Competition panel's interim measures raise some eyebrows

Singapore

SINGAPORE'S competition commission has announced interim measures for the Grab-Uber deal to ensure the ride-hailing market here "remains open and contestable" while it continues to investigate the acquisition which it had earlier said may have infringed the Competition Act.

The measures - announced on and effective from Friday - include freeing drivers from Grab's exclusivity requirements, stopping Grab from tapping Uber's operational data and preserving the fares and driver commissions prior to the acquisition.

The Competition and Consumer Commission of Singapore (CCCS) would not say when it will complete its investigations, but said the Uber platform will terminate on May 7. Until then, Uber users must be offered "necessary customer support to handle contractual and payment issues". Currently, Uber's app is still functional and is maintained by Grab.

Industry watchers found some of the interim measures directions (IMD) baffling.

Lee Der-Horng, director of the NUS-LTA Transport Research Centre, told The Business Times: "I personally don't understand what CCCS is trying to achieve . . .

"Uber has been very clear that it has exited South-east Asia with no more assets or staff. This means that we should no longer expect the same level of funding, operations and customer support on the Uber app as what it was before. So while CCCS has directed for the Uber app to be kept running, wouldn't riders and drivers be better off moving to alternative platforms sooner rather than later, to get better service and support?"

The May 7 cut-off for Uber's platform marks the second extension from its previous two shutdown dates of Apr 15 and Apr 8, the later of which was set by CCCS on Apr 6 to deliberate on feedback from Grab and Uber.

In its statement on Friday, CCCS said the May 7 shutdown date is to allow a smoother transition time for riders and drivers as both Grab and Uber comply with the IMD, which will help ensure the ridehailing market "remains open and contestable".

Industry watchers were also puzzled by CCCS' directive that Grab shall not take over Uber's operational data, including historical trip data. Prof Lee said: "This is akin to one buying a television set but not having access to channels. Will this benefit riders or lead to greater efficiencies in the private-hire vehicle sector? Or is this simply building a firewall to stop a fire that may not exist at all?"

Corrine Png, chief executive officer of Crucial Perspective (a self-described independent research firm focused on Asian transport equities), said that Grab should then also be made to provide trip data such as availability rates, waiting times and driver compensations to ensure that "service standards are not falling".

Also confusing to some is the IMD mandate that Grab cease its exclusivity arrangements with all taxi fleets in Singapore, provided that (a) there are no exclusivity arrangements in Singapore between any taxi fleets and any third-party ride-hailing platform other than Grab, and (b) that all taxi operators permit their respective taxi drivers to drive for any third-party ride-hailing platform for metered and fixed fare jobs. What is clear is that Grab will not be ending its exclusivity arrangements with its four taxi partners Trans-Cab, SMRT, Premier and Prime. BT has learnt this is because the second condition is not met as ComfortDelGro does not allow its drivers to accept fixed fare jobs via JustGrab, a Grab service that assigns the nearest vehicle - either a taxi or car - to riders at an upfront fixed fare.

Grab assured on Friday that it would be happy to work with ComfortDelGro. Lim Kell-Jay, head of Grab Singapore, said: "Grab notes the CCCS' objective of giving drivers choice, and are fully supportive of extending our platform to all taxi drivers, including ComfortDelGro drivers who are still constrained from picking up JustGrab jobs."

Thio Shen Yi, joint managing partner of TSMP Law Corporation, noted that Grab has been placed under some constraints in the way it can operate. "The IMD will prevent Grab from using its new-found dominance for now. The hope must be that new players enter the market and a competitive ridehailing market develops. If that happens, the need for these IMDs may be significantly reduced." The CCCS however, believes that newcomers may not enter the market because "barriers to entry are likely to be high due to strong network effects".

Grab's Mr Lim said that while Grab recognises CCCS' commitment to preserving competition, the IMD should not have the "unintended effect" of hampering competition and businesses that have "already been investing in the country over the years".

"We will work within the set constraints and continue to focus on building better products to compete ... and cultivating the local tech talent pool through our regional R&D centre in Singapore. All companies - big or small, digital or traditional - are capable of innovation in a free market."

The Land Transport Authority (LTA) said that it supports the IMD, and is in the process of reviewing the broader regulatory framework for the point-to-point transport sector.

Prof Lee said: "I can't help but think of a Chinese idiom: plugging one's ears while stealing a bell. The key considerations should be the protection of riders and drivers' rights and benefits, followed by a more efficient and cost-saving point-to-point transport sector. These key considerations can be achieved by carefully crafted regulations from LTA, rather the interim measures we have seen from CCCS.

"The CCCS intervention seems more out of obligation than actual correction."