SINGAPORE: Private-ride hailing platform Grab has revealed its acquisition of Trans-Cab, the third largest taxi company in the country, expanding its operations even further in Singapore.
This consolidation represents a significant development in the point-to-point transport sector and marks the second major merger in the local taxi industry this year, following SMRT Taxis’ merger with Premier Taxi in April.
In a joint statement issued on Thursday (20 July), Grab and Trans-Cab confirmed the signing of an acquisition agreement, with expectations of completing the process in the fourth quarter of this year.
The companies said that one of the key driving forces behind the acquisition is to address the challenges posed by the Covid-19 pandemic. Since the pandemic’s onset, there has been a shortage of private-hire drivers, leading to an imbalance in supply and demand that has resulted in soaring fares.
Grab said it aims to alleviate this issue by incorporating Trans-Cab’s fleet, effectively increasing the pool of drivers available on its platform.
Grab also emphasised the potential for enhanced efficiency in the matching process between passengers and taxi drivers through its technology. This move is said to make the process faster and more reliable, ultimately benefiting both drivers and passengers.
The ride-hailing giant also revealed plans to introduce an improved version of its private-hire driver app, which will be integrated with Trans-Cab’s mobile display unit. This integration will enable drivers to carry out transactions seamlessly through a unified platform, streamlining the overall experience for both drivers and passengers.
Yeo Wan Ling, a ruling party MP and adviser to the National Taxi Association, welcomed the acquisition on Facebook and said that Grab’s technology will empower taxi drivers to offer their services through a wider range of ride options.
Ms Yeo assured that the National Taxi Association will actively collaborate with Grab and Trans-Cab’s management during the transition period to address drivers’ concerns effectively, provide clarity on existing contracts for drivers and ensure a smooth onboarding process onto the ride-hailing platform.
The politician added that the acquisition will have a positive impact on Trans-Cab drivers, as they will have access to a broader customer base and benefit from technological advancements in the industry.
Grab became the largest ridesharing and food delivery platform in Singapore and the region in 2018 after 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, both Uber and Grab collectively 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 that 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 the acquisition of its business by Grab.
The acquisition of Trans-Cab by Grab has the potential to raise concerns about further monopolisation in the point-to-point transport sector.
With the consolidation of another significant player in the industry, Grab’s position in the market will undoubtedly strengthen. This could result in a larger market share for Grab, potentially leading to reduced competition and fewer alternatives for customers seeking ride-hailing services.
When a single company gains a dominant market position, it may have the ability to exert greater control over pricing and service terms, which could disadvantage customers. With fewer competitors to keep prices in check and drive innovation, there may be a risk of increased fares and reduced quality of service over time.
Moreover, customers may face limited choices as they might be compelled to use Grab’s services due to the reduced presence of other competitors. This lack of competition may reduce incentives for Grab to offer competitive prices and provide top-notch services, potentially leading to a decline in customer satisfaction.
To address these concerns and maintain a healthy level of competition in the point-to-point transport sector, regulatory bodies and authorities need to closely monitor the effects of this acquisition. They may implement measures to promote fair competition and protect consumers’ interests.
It’s important to note that the success of the acquisition will largely depend on how Grab manages the integration of Trans-Cab into its operations.
If Grab actively works to enhance customer experiences, provides a level playing field for other ride-hailing companies, and continues to innovate, it could benefit both customers and drivers.
Ultimately, the impact on customers will be determined by how Grab leverages its increased resources and capabilities from the acquisition to provide efficient, reliable, and affordable services.
As with any major corporate consolidation, transparency and accountability in the post-acquisition phase will be essential to ensure that customers are not negatively affected by potential monopolistic practices.