GIVEN that the merger between tech companies Uber and Grab have potential “far-reaching impact” on the market that will significantly dampen competition, the antitrust body said it is determined to put the deal under review.
Philippine Competition Commission (PCC) Chairman Arsenio M. Balisacan said the deal could give Grab a “virtual monopoly” should it push through.
“The Grab-Uber acquisition is likely to have a far-reaching impact on the riding public and the transportation services,” he said.
To recall, Grab’s founders announced in Singapore last week that they are acquiring Uber’s Southeast Asia units, namely: the Philippines, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand and Vietnam.
Under the deal, Grab is taking all of Uber’s shares in Southeast Asia with Uber receiving a 27.5-percent stake in Grab, which is reflective of the companies’ respective
market shares.
“The PCC is looking at the deal closely with the end view of potentially reviewing it for competition concerns, as a notified transaction, or by opening a motu proprio case,” Balisacan said.
This means that the antitrust body may launch a probe even without an official notification from the parties involved in the deal.
“A merger or acquisition review using competition lens will determine whether the merger of two players in the ride-sharing market will substantially lessen competition,” Balisacan explained.
The competition watchdog is mandated to protect competition in the market and prohibit anticompetitive conduct, including mergers and acquisitions of businesses and companies that may substantially prevent, restrict or lessen competition.
Among those that will be determined by the antitrust agency are the post-acquisition effects to the market, including price increases, service levels, options and fair entry of new competitors.
“The PCC recognizes that the exit of Uber in the Philippines will put its rival Grab in virtual monopoly in the ride-sharing market until the new players come into operation,” Balisacan said.
Consumers earlier voiced out fears on increased prices, lack of options and a potential worsening of the service.
Grab Philippines Country Manager Brian Cu has since allayed fears on the said issues, saying that services will continue to improve and that fares will remain at the levels set by the Land Transportation Franchising and Regulatory Board (LTFRB).
The PCC met with the representatives of the parties on Monday to determine if the transaction will meet the merger-notification thresholds, and thereby verify if the Grab-Uber transaction is notifiable.
“The consultation is taken as a sign of the parties’ willingness to comply with the provisions of the Philippine Competition Act, including ensuring real competition among ride-hailing options and promoting the welfare of the riding public,” Balisacan said.
If the transaction is notifiable, Grab and Uber are not allowed to consummate the deal without the PCC’s approval.
If the transaction does not meet the threshold and is not notifiable, the parties are not so precluded. However, Grab and Uber are urged to allow a voluntary review to take its course before consummating to minimize the need to unscramble the deal if found to have anticompetition concerns, Balisacan added.
The new threshold for transactions that require notification is now set at P2 billion for size of transaction and P5 billion for size of party. Notification to the competition watchdog should be made within 30 days after signing of the definitive agreement.
“Should anticompetitive concerns arise out of the transaction review, the parties may propose commitments to remedy, mitigate or present the negative effects to competition in the market after the acquisition,” Balisacan noted.
The BusinessMirror attempted to book for an Uber ride in Manila on Monday night, but miserably failed due to the lack of drivers on the road.
Grab has been aggressive in taking in the drivers of Uber in its system, deploying a mobile office in Libis last week. The driver center will be available until April 7.
Uber is expected to exit the Philippines on April 8.
LTFRB Board Member Aileen B. Lizada has said that there are at least five companies eyeing to launch transport network company services in the Philippines, namely: Lag Go, Owto, Hype, Hirna and Micab.