SINGAPORE (Sept 24): The Competition and Consumer Commission of Singapore (CCCS) has fined Uber and Grab a total of $13 million after the merger of the ride-hailing firms was judged to have led to a “substantial lessening of competition”.

Grab in March acquired Uber’s Southeast Asian business, which saw the integration of Uber’s regional ride-sharing and food delivery business into Grab’s existing multi-modal transportation and fintech platform.

In exchange, Uber took a 27.5% stake in Grab, with CEO Dara Khosrowshahi joining Grab’s board.

See: Grab confirms acquisition of Uber's Southeast Asia operations; Uber CEO Khosrowshahi to join Grab's board

According to CCCS, Grab now holds an 80% market share in Singapore’s ride-hailing market. In a statement on Monday, the watchdog says it has received numerous complaints from both riders and drivers on the increase in effective fares and commissions by Grab following the merger.

For example, CCCS says Grab announced changes to its GrabRewards Scheme in July 2018, which generally reduced the number of points earned by riders per dollar spent on Grab’s trips, and increased the number of points required for redemptions.

Effectively, CCCS says Grab’s fares have increased between 10% and 15% after the merger.

See: Singapore says Grab-Uber merger lessened competition, proposes penalties

In a bid to deter anti-competitive mergers, CCCS today slapped Uber and Grab with fines of $6.6 million and $6.4 million, respectively. CCS also imposed directions on the parties to restore market contestability.

To help to increase choices for drivers and riders, and make the market more competitive, Grab drivers will be free to use any ride-hailing platform instead of having to use Grab exclusively.

CCCS also ordered the removal of Grab’s exclusivity arrangements with any taxi fleet in Singapore so as to increase choices for drivers and riders.

Grab will also be required to maintain its pre-merger pricing algorithm and driver commission rates.

In addition, Uber will be required to sell its cars under Lion City Rentals to any potential competitor who makes a reasonable offer based on fair market value. Uber would also be barred from selling these vehicles to Grab without CCCS’s prior approval.

"Mergers that substantially lessen competition are prohibited and CCCS has taken action against the Grab-Uber merger because it removed Grab’s closest rival, to the detriment of Singapore drivers and riders. Companies can continue to innovate in this market, through means other than anti-competitive mergers,” says Toh Han Li, CCCS’s chief executive.

Grab in July said it disagreed with the Singaporean anti-monopoly watchdog’s assessment, adding that CCCS “appears to have taken a very narrow approach in defining competition.”

Grab stressed that they are not the only player in the market, and that CCCS has not taken into account the dynamic developments and intense competition going on over the past few months, from both new and incumbent taxi and ride-hailing players in Singapore.

But Lim Kell Jay, head of Grab in Singapore, added that the company is "glad" the regulator didn't require the deal be unwound.

See: Grab disagrees with competition watchdog analysis on merger

See: Grab defends position in Uber deal to Singapore's anti-monopoly watchdog