PCC gives Grab another 71 days to meet commitments in Uber deal

The Philippine Competition Commission is extending the effectivity period of voluntary commitments Grab Philippines vowed to meet for the Uber acquisition to get conditional clearance from the antitrust watchdog.

It is extending Grab’s voluntary commitments for 71 days to give way to negotiations for a new or amended set of commitments to address lingering competition concerns arising from the acquisition.

Originally, Grab has been given until August 11 to meet its voluntary commitments. Now it has until October 20.

A year after it conditionally approved Grab’s acquisition of Uber on August 10, 2018, the antitrust watchdog said it still finds that “the dominance of the merged firms remains unchallenged and competition has not improved in the ride-hailing market.”

“We are discussing with the PCC as to how to proceed moving forward,” Miguel Aguila, Grab Philippines legal counsel, told reporters in a Viber message.

Grab’s voluntary commitments may now be the basis of new or amended commitments, but possibly with adjusted metrics to keep the transport network company in check for price surges, driver discrimination through booking cancellations, and service quality.

The term of the new or amended commitments will also be the subject of negotiations, the antitrust watchdog said.

“The task ahead for PCC and Grab is to ink a renewed set of commitments that is fair and reasonable and that protects consumers from Grab’s currently unchallenged dominance in the market. We also hope to raise the level of competitive intensity in the market and bring about market conditions conducive to new entrants,” PCC Chairman Arsenio Balisacan said.

Grab’s voluntary commitments covers the following areas:

• Service Quality
• Fare Transparency
• Pricing
• Driver/Operator Non-Exclusivity Commitment
• Incentives Monitoring
• Improvements Plan

The current commitments remain valid during the extension period while negotiations for new or amended commitments are underway, according to the PCC.

If PCC and Grab fail to reach an agreement on the new set of voluntary commitments by October 5, the conditional clearance on the transaction will be re-evaluated, the antitrust watchdog noted.

In April 2018, PCC initiated a motu proprio review of the acquisition deal and flagged competition concerns as Grab took over its biggest competitor.

In its statement of concerns, PCC found the merger resulted in substantial lessening of competition in the market. With its virtual monopoly of both the driver and customer base, Grab has the ability and incentive to raise its prices and reduce the quality of its services.

PCC said its conditional approval of the Grab-Uber transaction is hinged on the merged firm’s compliance with its commitments.

These commitments are designed to maintain conditions in the market as if Uber or another competitor is present to set a competitive constraint on Grab, it said.

The commitments were also meant to prevent Grab from making it difficult for new players to enter and grow in the ride-hailing market.

“Competition is a dynamic process in the market. Real competition springs not from presence of a new player alone but from evident rivalry among firms in terms of capacity, price and service quality. On one hand, the commitments can keep Grab in check from exercising its market power as a virtual monopolist,” Balisacan said.

“On the other hand, we also advocate for allowing smaller players to grow or formidable new competitors to enter the market which will be more beneficial to the riding public,” he said. —VDS, GMA News