Reply to ST Forum Letters on Grab-Uber Merger
Interim measures ensure ride-hailing app market remains open
The interim measures the Competition and Consumer Commission of Singapore (CCCS) issued are necessary to level the playing field for potential rivals and safeguard consumers' interest (Competition watchdog shouldn't wait till deal is done to react, by Mr Gabriel Cheng Kian Tiong, April 17; and Competition watchdog mustn't be blamed for not acting ahead of Grab-Uber merger, by Dr Sunny Goh, April 19).
The CCCS started to investigate the merger and imposed interim measures after considering Grab's and Uber's views.
In a free market, businesses are free to enter or exit a market.
Hence, the extension of the Uber app is only until May 7. This is to allow a smooth transition for riders and drivers.
Uber continues to have business interests in Singapore, even after its exit, as it holds a 27.5 per cent ownership in Grab.
These actions have created a merger situation reviewable under the Competition Act.
With its closest rival Uber gone, Grab has an incentive to raise prices and driver commission rates.
Thus, interim measures require Grab to maintain its pre-merger pricing and product options for riders and drivers, including the base fare levels, surge factor and driver commission rates.
These measures keep the market open and contestable by lowering entry barriers for new entrants.
Specifically, the removal of exclusivity obligations on drivers helps to ensure that new entrants will not start off with a major disadvantage of not being able to find drivers.
Despite its operational exit, Uber is still required to allow drivers who rent from Lion City Rentals (LCR) to drive for any ride-hailing platform. This also applies to any subsequent acquirers of LCR.
Further, CCCS notes that ComfortDelGro is free from any restrictions on partnering with a third party ride-hailing platform.
Grab is also disallowed from taking over Uber's operational data - for example, historical trip data - to prevent Grab from using the information to enhance its market position.
This requirement also enables the CCCS to make Grab divest some of Uber's assets it has acquired to another firm, if the commission finds the merger has infringed the Competition Act.
On top of these, the Land Transport Authority is also looking at implementing measures to keep the industry open and contestable.
Herbert Fung
Director (Business and Economics)
Competition and Consumer Commission of Singapore
Yik Jiawei
Director, Public Transport Promotion and Services
Land Transport Authority