Competition body restores choice to ridehailing market after Grab-Uber deal

THERE may be questions about whether enough was done to level the ride-hailing playing field, but one thing that the Competition and Consumer Commission of Singapore (CCCS) got right in the Grab-Uber merger was to put in place incentives to restore market choice.

The CCCS rightly found that the Grab-Uber deal, which led Uber to exit Singapore, created a dominant player in Grab. Grab has complained that the Commission's determination of its 80 per cent market share did not include taxi operators, but the exclusion is reasonable because the market that is directly affected by the merger is in private-hire ridehailing. That is where remedies are needed.

There is also little surprise that the Commission allowed the merger to remain in place. It would have made no sense to force Uber to come back to Singapore to compete, and so the best way forward is to impose measures that limit Grab's ability to unfairly stack the market in its favour.

Two key directions are that Grab must cease exclusivity restrictions on drivers and taxi fleets; and that the restrictions on Grab may be suspended if another open-platform competitor attains at least a 30 per cent market share.

Without the benefit of exclusivity, Grab will find it difficult to lock up drivers and taxi operators to squeeze out newcomers. The rule has also created a major player in the market operating on a non-exclusive basis, which will put pressure on others to open their platforms. When the biggest player in the market does not operate on exclusivity, other players trying to impose exclusivity will find themselves having to pay a premium.

The 30 per cent trigger to suspend the directions on Grab is also sound. It does not stop Grab from trying to improve its services and raising its market share. At the same time, it makes sense to unshackle Grab if another player gets big enough because it leaves intact the incentive for new players to grow their market share while giving Grab the chance to resume "fair treatment". If instead the rule tried to level the playing field by imposing an exclusivity ban on any player that got big enough, then newcomers would deliberately try to avoid growing too big. That path has fortunately been averted.

The directions laudably create incentives that should encourage more choices for drivers and taxi operators, and by extension, more choices for customers.

Whether another player will take advantage of the rules to give Grab a run for its money is another question. The Grab-Uber merger was an inevitable consolidation in a market that was distorted by a business model built on acquiring market share at all costs and enabled by generous venture funding. Those economics may make it difficult for a newcomer to achieve the same success without also having deep pockets.

But Singapore's taxi operators, who already have drivers and vehicles, also have a second opportunity to step up after losing the first round to their industry's disruptors. Grab may be a dominant market player whose influence may need curtailing, but the company did not get there by accident. An agile business, a keen eye for market opportunities, effective use of technology and the means and willingness to invest in growth helped Grab to leapfrog the incumbents. The CCCS can get everyone to the same starting line, but someone still has to run the race.