Competition watchdog raises concerns over Grab’s proposed Trans-cab acquisition

THE Competition and Consumer Commission of Singapore (CCCS) has raised competition concerns over Grab’s proposed acquisition of Trans-cab, as it may increase barriers to expansion and entry for Grab’s competitors.

The concerns were raised based on information from both dealing parties, as well as public and industry feedback during the phase one review, said the competition watchdog on Monday (Oct 16).

CCCS emphasised that under the point-to-point transport regulatory framework, licensed ride-hailing operators are banned from imposing exclusive arrangements that prevent their driver-partners from driving for rival ride-hailing operators.

However, the proposed acquisition might give Grab an edge over its competitors, as it could affect Trans-cab drivers’ usage of other platforms. Given the importance of scale in the ride-hailing industry, Grab’s ownership of Trans-cab’s fleet could make market expansion or entry more difficult for rivals.

Under Section 54 of the Competition Act, mergers that could result in a “substantial lessening of competition” in Singapore are prohibited.

CCCS said competition concerns are usually unlikely unless the merged entity has or will have a market share of 40 per cent or more; or if the merged entity has or will have a market share of between 20 per cent and 40 per cent and the post-merger combined market share of the three largest firms is 70 per cent or more.

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After completing the phase one review, CCCS noted that the involved parties may commit to address the competition concerns. Otherwise, the watchdog will proceed to conduct a more in-depth phase two review after receiving the relevant documents, and will complete the more extensive examination within 120 business days.

CCCS also noted that it accepts commitments that “remedy, mitigate or prevent the substantial lessening of competition or any adverse effect arising from the merger situation” at any time before making a decision.

Once it recognises such commitments by the dealing parties, it will make a favourable decision.

The phase one review commenced on Aug 7, after Grab and Trans-cab submitted an application to CCCS for a decision on whether the proposed acquisition would infringe Section 54 of the Competition Act.

Both Grab and Trans-cab overlap operations in private-hire car rentals for ride-hailing services, as well as ride-hailing platform services in Singapore.

If the acquisition proceeds, it would entail about 2,200 cabs and more than 300 private-hire vehicles that Trans-Cab owns. It would also include Trans-Cab’s vehicle workshop and fuel pump operations.

In 2018, after Grab’s acquisition of Uber’s South-east Asian business and Uber’s acquisition of a 27.5 per cent stake in Grab, CCCS issued an infringement decision and imposed S$13 million in financial penalties after a six-month review.