Grab grabs Uber
Uber is over.
Could even the motu propio review by the Philippine Competition Commission (PCC) on April 2 of the acquisition by Grab Holdings, Inc. and MyTaxi.PH, Inc. of the assets of Uber BV and Uber Systems, Inc. in Southeast Asia have affected the status of the survivor company, Grab, in the Philippines? No, the merger was already announced on March 26, with Uber receiving a 27.5% stake in the combined business, and Grab the continuing operator. Nor did Uber and Grab feel they had to pre-inform the PCC or any regulatory body: “the transaction is not covered by the compulsory notification requirements under Section 17 of the Philippine Competition Act or RA 10667,” the parties stressed (ABS-CBN News, April 3, 2018).
Yet the PCC reviewed the surprising offshore ( regional) Grab- Uber deal in accordance with Section 13 of local Rules on Merger Procedures. The antitrust watchdog noted that its preliminary assessment of the merger would lead to “a virtual monopoly in the ride-sharing market… there are reasonable grounds that the said acquisition may likely substantially lessen, prevent, or restrict competition… (and) will result in a substantial increase in concentration of an already highly concentrated market in an industry that provides a basic public service (Rappler, April 3, 2018).”
Grab will capture 80% of the transport network vehicle service ( TNVS) market, PCC Chair Arsenio Balisacan said (ABS-CBN News, April 3, 2018). At a Land Transportation Franchising and Regulatory Board (LTFRB) meeting last year to discuss regulation of ride-sharing/ hailing platforms, Chair Martin Delgra III was shocked, thinking Grab and Uber had only about 28,000 cars each. (Taxicabs still outnumbered ride-sharing cars 10 to one.) But Grab Philippines country head Brian Cu said then that there were 52,398 Grab cars in the country, with only 3,000 to 4000 having provisional authority from the LTFRB. Uber Philippines spokesperson Yves Gonzalez said there were 66,000 Uber cars, of which 2,500 have provisional authority from the LTFRB, while 1,000 have pending extension of this authority ( Inquirer. Aug. 2, 2017). Cu said that “if we don’t grow supply by three percent a week, then there would be passengers who would not get a ride…(since) 60% of our drivers do not see themselves as full-time drivers. Many drive for less than 10 hours a week (Ibid.).”
There is still unserved demand.
Does the Grab projected estimate of demand mean the number of TNVS units in the last six months should have now increased from 120,000 to about 200,000? We wouldn’t know, because there was no regulatory mechanism set up to monitor the compounding growth rate of these ride-shares. Anyway, it is all demand-driven, from riders who tolerate the traffic and time-related volatility, but accept the more transparent pricing of app-based Grab and Uber rides. The easy electronic access and dependable service of ride- sharing/ hailing wins heads-up versus riding taxis who cherry-pick destinations and the hassling at urgent need with taxi drivers dictating atrocious fares ( Read: “The trouble with
taxis,” Rappler, May 17, 2015).