Singapore says Uber may have to unwind merger with Grab

Singapore says Uber may have to unwind merger with Grab

Uber may be facing fines and maybe even a broken deal in Singapore, as a consumer watchdog agency there says its merger with rival Grab earlier this year reduced competition and raised fares. It has also issued a Proposed Infringement Decision against the transaction.

The CCCS also found that both had agreed to split any anti-trust financial penalty.

It also proposed that Grab maintain its pre-transaction pricing algorithm and driver commission rates until competition is revived in the market.

This is especially so given that Grab had imposed exclusivity obligations on taxi companies, auto rental partners and some of its drivers. It had received "numerous complaints" from drivers and riders.

However, risks to DBS's assessment are the possible emergence of a three-way fight for market share in the ride-hailing space between Grab, Go-Jek and ComfortDelGro.

Grab said in a statement that it disagrees with the commission's findings, calling it a "narrow approach in defining competition".

DBS said in a research note on Friday: "Having seen a full cycle of entrants and eventual exits (since 2013 with Uber's entry) of private hailing app players, we believe that a strong escalation of competition and reversion to high incentives and discounts (where participants incur sustained losses) seem unlikely". "CCCS has not taken into account the dynamic developments and intense competition going on over the past few months, from both new and incumbent taxi and ride-hailing players", said the spokesperson.

Grab asserts that it had "proactively engaged with the CCCS" before the transaction was signed.

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Grab conducted the merger legally and complied fully with Singapore's competition laws, the spokesperson said.

CCCS has invited public feedback on the proposed remedies.

Dr Walter Theseira, transport economist at the Singapore University of Social Sciences, said that unwinding the merger was "practically impossible" because the ride-hailing business does not constitute only physical assets.

"The difficulty that small start-ups such as Ryde have had will not go away simply because exclusivity arrangements are removed from Grab drivers", he said. "The majority of drivers will still find it in their interest to take most of their bookings through the dominant player".

"As for unwinding the transaction, given that Uber has exited the market, we can't return to the original position", he said.

Furthermore, drivers now recognise that income earned through private-hire vehicle chauffeur services (before incentives) are not materially better than those generated by providing taxi services, it added.

It said it could ask Uber to sell its Lion City Rentals car-leasing unit to any potential competitor who makes a reasonable offer and prevent its sale to Grab without the authority's permission.

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