Reply to TODAY Forum Letter on GRAB-UBER Proposed Infringement Decision

CCCS’s proposed directions keep market open and competitive for new entrants

We refer to the letter “CCCS’ proposed measures may be counter-productive” on July 18.

The Competition and Consumer Commission of Singapore (CCCS) enforces the Competition Act to keep markets open and contestable, so that firms can enter and compete freely in Singapore.

CCCS has provisionally found that the Grab-Uber merger has breached the Competition Act, by causing substantial harm to competition in the ride-hailing market.

The letter writer said that CCCS’ proposed measures will not work because Uber has left South-east Asia. This is incorrect.

Uber remains in the market through its 27.5 per cent stake in Grab. The writer may also be interested to know that CCCS’ investigations revealed that Grab and Uber had even reached an agreement to apportion any eventual anti-trust penalties among themselves. Hence, both Grab and Uber envisaged the possibility that they may be subject to fines under the Competition Act.

CCCS’ proposed measures will not, as the writer fears, discourage foreign investment in Singapore, or discourage innovative companies from succeeding. In fact, media reports have stated that potential competitors view CCCS’ decision as being a step in the right direction to ensure that market remains contestable, and playing a significant role in determining their entry strategy.

CCCS’ proposed interventions are directed only at actions by Grab affecting the ride-hailing market. They do not affect its other businesses such as payment systems or food delivery.

Innovative companies that achieve a dominant market position are already rewarded through increased revenues and profitability. It would be wrong to dilute the application of the Competition Act in the belief that this rewards innovation.

Doing so will merely entrench the newly dominant player and create obstacles for other innovators to succeed. It will be a disservice to Singapore and the Singapore consumer.

CCCS will make its final decision after careful consideration of the involved parties’ representations, feedback on the proposed remedies as well as all available information and evidence.

Herbert Fung
Director (Business and Economics)
Competition and Consumer Commission of Singapore

Published 25 JULY, 2018, UPDATED 26 JULY, 2018