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The Competition and Consumer Commission of Singapore has issued interim measures to stop Grab's acquisition of Uber in the South East Asian region.

13 Apr 2018 | Local News : Singapore


The Competition and Consumer Commission of Singapore (CCCS) has issued interim measures to stall Grab's takeover of Uber operations here. In a statement issued Friday (13th April), the CCCS said the measures will remain in place until it completes its investigation into ride-hailing group Grab's acquisition of its American rival's South East Asian business.

The measures will help keep the market open and contestable, says the CCCS
The CCCS said the measures are meant 'to keep the market open and contestable'. They include requiring Grab to remove exclusivity obligations on drivers, preventing Grab from making use of Uber's operational data to enhance its market position, preserving pre-acquisition fares and driver commission.

In its statement, the commission also said drivers who rent a vehicle from Uber-owned Lion City Rentals 'are free to drive for any ride-hailing platform'. Observers said this clause has implications for taxi giant ComfortDelGro's pending deal to acquire 51 percent of the car rental firm - a deal it may not go through with now that Uber has exited the region.

The CCCS also said Grab must cease 'exclusivity arrangements with all taxi fleets in Singapore'. This implies that SMRT, TransCab, Premier and Prime - cab operators whose vehicles can be hailed by Grab apps - will have to open their fleets to other app firms, including Indonesia's Go-Jek.

The CCCS would not say when it will complete its investigations, but said the Uber platform will terminate on 7th May. Until then, Uber users must be offered 'necessary customer support to handle contractual and payment issues'.

Industry watchers are unsure how this can be enforced, as the American firm has already pulled out of the region. According to social media site Rappler, Uber Asia Pacific Chief Business Officer Brooks Entwistle said, "Our funding is gone. Our people are gone. We don't intend to come back to these markets."

Grab must cease any exclusive arrangement it has with cab operators, who will have to open their fleets to other firms such as Go-Jek
Mr. Entwistle was speaking at a hearing conducted by the Philippine Competition Commission on 5th April. Head of Grab Singapore, Lim Kell Jay, confirmed that they had agreed to extend the Uber app to 7th May 'to allow a smoother transition time for riders and drivers'.

"We trust that the CCCS' review takes into account a dynamic industry that is constantly evolving, highly competitive, and being disrupted by technology and new services," he said.

He added that the interim measures should not have the unintended effect of hampering competition and restricting businesses that have already been investing in the country over the years.

National University of Singapore transport researcher Lee Der-Horng said he does not see how the CCCS moves will benefit passengers or lead to better efficiency. "Uber has been very clear that it has exited South East Asia, with no more assets or staff," he said.

"What does this mean to consumers? I think this means that we should no longer expect the same level of funding, operations and customer support on the Uber app to be what it was before."

Prof. Lee said that even as the CCCS attempts to block Grab's assimilation of Uber, 'passengers and drivers would be better moving onto alternative platforms sooner rather than later'.

The CCCS said the interim measures would be lifted when there is 'resolution of any competition concerns' arising from Grab's acquisition of Uber's regional business. It added that this could also happen when there are 'material changes in market conditions'.

The Uber app will remain in operation until 7th May to allow for a smoother transition
A commission spokesman said the interim measures were necessary because the two companies 'are each other's closest competitors and have a significant combined market share'.

"Their close rivalry can be seen from the surge in Uber's fares following the recent outages of Grab's app," she noted. The CCCS is also of the view that newcomers may not enter the market because 'barriers to entry are likely to be high due to strong network effects'.

It explained, "The larger the number of drivers that are available on a ride-hailing platform, the larger the number of riders will be attracted to use that platform, and vice versa... This makes it difficult for a new ride-hailing platform to attract drivers."

According to the commission, Uber started transferring assets - such as historical trip data - immediately after its sale to Grab. As such, the interim measures are 'necessary to prevent further transfers', and to preserve the CCCS's ability to complete its investigations.

The CCCS said both companies' share of vehicle fleets 'is significantly above the indicative threshold of 40 percent' allowed under competition guidelines. In a statement following the CCCS', the Land Transport Authority said it 'supports' the interim measures.

An LTA spokesman said, "LTA is in the process of reviewing the broader regulatory framework for the point-to-point sector, including studying how to structure the sector and license private-hire car booking service operators."

She added the LTA was for a market, which is 'open and contestable, and no single operator dominates the market to the detriment of commuters and drivers'.
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