PCC slaps Grab with P23M in fines, orders firm to refund riders P5.05M

The Philippine Competition Commission (PCC) on Monday slapped Grab Philippines with P23.45 million of fines, and ordered the ride-hailing company to refund its passengers some P5 million in overcharges.

“The PCC has resolved to impose a total fine of P23.45 million on Grab for breaching its pricing commitments during the first to third quarters of the initial undertaking,” the antitrust watchdog said.

The fines cover P11.3 million in penalties for the first quarter, P7.1 million for the second quarter, and P5.05 million for the third quarter.

According to the PCC, the fines were imposed as Grab failed to meet the commitments it made to the government.

In a separate statement, Grab said it will heed the commission and refund P5.05 million to passengers who were overcharged.

“We respect the PCC and its mandate to protect the consumers in the Philippines and create a healthy competitive environment. Grab Philippines has worked closely with the PCC to form and finalize these voluntary commitments,” the company said.

“The antitrust body has identified certain deviations from Grab’s voluntary commitments, and based on the recent order from the PCC, Grab will be paying a total computed amount of P5,050,000 to the passengers who took Grab rides from February until May 2019.”

Among the non-exclusivity commitments Grab failed to meet are the following:

• Non-exclusivity guarantee to not impose or introduce any agreement, policy, or incentive that would result in exclusive membership or registration by drivers or operators in Grab

• Incentives monitoring to ensure incentives, benefits, promotions, or rewards for its drivers or operators do not result in exclusivity to Grab

• Assistance commitment to provide licensing and regulatory support, including the return of documents to divers and operators when operating under competitors

In terms of service quality, Grab must meet an average completion rate of not less than 65% of trips per month for the first quarter, and 70% monthly for the remaining quarters.

Grab will also remove the “See Destination” feature for drivers with a weekly completion rate of 65% for the first quarter, and 70% for the remaining quarters.

“Any breach of the conditions will subject Grab to fines of up to P2 million per breach, additional remedies, or nullification of the decision conditionally clearing the transaction,” the PCC said.

For price-related commitments, Grab committed to continue using its receipt with fare breakdown per trip, and ensure that the monthly average fare increase should not reach 22.5%.

“In the event that Grab breaches its monthly average fare cap commitment, PCC shall fine Grab P2 million per month,” the PCC noted.

The commission also implemented a “disgorgement mechanism” that will allow Grab to refund overcharged customers through their GrabPay account.

“This mechanism ensures that the public will directly be given a rebate, through their individual GrabPay accounts,” PCC Chairman Arsenio Balisacan said.

“The disgorgement mechanism shall be applied on the third quarter fine that will kick off the refund of P5.05 million to affected grab riders,” he said.

The PCC said it will continue to monitor Grab’s commitments for another year from November 1, 2019. It will also continue to review the non-exclusivity commitments, which have implications on new entrants, for four years.

“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,” Balisacan said.

There remains a lack of competitive constraints on Grab as concerns include prevailing market dominance, its ability to unilaterally increase prices, the barriers to entry of new players, and the inadequacy of Grab's service quality to the detriment of the riding public.

“This is why there was a need to re-negotiate these commitments and install new mechanisms—to effectively address the persistent impact of a virtual monopoly on a sector imbued with public interest,” Balisacan noted.

GMA News Online has contacted to Grab country head Brian Cu for a statement, but no response has been received as of this posting.

This is not the first time that the PCC imposed penalties on Grab. The company was fined P6.5 million in January this year for submitting incorrect data on its voluntary commitments.

In 2018, the PCC also imposed P16 million in fines against Grab and Uber for “undue difficulties” during a review of the merger agreement. —VDS, GMA News