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Competition watchdog approves Grab-Uber deal

BusinessWorld logo BusinessWorld 10/8/2018
a close up of a computer: Honor among hoodlums? Honor among hoodlums?

THE PHILIPPINE COMPETITION COMMISSION (PCC) has cleared Grab Philippines’ (MyTaxi.PH Inc.) acquisition of the local business of Uber and Uber Systems, Inc., but will monitor for a year the former’s compliance with quality and pricing standards it had committed to.

“These conditions for clearance were part of the voluntary commitments signed by Grab on Thursday to address the competition concerns raised… last May 22 by PCC’s Mergers and Acquistions Office,” the watchdog said in a press statement on Friday, adding that “any breach of the conditions will subject Grab to fines of up to P2 million per breach or unwinding of the transaction”.

“Violations or arrangements intended to circumvent the application of the commitment… may likewise result in appropriate penalties.”

“To ensure that the quality of service and pricing of Grab is not unreasonably different before and after it acquired its competitor, Uber”, the PCC issued a “Commitment Decision” outlining Grab’s commitment on:

• service quality (Grab commits to bring back market averages for acceptance and cancellation rates before acquiring Uber’s Southeast Asian business and response time to rider complaints);

• fare transparency (showing fare breakdown per trip including distance, fare surges, discounts, promo reductions and per-minute waiting charge;

• pricing (Grab will be penalized an equivalent of five percent of commissions, or up to P2 million, in routes with extraordinary deviation from minimum allowed fares “that do not have sufficient justification”);

• removal of “see destination” feature especially for drivers with low ride acceptance rate;

• driver/operator non-exclusivity (Grab will not introduce policy that will prevent drivers and operators from operating with other transport network companies);

• monitoring of incentives that may curb entry of competitors or their ability to expand;

• and improvement plan, particularly to enhance driver performance; adopt drivers’ and passengers’ codes of conduct; establish a Grab driver academy, welfare and rewards programs; adopt an emergency SIS feature, health center and passenger no-show feature; and maintain dedicated service lines.

PCC Commissioner Amabelle C. Asuncion said in a press conference on Friday that monitoring will be conducted by a third party that will be chosen by the end of the month.

“The PCC’s Commitment Decision holds Grab to a standard as if Uber were present in the market,” PCC Chairman Arsenio M. Balisacan said in the same briefing.

“In effect, while Grab operates as a virtual monopolist, the commitments assure the public that quality and price levels would prevail are those that had been when they still faced competition from Uber,” he added.

“Moreover, the commitments ensure that the merger will not make it more difficult for new players to enter and grow.

In a separate press briefing on Friday afternoon, Grab Country Head Brian P. Cu said his group welcomed the contract and pledged to adhere to the commitments.

Mr. Cu said the company now has 33,000 drivers servicing demand of 600,000 bookings a day, half the 65,000 vehicle cap set by the Land Transportation Franchising and Regulatory Board which he said was needed to improve service quality. — A. G. A. Mogato with D. A. Valdez

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