The Competition and Consumer Commission of Singapore (CCCS) claims that the acquisition of taxi operator Trans-cab by Grab would significantly weaken its rivals. After conducting an in-depth review of the proposed takeover, Singapore’s competition watchdog CCCS stated that this move could lead to higher prices for drivers and passengers and reduce choices for ride-hailing services.
In a press release, CCCS said that Grab recognised potential savings on driver incentives through the acquisition compared to other methods of increasing driver supply. In its provisional decision, CCCS found that the acquisition would likely result in a “substantial lessening of competition” in the ride-hailing market, violating Singapore’s competition laws against anti-competitive mergers.
Grab and Trans-cab have 10 working days to respond to these concerns before CCCS decides on the deal’s fate. The acquisition, announced last July, includes Trans-cab’s taxi and car rental business, maintenance workshop, and fuel pump operations. Grab plans to acquire 100% of Trans-cab’s shares through its private-hire car rental arm, Grab Rentals.
CCCS warned that the acquisition could strengthen Grab’s already dominant market position, disadvantaging drivers and passengers. The watchdog said that the acquisition by Grab comes at a time when rival platofrms are facing a shortage of drivers. “The proposed acquisition will significantly weaken Grab’s rival ride-hail platforms by depriving them of an important source of drivers (i.e. Trans-cab drivers),” it noted.
CCCS added that data shows drivers who rent from ride-hail platform-owned fleets are less likely to use a platform that is different from the one they have rented their vehicle from.
“The proposed acquisition is thus expected to result in a greater degree of ‘stickiness’ of Trans-cab drivers to Grab’s ride-hail platform and a potential reduction in usage of rival ride-hail platforms,” said CCCS in the press release. Adding, “Consequently, rival ride-hail platforms’ access to Trans-cab drivers post-merger is likely to be significantly restricted.”
A merger is likely to affect the ability of rival platforms to fulfill trip requests, making them less attractive to drivers and passengers, thus weakening their ability to scale up. “This will weaken competitive constraints exerted by rival ride-hail platforms on Grab,” said CCCS.
Grab Singapore’s managing director Yee Wee Tang said, “This ruling does not change our determination to do everything that we can to offer affordable, reliable transport options to passengers in Singapore. Consumers will still be able to access both private hire and taxis from multiple taxi companies via the Grab app.”