SINGAPORE: The Competition and Consumer Commission of Singapore (CCCS) has formally entered the second phase of its evaluation of the proposed acquisition of Trans-Cab by ride-hailing giant Grab, following the submission of relevant documents by both parties on 25 Jan. The regulatory body is particularly focused on potential anti-competitive practices, aiming to ensure fair market conditions.
Grab’s plan to acquire Trans-Cab, which was disclosed last year, encompasses the acquisition of approximately 2,200 cabs, over 300 private-hire vehicles, and related operations, such as workshops and fuel pump facilities. Grab expects the deal to be concluded in the fourth quarter of 2023, contingent on the approval of relevant authorities.
The CCCS, which follows a two-stage evaluation approach for merger applications, completed the first phase in October last year but said it was unable to conclusively determine that the merger would not adversely affect market competition. The first phase raised concerns regarding potential negative impacts on taxi drivers and barriers to the expansion of rival platforms.
Grab, in response to CCCS’ assessment, expressed its commitment to collaborate with the watchdog for a more in-depth evaluation if required. The company emphasized its dedication to ensuring that the merger would benefit passengers, citing potential improvements in driver productivity and taxi supply through digitization of the fleet.
CCCS gave Grab and Trans-Cab the option to address competition concerns by making commitments but said that if these concerns persisted, it would will proceed with the second phase of its probe, a more detailed assessment lasting about 120 working days compared to the 30-day first phase.
On 31 October last year, Grab submitted a commitments proposal to address these concerns but CCCS found that the proposal “did not adequately address” the competition concern surrounding the proposed acquisition.
As the CCCS initiates the Phase 2 review, Grab has the opportunity to present a revised commitments proposal, subject to CCCS’ approval.
Not the first CCCS probe involving Grab
The planned acquisition of Trans-Cab comes five years after the CCCS imposed financial penalties of S$13 million on Grab and Uber after a six-month review concluded that their merger was anti-competitive in 2018.
The 2018 CCCS probe was initiated after Grab became the largest ridesharing and food delivery platform in Singapore and the region when it merged with Uber’s Southeast Asian operations. Uber sold its Southeast Asian business to Grab in exchange for a 27.5 per cent stake in Grab.
Before this acquisition, Uber and Grab held a dominant market share, surpassing their nearest competitor, ComfortDelGro, by more than five times. The deal raised concerns about potential competition issues, prompting an investigation by the Competition and Consumer Commission of Singapore (CCCS) in 2018.
After a thorough six-month investigation, CCCS concluded that the Grab-Uber deal had indeed reduced market competition, leading to Grab securing an 80 per cent share of Singapore’s ride-hailing market, a significant increase from its previous 50 per cent share.
Although CCCS acknowledged it was too late to undo the merger, they implemented measures to mitigate the impact on commuters, drivers, and other potential competitors.
These measures included mandating Grab to remove exclusivity arrangements with taxi fleets and drivers and to maintain its pre-merger pricing algorithm and driver commission rates.
While Grab complied with the CCCS’ verdict and accepted a S$6.4 million fine, Uber contested the decision as a matter of “principle.” The company argued that it had not intentionally or negligently violated anti-competition laws, and the merger did not substantially lessen competition, especially with the entry of Gojek into the market later that year.
In 2021, an appeal board upheld the CCCS’ verdict, and Uber’s appeal against the 2018 decision was dismissed. As a result, Uber was ordered to pay a S$6.58 million penalty for breaching competition laws in Singapore during Grab’s acquisition of its business.