SINGAPORE:Regulators fined ride-hailing firms Grab Inc. and Uber Technologies Inc. and imposed operating restrictions on the former after ruling that a merger earlier this year was anticompetitive.
The Competition and Consumer Commission of Singapore said Monday it would fine Uber 6.6 million Singapore dollars (US$4.8 million) and Grab S$6.4 million. Restrictions on Grab will include a ban on exclusivity agreements with drivers.
The March deal, in which Uber exited Southeast Asia in exchange for a 27.5% stake in its local competitor Grab, earlier ran into flak from Philippine competition authorities. Last month, while approving the deal, they imposed restrictions and threatened fines for breaches.
The two companies had been competing aggressively over this region of 600 million people, offering discounts and driver incentives. The merger, which gave Grab a dominant position, brought an end to those consumer benefits.
The deal “removed Grab’s closest rival, to the detriment of Singapore drivers and riders,” sending fares up 10% to 15%, the Singapore regulator said, putting Grab’s current market share there at around 80%.
In July the regulator threatened to unwind the deal and penalize the two companies, but said it would invite feedback from them and the public before deciding.
Brooks Entwistle, chief business officer for Uber’s international operations, said he was disappointed by the decision. The company is reviewing it carefully and will consider its options, including an appeal, he said.
“We believe it is based on an inappropriately narrow definition of the market, and that it incorrectly describes the dynamic nature of the industry, among other concerns,” he added in an emailed statement.
Lim Kell Jay, head of Grab in Singapore, echoed that sentiment but added that the company is “glad” the regulator didn’t require the deal be unwound.
Uber earlier exited Russia and China in exchange for stakes in local rivals it was struggling against. The company is seeking to shore up its finances through such deals ahead of an expected 2019 initial public offering.
In Southeast Asia, Grab is facing off against Go-Jek, which operates in Vietnam as well as at home in Indonesia and it plans to enter other markets including Thailand and Singapore this year. A few new players have recently joined in the ride-hailing industry in Singapore.
“Mergers that substantially lessen competition are prohibited,” Toh Han Li, chief executive of the Singapore regulator said in a statement. “Companies can continue to innovate in this market, through means other than anticompetitive mergers.”