PCC flags competition concerns on Grab-Uber deal

The Philippine Competition Commission (PCC) has raised concerns on price increases and service deterioration in the market caused by Grab’s takeover of its main rival Uber in its ongoing review of the deal.

In a statement of concern (SOC) published yesterday, PCC’s Mergers and Acquisitions Office found that the acquisition by Grab Holdings Inc. and MyTaxi.PH Inc. of Uber B.V. and Uber Systems Inc. last March 25 resulted in a “substantial lessening of competition” in the ride-hailing market in the Philippines.

The issuance of the SOC is part of the motu proprio review launched last April 3 by the anti-trust authority to scrutinize the merger.

PCC said Grab and Uber are being given time to file their comment on the SOC, with the review culminating in either the approval or blocking of the deal.

In its SOC, the PCC said it found compelling grounds to take Grab to task for its virtual monopoly of both the driver and customer base after the merger.

“With the migration of Uber drivers to Grab, Grab now holds 93 percent of TNVS (transport network vehicle service) registered vehicles. It also absorbed most of the customer demand previously served by Uber,” the PCC said.

Likewise, data from the PCC commissioned surveys indicated that ride-hailing passengers are a “captive market” as more than a majority of them are not likely to shift to other modes of public transportation, but would continue to choose TNVS even when faced with price increase.

“Despite the increase in Grab’s supply of drivers, however, price monitoring data before and after Uber’s app shutdown on April 16, show an upward trend in Grab fares and frequency of surge-pricing after the shutdown,” the SOC stated.

“Passenger surveys and interviews likewise indicate more driver cancellations, forced cancellation of rides, and longer waiting times. PCC-MAO finds that these harms to passengers are a result of the loss of competition previously posed by Uber on Grab,” it added.

Aside from loss of competition, the possibility of other TNCs entering the market to provide competition to Grab was also assessed by the PCC.

The PCC found that such entry of competitors would not be “timely, likely, and sufficient” because it would take a significant amount of time and cost to build a driver and rider base sufficient to contest the incumbent.

The commission said it took note that the business model of TNCs relies on being able to match successfully the supply of drivers with the demand of riders.

“With no constraint from a potential entrant, the ability and incentive of Grab to exercise its market power to the detriment of ride-hailing passengers is even stronger,” it said.

The PCC said commitments and remedies to address the identified anticompetitive concerns may be considered as covered by the Philippine Competition Act.