Competition watchdog consults on Grab’s proposed Trans-cab acquisition

THE Competition and Consumer Commission of Singapore (CCCS) has invited public feedback on Grab’s proposed acquisition of Trans-cab through its subsidiary, Grab Rentals.

On Monday (Aug 14), CCCS said it accepted an Aug 7 application by Grab and Trans-cab. The public consultation will close at 5 pm on Aug 25.

The competition watchdog is seeking views on the impact of the acquisition on the price, quality, quantity, and other attributes of services in Singapore. This would include the rental of taxis and private-hire cars; the provision of street-hail and ride-hail by taxi and private-hire car drivers; as well as ride-hail platform services provided to drivers and passengers.

Nasdaq-listed Grab and private taxi operator Trans-cab each operate a fleet of private-hire cars for rental to drivers to provide ride-hailing services.

While the two parties submitted that they overlap in terms of rental and platform markets, they believe the takeover deal would not result in a substantial decrease in competition due to “minimal overlaps” and a lack of prohibitive barriers to entry.

The rental market is highly fragmented and competitive with strong competitors that drivers are well-informed of and can easily switch to, said Grab and Trans-cab in their application to CCCS.

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Both parties also believe Grab will continue to be constrained by the strong competition posed by other technology companies and taxi operators in the rental market.

According to Grab and Trans-cab, “passengers are well-informed and use more than one ride-hail platform service, while drivers exhibit a high level of price sensitivity and are inclined to switch to rival operators when presented with more favourable fee structures, rates, or incentives”. 

They suggested that given how Trans-cab’s workshop only serves its own fleet of taxis and private-hire cars, third party workshops would still be able to service other rental fleets in Singapore in the event that Grab Rentals fully relies on Trans-cab’s workshop after the acquisition is completed.

Another point is that drivers remain free to use any other ride-hailing services in the platform market other than Grab’s.

The merger is therefore not expected to result in a significant increase in drivers on the Grab mobile platform, said Grab and Trans-cab in their CCCS application.

News of the acquisition first emerged in late July this year with the deal purported by The Straits Times to be at around S$100 million.

Minister of State for Trade and Industry Alvin Tan on Aug 3 told Parliament that CCCS was looking into the deal, which would include Grab’s acquisition of about 2,200 cabs and more than 300 private-hire vehicles that Trans-Cab owns.