Earlier this week, Singapore’s competition watchdog fined Grab and Uber a total of S$13 million over their merger, saying that the deal has led to a substantial erosion of competition in the ride-hailing market.
It is understandable for businesses to want to achieve growth and dominance, but the latest development has shown that they also need to consider their responsibility to consumers and in ensuring fair play.
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As part of its investigation findings, the Competition and Consumer Commission of Singapore (CCCS) found that Grab trip fares, net of rider promotions, increased by between 10 and 15 per cent after the acquisition deal.
It highlighted changes Grab made to its loyalty programme as well as a decrease in the number and frequency of driver promotions and incentives.
The CCCS also found that Grab currently holds about 80 per cent of the market share, and that the “strong network effect” makes it difficult for potential competitors to scale and expand in the market.
As such, among other things, it has ordered Grab to remove exclusivity obligations on drivers and taxi fleets, and to maintain its pre-merger pricing algorithm and driver commission rates.
While maintaining that the ride-hailing firm completed the merger within its legal rights and “did not intentionally or negligently breach competition laws”, head of Grab Singapore Lim Kell Jay has said that for drivers to have full maximum choice, “all transport players, including taxi operators, should be subjected to non-exclusivity conditions.”
However, according to the CCCS, under competition law, dominant players can have certain measures imposed on them in order to ensure the contestability of the market.
Perhaps, in time, measures such as non-exclusivity conditions should be applied equally to all players in the spirit of fair play and to prevent a repeat of this situation.
SIMPLY A MATTER OF STRATEGY?
The fact remains that the merger has had a substantial impact on commuters.
Some experts argue that what Grab has done in the Singapore market is a very natural thing for businesses to do.
https://www.channelnewsasia.com/news/commentary/grab-uber-merger-cccs-competition-consumer-watchdog-ruling-10764108