Uber and Grab have been hit with a fine from antitrust watchdogs in Singapore.
Regulators in Singapore fined Uber and Grab for antitrust violations after the latter acquired the former’s regional operations. Along with the $9.5m fine, the regulators also finalised restrictions to open up the market to competitors.
According to Reuters, the merger between the two ride-sharing companies drove up prices in Singapore at a rate of between 10pc and 15pc.
Uber sold its operations in south-east Asia to Grab in March in exchange for a 27.5pc stake in the Singapore-headquartered firm. Grab is the more popular ride-sharing service in the region.
Strict new regulations
The fine may seem small considering the companies are both at multibillion-dollar valuations, but the impact is large. The competition-boosting measures introduced by the Competition and Consumer Commission of Singapore (CCCS) shows the strongest pushback against the deal since it became final in March.
“Mergers that substantially lessen competition are prohibited and CCCS has taken action against the Grab-Uber merger because it removed Grab’s closest rival, to the detriment of Singapore drivers and riders,” CCCS chief executive Toh Han Li said.
Under the new rules, Grab drivers are not to be exclusively tied to the company. Grab must remove all exclusivity deals with any taxi fleets. Uber is also required to sell off its car rental business to any rival that makes a reasonable offer. Uber is not allowed to sell the rental vehicles to Grab without permissions from the CCCS. The car rental business had a fleet of approximately 14,000 vehicles as of December.
Grab must also maintain the algorithm and driver commission rates it used pre-merger. The regulators said this rule will protect users against massive price surges, and drivers will not have to pay excessive commissions to the firm.
The regulator said that it would suspend the measures on an interim basis if a Grab competitor could accrue more than 30pc of total journeys in the Singapore market in a month.
Uber may appeal
Uber said that it is considering appealing the decision. It says it was based on an “inappropriately narrow definition of the market”.
Grab said it did not negligently or intentionally breach competition rules. It added that it did not intentionally raise fares since the deal closed, and that all transport firms should be subjected to non-exclusivity measures, including taxi operators.
Vietnamese regulators are still reviewing the deal, while regulators have approved it in the Philippines. The latter said it is monitoring Grab’s compliance on an ongoing basis.