THE spirit of the Singapore competition watchdog's finding - that Grab's taking over of Uber's South-east Asia business threatens competition - could hurt innovation and "limit investor interest in Singapore, GGV Capital has said.
The venture capital firm, an early investor in the ride-hailing platform, said mergers and acquisitions do not necessarily spell an end to competition.
Speaking to The Business Times, GGV's managing director Foo Jixun said the decision by Competition and Consumer Commission of Singapore (CCCS) "forces unnatural competition in the sector": "If CCCS wants to promote innovation, it will have to allow market forces to decide. If a merger happens in the market, it's only because there is a right price-performance consideration."
The comments by the California-based firm follow the CCCS' proposed measures this month to address a potential monopoly in the ride-hailing sector caused by Grab's buyout of Uber's South-east Asian business.
Mr Foo pointed out that in China, for instance, ride-hailing giants Didi Dache, Kuaidi Dache and Uber China have consolidated, as have travel apps Ctrip and Qunar, but the "landscape for innovation continues and competition doesn't stop".
"If CCCS stands by its anti-competitive ruling, the message sent to the market is that Singapore is not a market forces-driven environment, but one where regulations could come into play and force unnatural behaviour, or stop things from happening. This will limit investor interest in investing in Singapore and the region."
On Friday, Grab said it has submitted a written response to the CCCS to explain why it disagrees with the authority's finding that the Grab-Uber deal has crimped competition, and why some of the CCCS' proposed measures are "unwarranted".
Among Grab's arguments is that CCCS' definition of the ride-hailing market is overly narrow: "Contrary to CCCS' market definition, Grab operates in a market that is much broader than chauffeured point-to-point transport platform services and taxi-booking services."
A relevant "market" under competition law comprises all products and services which consumers consider as substitutes, in response to a slight price adjustment in one product or service. Grab argued that it thus views on-demand private-hire cars, on-demand taxis, street-hail taxis and even public transport as its competition.
CCCS had said in its statement that taxi-booking services pose an "insufficient competitive constraint" to Grab and Uber; in addition to that, barriers to entry and expansion in the ride-hailing sector are high due to "strong network effects" that are perpetuated by Grab imposing exclusivity obligations on taxi and car rental partners.
The competition watchdog added: "Without any intervention from CCCS, it could continue to hamper the ability of potential competitors to access drivers and vehicles."
Responding, Grab said CCCS' one-sided imposition of exclusivity conditions "goes against the spirit" of increasing choices for drivers and riders. It noted that CCCS had proposed that the ride-hailing app remove all exclusivity arrangements with drivers, taxi operators and rental fleet partners to "increase choices for drivers and rides" - but yet let other players maintain or form such exclusivity arrangements.
"Drivers should be free to drive for any platform, and that maximum choice for drivers can be achieved only if exclusivity standards are lifted and prevented industry-wide," Grab said.
It said that before the CCCS' proposed ruling, it had voluntarily proposed to lift its exclusivity arrangements - if these are applied evenly across the industry.
"Current market realities unfortunately do not reflect this. For instance, taxi operators are still able to restrict their drivers' ability to receive fixed-fare jobs on other platforms." ComfortDelGro, for instance, bars its taxi drivers from picking up jobs through JustGrab, Grab's primary ride-hailing service through which riders book a private-hire car or taxi at a fixed fare.
In other arguments, Grab said it has kept its fares and driver commissions unchanged after the Grab-Uber deal.
However, it added that it trusts CCCS to take measures to ensure a level-playing field "without unduly favouring or disadvantaging any particular player".
Grab Singapore head Lim Kell-Jay on Friday said Grab does not agree with some of the measures proposed by CCCS, but is committed to working with it to "improve upon its proposed remedies to ensure a vibrant and dynamic transport sector".
Since the Grab-Uber deal in March, new players that have already entered the arena or are about to do so include India's Jugnoo, Singapore's Ryde, Indonesia's Go-Jek and the blockchain-based TADA.