The document summarizes the Competition and Consumer Commission of Singapore's (CCCS) investigation and remedies regarding Grab's acquisition of Uber's Southeast Asian business in March 2018. CCCS found the merger violated competition laws by substantially lessening competition. Remedies included directing Grab to maintain pre-merger pricing and remove exclusivity obligations on drivers. CCCS also required Uber to sell its Lion City Rentals vehicles to potential competitors. Designing effective remedies was challenging and required input from stakeholders due to the dynamic ride-hailing market.
Efficiency Effects & Design of Remedies – SINGAPORE – December 2019 OECD discussion
1. MAKING MARKETS WORK WELL
MergerControl:DesignofRemediesinDynamicMarkets
NgEeKia,AssistantChiefExecutive(Policy,Business&Economics)
CompetitionandConsumerCommissionofSingapore
2. 2
Grab-UbermergerinvestigationinSingapore
• Section 54 of the Act prohibits mergers that have resulted,
or may be expected to result, in a substantial lessening of
competition within any market in Singapore for goods or
services
• Infringement of section 54 of the Competition Act (Cap.
50B)(“Act”) in relation to the sale of Uber’s Southeast Asian
business to Grab for a 27.5% stake in Grab in return
(“Transaction”)
• The un-notified Grab-Uber merger was completed on 26
March 2018 and CCCS commenced an investigation into the
merger on 27 March 2018
3. 3
Thetransaction
• Grab acquired all of Uber’s Southeast Asian assets,
properties, privileges, claims and rights except for certain
excluded assets and liabilities
» Excludes the Lion City Rentals
• Uber began to transfer its assets (including confidential
information and data) to Grab
• Uber started to migrate its drivers and riders to Grab’s ride-
hailing platform
• Uber’s office was closed upon the announcement of the
merger, and the Uber application was due to cease within
two weeks
4. BackgroundInformation&Timeline
30 March 2018
CCCS issued Proposed
Interim Measures
Directions (“IMD”)
27 March 2018
CCCS
commenced
investigations
26 March 2018
Parties
announced the
Transaction
5 July 2018
PID Issued
13 April 2018
Issuance of
IMD
24 September 2018
ID Issued
Ongoing
appeal by
Uber
5. 5
Remedies
(1)Maintainingpre-mergerpricing
• Grab had increased its effective fares (by between 10% and
15%) and the commission rates for drivers post-merger
• CCCS directed Grab to maintain its pre-merger pricing, pricing
policies and product options (including driver commission
rates and structures) in relation to all its products in the ride-
hailing platform services market
» Protected riders’ interests against excessive price surges, and drivers’
interests against increases in commissions paid to Grab
» Grab still had flexibility to apply dynamic pricing under normal
demand and supply conditions, and determine rider promotions and
driver incentives
6. 6
Remedies
(2)Removalofexclusivitiesintheprovisionofride-hailing
platformservicesinSingapore
• Grab’s exclusivities hampered access to drivers and vehicles
necessary for potential competitors to expand
• Indirect network effects in the ride-hailing platform impeded
competition & entry
• CCCS directed Grab to remove all, and not impose any,
exclusivity obligations, lock-in periods and/or termination
fees on all drivers who use Grab’s ride-hailing platform
» Ensured that Grab drivers are free to use any ride-hailing platform
and are not required to use Grab exclusively
» Increased the choices for drivers and riders, and make the market
more competitive
7. 7
Remedies
(3)Conditionsonsaleofassets
• Lion City Rentals held key vehicle assets in the provision of
ride-hailing services in Singapore
» Third-party car rental companies were not of sufficient scale and size,
and might not have been able to offer competitive rates
• CCCS required Uber to sell the vehicles of Lion City Rentals to
any potential competitor who makes a reasonable offer
based on fair market value, and prevented Uber from selling
these vehicles to Grab without CCCS’s prior approval
» Prevented Grab and Uber from absorbing or hoarding Lion City
Rentals vehicles to inhibit the access to a vehicle fleet by a new
competitor
8. 8
Challengesindesigningremedies
• Integration of data was unlikely to be reversible and could
not be easily rectified
» This would prejudice the possibility of a sale of Uber’s data and
business to another third-party
» CCCS imposed interim directions to prevent any integration of
operational data between Grab and Uber as CCCS had yet to
complete its assessment of the importance of the data assets
• CCCS had to ascertain the commercial value and importance
of the data asset held by Uber
» CCCS had to determine whether the data could be easily collected
or replicated post-merger
• Contrary to initial views, market feedback indicated such
data could be easily collected
» Data was not a critical asset and CCCS’s directions did not cover this
aspect
(1)Dataassetsheldbymergingparties
9. 9
Challengesindesigningremedies
• Difficult to ascertain the appropriate duration of the
remedies upfront
» CCCS prescribed trigger events in respect of which remedies may be
suspended on an interim basis, or released unconditionally
• CCCS had to determine the appropriate measure and
threshold level of market shares of the trigger events, and
the duration that such market shares should be sustained
» A threshold level well below Uber’s pre-merger market share, which
was between 30 to 40%, would not be sufficient to establish that
pre-merger competition conditions have been restored and/or that
it would be appropriate to release Grab from the directions
• CCCS used Uber’s pre-merger market share of 30% as a
proxy in its directions
(2)Continuedrelevanceofbehaviouralremedies
10. 10
Challengesindesigningremedies
• CCCS had to ensure that the appointed monitoring trustee
(“MT”) has the necessary technical capabilities and
competencies to monitor Grab’s compliance with the final
directions
» In particular, CCCS had to ensure that the appointed MT has the
abilities to audit any changes to the pricing algorithm
(3)Effectivenessofmonitoringtoensurecompliance
11. 11
Conclusion
• Formulation of appropriate remedies in dynamic markets
remains challenging
• In CCCS’s experience, it is prudent to interact and receive
inputs from different stakeholders in the industry to design
an effective set of remedies that can effectively address
competition harm in dynamic markets
12. A VIBRANT ECONOMY WITH
WELL-FUNCTIONING AND INNOVATIVE MARKETS
Thankyou