SINGAPORE: The Competition and Consumer Commission of Singapore (CCCS) has raised concerns about the private-hire vehicle platform Grab’s plan to acquire Trans-Cab and said it needs to study more carefully the impact of the proposed merger on the market competition after completing the first phase of its probe into the acquisition.
Grab announced its takeover plans of Trans-Cab earlier this year and said the deal is expected to be finalized in the fourth quarter of 2023. The acquisition includes approximately 2,200 cabs, over 300 private-hire vehicles owned by Trans-Cab, and its workshop and fuel pump operations.
However, before the acquisition can proceed, it must be approved by the relevant authorities.
The competition watchdog is scrutinising the deal for potential anti-competitive practices. CCCS follows a two-stage evaluation approach for merger applications. The initial phase involves a quick assessment, typically completed in 30 working days. If this initial review is inconclusive, a more detailed second phase will follow, lasting about 120 working days.
Input from third parties, including competitors and consumers, plays a vital role in CCCS’ assessment of mergers.
CCCS announced on Monday (Oct 16) that it had completed the first phase of its assessment of the Grab merger, but it is unable to conclude that the proposed merger will not negatively impact competition in the market.
CCCS pointed out that third-party feedback the authority received showed that the market is concerned that Grab’s ownership of the Trans-Cab fleet will affect taxi drivers who currently drive for Grab’s competitors’ ride-hailing platforms and create barriers to the expansion and market entry of rival platforms.
CCCS also said that at this stage, Grab and Trans-Cab could make commitments to eliminate concerns that the proposed merger may affect market competition. Otherwise, the CCCS will launch the second phase of its probe and undertake a more in-depth assessment after receiving relevant documents submitted by Grab and Trans-Cab.
Grab issued a statement in response to the CCCS’ assessment, saying that it is a priority for the company to work closely with the watchdog to deal with matters that require more in-depth assessment.
The statement emphasized that Grab and Trans-Cab will be committed to ensuring that the merger and acquisition activities will benefit passengers. It added that digitizing the taxi fleet will improve driver productivity and taxi supply, making it easier for passengers to get a ride, which will also help increase driver income.
Grab also said it would continue to treat all driver-partners fairly.
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.
CCCS to consult public as it scrutinises Grab’s proposed takeover of Trans-Cab