Uber appeal against CCCS decision dismissed, S$6.58m fine upheld

Uber appeal against CCCS decision dismissed, S$6.58m fine upheld

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4 -min read
Listen to this article

THE Competition Appeal Board (CAB) has dismissed Uber's appeal against the finding that the ride-hailing firm's 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 in relation to the appeal.

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. 

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$6.41 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 CAB said that 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.

In situations where the merger is irreversible, as was the case with Uber, the parties risk infringing the Competition Act. 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 (SLC) 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."

While merging parties can perform a self-assessment on whether the transaction would substantially lessen competition, they should apply to the CCCS for guidance or a decision if they are unsure or have concerns, she added.

In its Wednesday statement, the CCCS said 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 prior to engaging in any merger or agreement that may be potentially anti-competitive”. 

It added: “As the parties should be aware, where merger parties merge without first notifying and obtaining necessary clearance from CCCS, (they) run the risk of infringing the Competition Act should their merger or agreement lead to an adverse effect on competition in Singapore.”

If they choose to proceed without obtaining clearances from the CCCS despite competition concerns, the parties risk infringing Section 54 of the Competition Act. The CCCS can investigate and take enforcement action if it has "reasonable grounds to suspect that an anti-competitive merger has been completed or is anticipated".

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