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Competition Body Wants Grab and Uber to Continue to Operate Independently in PH Amid Review

But both ride-hailing companies don't seem inclined to agree to the proposal
By Elyssa Christine Lopez |

 

 

The Philippine Competition Commission (PCC) is proposing that Grab and Uber should continue to operate independently in the Philippines while the anti-trust body conducts a thorough review of their merger in the country.

 

The commission is tasked with preventing the formation of trusts and monopolies that could hurt consumer welfare.

 

Uber had originally announced that its app can be used in the Philippines only up to April 8, Sunday. Grab has also begun to process applications from Uber drivers too so it can eventually absorb all of them.

 

“We will impose that Uber and Grab will continue to operate after April 8, and that they will be operated independently,” said Stella Alabastro Quimbo, a member of the PCC during the public hearing on the merger deal held on April 5.

 

During the hearing, representatives of Grab and Uber did not seem inclined to heed the PCC’s proposals.

 

“In reality, the interim measures will not be necessary as concerns are not real in this case. We have prepared alternative interim measures to the PCC,” said Arlene Maneja, legal counsel for Grab Philippines.

 

For Uber, Brooks Entwistle, Southeast Asia business chief, said: “We have exited these markets so after April 8, we no longer have people and funding to operate. And the marketplace is falling away fast.”

 

Members of the PCC went on a recess at around 4 pm Thursday to discuss the interim measures they would impose on Grab and Uber in the Philippines. They came back after an hour to announce they hope to finalize the interim measures before April 9, 2018, when Uber’s app is deactivated in the Philippines.

 

"The purpose of this hearing is to hear the side of the parties in this case, Uber and Grab, as to the proposed interim measures,” said PCC Chairman Arsenio Balisacan after the two-hour hearing. “Based on the hearing, the comments that we heard, we'll further deliberate the interim measures then we will issue our [final] order". 

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On March 26, both Grab and Uber confirmed months of speculation when they announced that Grab will be acquiring Uber’s operations in eight Southeast Asian countries, including the Philippines. In exchange, Uber will acquire a 27.5-percent equity stake in Grab worth “several billion dollars.”

 

 

Related story: Grab, Uber Confirm Merger of Ride-Hailing Operations in Southeast Asia

 

 

In a meeting with PCC on April 2, Monday, Grab and Uber said neither of them nor the transaction are covered by the compulsory notification requirements under Section 17 of the Philippine Competition Act. Under PCC rules, parties to a merger agreement must notify the body, which may subsequently conduct a review, if the transaction value exceeds Php2 billion or if the value of either company exceeds Php5 billion. The two companies said their respective values or the value of the deal do not meet the thresholds set in the law.

 

On April 3, Tuesday, the anti-trust body announced it will hold a motu proprio (on its own initiative) review of the deal whether or not it meets the notification thresholds due to its potential anti-competitive effects on the local market.

 

 

Related story: Grab-Uber Deal in PH Can Be Blocked if it Hurts Consumers, Says Anti-Trust Body

 

 

“The riding public and partner drivers may be adversely affected by the transaction… [and] will result in a substantial increase in concentration of an already highly concentrated market in an industry that provides a basic public service,” the body said in PCC Resolution No. 08-2018.

 

In the Philippines, Uber had 66,000 registered drivers as of August 2017, while Grab had 52,000 in the same period. But the latest audit of the Land Transportation and Franchising Regulatory Board (LTFRB) showed there are only around 55,000 accredited Grab and Uber drivers in Metro Manila.

 

The LTFRB also fended off concerns of fare hikes in the ride-hailing space and assured Filipino commuters that prices will remain competitive. The board also said three transport network companies are set to enter the market.

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Related story: 3 New Ride-Hailing Startups Appying for Franchise, Says LTFRB

 

 

Elsewhere in the region, the two parties’ merger has also been met with concern especially with the potential monopoly of Grab in the industry.

 

On March 30, the Competition Commission of Singapore (CCS) issued interim measures directions to the two parties that would prohibit either of the companies to share confidential customer and driver data with each other, including information related to fare pricing and formulas to “preserve and/or restore competition and market conditions.”

 

A day later, Malaysia's Land Public Transport Commission and Malaysia Competition Commission (MyCC) announced they would start conducting a review of the merger to ensure the two parties are not violating local competition laws.

 

The two companies’ integration could potentially add a million drivers to Grab’s network in eight Southeast Asian countries. As of end-2017, Grab had over 2.3 million drivers in the region while Uber reportedly has about seven million drivers around the world.

 

 

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Elyssa Christine lopez is a satff writer of Entrepreneur PH. Follow her on Twitter @elyssalopz

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