SINGAPORE: The Competition and Consumer Commission of Singapore (CCCS) is investigating Grab’s proposed takeover of Trans-Cab, Singapore’s third-largest taxi operator, according to Minister of State for Trade and Industry Alvin Tan.
Mr Tan told Parliament yesterday (3 Aug) that the competition watchdog is scrutinising the deal for potential anti-competitive practices and will hold a public consultation before deciding whether to approve the intended acquisition.
Grab announced its takeover plans last month 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 vehicle workshop and fuel pump operations.
However, before the acquisition can proceed, it must receive approval from the relevant authorities.
Mr Tan’s revelation on CCCS’ probe came in reply to a question by Non-Constituency MP Leong Mun Wai, who raised concerns in Parliament about potential anti-competitive practices resulting from the merger.
Mr Leong also inquired about safeguards to protect taxi drivers from other firms’ post-acquisition disadvantages. He questioned whether the competition regulator would evaluate the impact of the consolidation of the taxi industry on consumers.
Mr Tan emphasized that CCCS would evaluate the impact of the proposed acquisition on competition and consult relevant stakeholders before making a decision. As part of this process, a public consultation will be conducted to gather input from the public.
Mr Tan revealed that 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.
He added that input from third parties, including competitors and consumers, plays a vital role in CCCS’ assessment of mergers.
Ruling party MP Tan Wu Meng also expressed concerns about the acquisition’s potential effects on drivers and consumers. He sought clarification on whether the review would examine the effects on the market as a whole or at the individual level of taxi, private-hire car, or point-to-point transport sectors.
Dr Tan Wu Meng also questioned whether CCCS considers possible “tripartite outcomes,” including the impact on workers, the labour market, and the bargaining power between workers and firms.
The Minister of State said that not all mergers lead to competition issues, as many are pro-competitive or competitively neutral. Sharing that CCCS evaluates mergers based on whether they result in a significant reduction in competition, he urged MPs and the public to participate in the public consultation exercise on the proposed acquisition.
The planned acquisition of Trans-Cab comes five years after the CCCS imposed financial penalties of $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, the 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 the 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’s verdict and accepted a $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’s verdict, and Uber’s appeal against the 2018 decision was dismissed. As a result, Uber was ordered to pay a $6.58 million penalty for breaching competition laws in Singapore during Grab’s acquisition of its business.
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