CCCS reiterates rules to Grab and Gojek after Uber's S$6.58m fine is upheld


CCCS reiterates rules to Grab and Gojek after Uber's S$6.58m fine is upheld

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4 -min read
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THE Competition Appeal Board (CAB) has dismissed Uber's appeal against the finding that the ride-hailing firm's March 2018 merger with Grab was anti-competitive.

Uber will thus have to pay the S$6.58 million fine that the Competition and Consumer Commission of Singapore (CCCS) had imposed back in 2018. The US-based firm was also ordered to pay CCCS' costs for the appeal.

An Uber spokesperson told BT: "We have received the ruling and are reviewing it."

In a separate statement on Wednesday, the CCCS said that it continues to monitor any potential merger between Grab and Gojek, and reiterated that it has the power to take action against anti-competitive deals.

Should a Grab-Gojek merger breach competition law, the CCCS can issue directions and "impose financial penalties as it did in relation to the merger between Grab and Uber", the watchdog said.

Back in September 2018, the CCCS had found that Uber's sale of its South-east Asian business to Grab, in exchange for a 27.5 per cent stake in the Singapore-based firm, had led to a "substantial lessening of competition" in the city-state's ride-hailing sector.

Grab did not contest the decision and paid a S$6.42 million penalty. Uber appealed to the CAB to either set aside the decision or to reduce the penalty imposed.

However, in a decision made on Dec 29, the CAB upheld the fine on Uber, as well as directions that the CCCS had issued to Uber and Grab to lessen the impact of the merger on drivers, riders and the openness of the ride-hailing market to new players.

The board noted in its published decision: "The evidence suggested that the merger parties were aware or ought to have been aware that there were competition concerns with the transaction."

Gojek's entry into the Singapore market "has not been sufficient" to restore the substantial lessening of competition from the Uber-Grab deal, it added. Prior to the deal, Grab and Uber's combined market share was more than five times that of ComfortDelGro, the next biggest player.

It can also be inferred that Grab had "deeper pockets" to maintain competitive advantages from the merger.

Evidence from after the CCCS' decision "shows that Gojek's entry has not been sufficient in scope to provide a sufficient competitive constraint on Grab", the CAB said.

Grab's reduction in rider discounts had also intensified from end-March to end-July 2018, "suggesting that it was at least contributed to in part by the reduction of competition brought about by the transaction", the board said.

While Singapore has a voluntary notification merger regime, this does not mean that there are no risks to going ahead with a merger before notifying CCCS, it added.

In situations where the merger is irreversible, as was the case with Uber, the parties may also further risk that any commitments they offer subsequently to remedy or mitigate the situation may be rejected by the CCCS as inadequate or inappropriate.

The appeal board further held that in deciding whether to accept commitments, the CCCS can consider the need to deter businesses from engaging in anti-competitive practices and decide instead to issue directions to the merger parties, including financial penalties.

Notably, the CAB said that CCCS can do so even if the commitments offered by the parties are in fact sufficient to remedy or prevent any substantial lessening of competition arising from the merger.

CCCS chief executive Sia Aik Kor said: "The CAB's decision affirms the key findings made by CCCS in the infringement decision and reinforces the message that mergers that substantially lessen competition in Singapore are prohibited."

"Singapore's voluntary notification merger regime aims to strike a balance between safeguarding competition and being pro-business."

In its Wednesday statement, the CCCS added that it is "actively monitoring the potential merger reported in the news" of Grab and Gojek.

Media reports last year indicated that both firms were discussing a merger. On Jan 5, however, Bloomberg reported that Gojek is now exploring a merger with Indonesia's Tokopedia.

Nevertheless, the watchdog said that it has sought further information from Grab and Gojek, and highlighted "the avenue available to the parties to seek clearance from CCCS".

Both Grab and Gojek declined to comment.

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