income a day would be $180 after rental and petrol deductions. This past month I can’t even make that amount per day. That’s what the merger has done to many drivers like myself.

He continued saying, “Now I’m stuck with a car and I’m struggling to pay rent. All because Grab decided to cut off excess drivers and skimp on the incentives, so Grab knows that these drivers like myself are turning to the smaller players”.

The CCCS turned to the public and has invited feedback in an ‘Active Public Consultation”. They add that if after the consultation their proposed remedies are still found to be insufficient, that they might have to break up the merger between Uber and Grab.

A statement from Grab has yet to be released.