PCC approves Grab-Uber deal on conditions of fair competition, consumer protection

The Philippine Competition Commission (PCC) approved on Friday Grab’s acquisition of rival Uber Technologies on condition that the buyer commit to fair competition and consumer protection.

Any breach of the commitments to improve ride-hailing service and ensure that price levels are fair is subject to fines of up to P2 million per violation.

The antitrust commission suspended its motu propio review of the Grab-Uber deal after Grab submitted its proposed voluntary commitments to address the PCC’s Statement of Concerns regarding the transaction on June 1.

The PCC released an executive summary of the Statement on Concerns, saying that Grab’s quality of service declined after the transaction and citing a higher number of incidents of driver cancellations, forced cancellations, and longer waiting times.

The PCC has since cleared the deal subject to a 12-month monitoring scheme in order to ensure that concerns of “virtual monopoly” have been addressed and has delivered on its commitments.

“The PCC’s commitment decision holds Grad to a standard as if Uber were present in the market,” PCC chairman Arsenio Balisacan said in a press briefing in Quezon City on Friday.

Balisacan noted that Grab’s commitments are as follows:

• Service quality—Grab shall bring back to market averages for acceptance and cancellation rates before the transaction, and response time to rider complaints.

• Transparency—Grab will revise its trip receipt to show the fare breakdown per trip, including distance, fare surges, discounts, promo reductions, and per-minute waiting charge (if reinstated by the Land Transportation Franchising and Regulatory Board).

• Pricing—Grab shall not have prices that have an “extraordinary deviation” from the allowed minimum fares. Prices shall not exceed 22 percent before the acquisition was consummated. In the event the LTFRB allowed fare increases, the PCC shall adjust its deviation.

• Removal of “see destination” feature—Grab will remove “destination masking” for drivers with low ride acceptance rates.

• Driver/operator non-exclusivity—Grab is prohibited from having drivers and operators under exclusive contract to the company.

• Incentive monitoring—The PCC will monitor and evaluate Grab’s incentive scheme to ensure that it will not affect entry and ability to expand of potential competitors.

• Improvement plan—Grab will enhance driver performance standards; adopt a drivers’ code of conduct; establish a Grab driver academy; adopt an emergency SOS feature, help center, and passenger no-show feature; adopt a passenger code of conduct; maintain dedicated service lines; adopt a driver welfare program; and implement driver rewards program.

PCC Commissioner Stella Luz Quimbo said the commitments will be monitored on a quarterly basis by a third-party.

However, Grab may seek to be removed from its commitments if there is enough competition in the market after six months, Quimbo said.

The clearance issued by the antitrust body is “conditional,” meaning it can still be taken away and compel Grab to divest from Uber in the event that anti-competitive conditions worsen, PCC commissioner Johannes Bernabe said.

“In effect, while Grab operates as a virtual monopolist, the commitments assure the public that quality and price levels that would prevail are those that had been when they still faced competition from Uber. Moreover, the commitments ensure that the merger will not make it more difficult for new players to enter and grow,” Balisacan said.

Late in March, Uber Technologies agreed to sell its Southeast Asian business to regional rival Grab, which spurred an operational merger in the Philippines.

The PCC then ordered its Mergers and Acquisitions Office (MAO) to conduct a motu proprio review of the acquisition deal on the premise that it may lessen competition in the industry.

“Grab’s commitments signal their willingness to behave within a competitive space and in accordance with the Philippine Competition Act. Engaging in this comprehensive legal exercise is a testament how compliance contributes to a culture of competition to benefit the riding public,” Balisacan said. —VDS, GMA News