Grab, Uber fined $13 million for breaking competition laws

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Deal flouted competition laws, says watchdog that seeks to level playing field

The merger between ride-hailing firms Grab and Uber will not be unwound, but they were fined a combined $13 million yesterday by Singapore's competition watchdog.

Grab was fined about $6.4 million and Uber about $6.58 million by the Competition and Consumer Commission of Singapore (CCCS), which also spelt out measures to cushion the merger's impact on commuters, drivers and potential rivals.

The CCCS ruled that the deal had reduced market competition and resulted in Grab getting an 80 per cent share of the Republic's ride-hailing market, up from 50 per cent previously.

"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," said its chief executive Toh Han Li.

Uber announced in March that it was exiting South-east Asia and that its business would be acquired by Grab, with the US firm getting a 27.5 per cent stake in Grab and a seat on the Singapore-based firm's board.

Since the merger, CCCS noted, effective fares had risen 10 per cent to 15 per cent while driver commissions had shrunk.

While it was too late to un-wind the deal, CCCS set out dir-ections to ease the impact on riders and drivers and to level the playing field.

Grab must remove existing exclusivity arrangements with taxi fleets and drivers and maintain pre-merger pricing algorithm and commission rates.

Uber must sell vehicles from its car rental arm Lion City Rentals - which was not included in the deal - to any potential competitor with a "reasonable offer". It will need CCCS' approval to sell to Grab.

These measures could be suspended if a competitor gets a 30 per cent share of the market for a month. Uber and Grab will have their penalties lifted if this competitor maintains the share for six straight months, CCCS said.

Noting existing players each held less than 5 per cent of the market, Mr Toh said: "We don't rule out joint ventures between the parties so that they can operate more like a single entity."

Uber and Grab have up to a month to appeal against the decision, he said.

Grab Singapore head Lim Kell Jay said it was glad the deal was not unwound but insisted it was legal and Grab did not "intentionally or negligently" breach laws. Uber chief international business officer Brooks Entwistle said it was "disappointed".

The Land Transport Authority said it supports the CCCS decision.