PCC orders Grab to refund riders for overcharges

The Philippine Competition Commission (PCC) has ordered Grab to refund ₱5.05 million in overcharges to riders out of the ₱23.45 million in total fines imposed on the public hailing transport network company (TNC) for breaches in its pricing commitments.

Grab has 60 days or by January next year to refund riders via the individual GrabPay accounts of Grab riders. The refund can be used to pay for future Grab rides.

PCC Chairman Arsenio M. Balisacan said the refund order was issued on November 12, 2019 following the effectivity last November 1, 2019 the agreement between the anti-trust agency and Grab to extend the initial undertaking for another year for service quality and price-related commitments and four years for the non-exclusivity commitment.

To break down the ₱23.45million total penalty includes a fine of ₱11.3 million imposed for the first quarter, ₱7.1 million for the 2nd quarter, and ₱5.05 million for the 3rd quarter of its initial undertaking.

To kick off the refund system, both parties agreed that the disgorgement mechanism shall be applied on the 3rd quarter fine, with Grab being ordered to refund ₱5.05 million to affected riders for the exorbitant fares.

PCC Commissioner Amabelle Asuncion explained that the ₱5.05-million refund would cover every breach of the 22.5 percentage points allowable average cap during the third quarter review. As a general rule, Grab has to refund consumers of excess charges for each comparable trip for each rider before the acquisition of Uber by Grab and post-acquisition fare rates.

The disgorgement mechanism is a major amendment to the initial undertaking. It also ensures transparency so that consumers know how Grab arrived at computing their fares. The system-wide average fare cap is in place to limit Grab’s ability to unreasonably increase fares beyond pre-transaction levels.

PCC has also made the penalties stricter by imposing up to ₱2 million in fines per breach. This is on top of the refund to consumers should they breach the 22.5 percentage cap in fares vs the comparable period before the merger.

“The PCC stands to guard against any breach of the Extended Undertaking through an appointed impartial third-party trustee to independently monitor Grab on its commitments,” said Balisacan.

The PCC defended its way of disciplining Grab noting that without the extension of the initial undertaking, they would have no way to monitor Grab.

“I would rather see this as a positive. The fact that we are able to monitor and able to impose fines for deviations show that the undertaking was effective,” said PCC Commissioner Johannes R. Bernabe. But he also said that what is deemed ineffective is the fact that there has been no new viable TNC competitors to have come to the market yet. This justified, he said, the need for both parties to agree to extend the initial one-year undertaking.