Having finally agreed upon a Southeast Asia acquisition after much speculation and discussion, Grab and Uber aren’t experiencing as smooth a ride as they may have hoped.
Uber announced that it will leave its unprofitable market of Southeast Asia and will instead concede to local rival Grab, of which it will retain a 27.5% stake.
However, Tech in Asia has described the deal as in “a state of limbo” while the companies face regulatory issues. This is not the first deal of its kind, with Uber already having left unprofitable markets such as China and Russia, but at the moment Singapore’s “anti-trust watchdog” has postponed the merger until early May while it investigates the deal due to concerns of a monopoly.
The merger will still likely go ahead but new regulations may be imposed upon Grab by Singapore, which has expressed concerns that monopolisation will be detrimental of drivers and customers.
The Competition and Consumer Commission of Singapore (CCCS) is has placed Uber and Grab under regulatory measures pending the investigation. At the moment these are set to last until early May.
Tech in Asia has said: “The fact that several watchdogs in the region are now examining the deal indicate they have reasonable grounds to suspect it may be in breach of anti-competition rules.”
According to legislation, if the merged company has more than a 40% market share, or if that company and two others total 70% in market share, the deal will likely have to be stopped or changed.
This will largely depend on the definition of the “market” – is it the taxi market, public transport or a smaller market of ride-hailing?
Lim Kell Jay, head of Grab Singapore, has said: “We trust the CCCS’ review takes into account a dynamic industry that is constantly evolving, highly competitive, and being disrupted by technology and new services.”
Some measures CCCS is set to impose include preventing Grab taking operational data from Uber as well as ensuring drivers are not subjected to exclusivity obligations, as well as ensuring prices and commission levels don’t change.
According to TechCrunch, Grab has “had a hand in formulating” these directives and will remind drivers and passengers “that their migration to the Grab platform is optional”.
Grab is not only registered in Singapore, but it spans across six other Southeast Asian markets, where Uber’s app has already closed.