Vietnam Business Channel

Will the Grab and Uber Southeast Asia deal go through?

With the announcement in late March that that Grab would buy Uber’s operations in Cambodia, Indonesia, the Philippines, Thailand, Singapore and Vietnam; government regulators in several countries have begun to question whether the deal will benefit to consumers, drivers or their countries and have raised concerns about the deal.

When Chinese ride-hailing giant Didi Chuxing acquired Uber’s business in China in 2016 it became the largest ride-hailing company in China with an almost 90% market share. The result of this near monopoly has been that fares on the Didi Hitch service rose by 20% in Beijing, and customers in other major cities across China have also reported price increase and complain that they are paying more for traveling the same distance.

In addition, Didi Chuxing reduced its subsidies for drivers in Beijing and other cities and drivers have had to accept being paid less than they were paid before the merger. China’s official Xinhua News Agency has looked at the result of the merger and slammed Didi Chuxing for “capricious” price rises.

With the announcement of the Southeast Asia Grab and Uber deal, governments across the region have begun to announce their concerns:

Singapore - Lawmakers have said that they will ask the Competition and Consumer Commission of Singapore (CCCS) to review the deal and determine its impact on the point-to-point transportation sector. One of the major concerns with Grab is its ability to post “surge” prices that can be 50% higher than normal prices. Under government regulations, taxi firms have to post their prices so that consumers understand how much they will pay, but there is no such regulation for ride-hailing services such as Grab and Uber.

Lim Kell Jay, Grab’s Singapore country manager, said the public’s fears over a monopoly, while understandable, were “unwarranted especially given that the competitiveness and the contestability of the market is well and alive.” He said that Grab has pledged not to raise fares and or change commission fees in the “short to medium term” but the company has refused to define how long the “short to medium term” is.

Singaporean legislators and regulators have stated that they have no intention to limit Grab with regards to its prices, but that they want the company to provide transparent information about how it arrives at those prices and to ensure that there are sufficient numbers of vehicles on the roads to handle “normal” consumer demands.

Philippine’s – The government’s anti-trust agency has ordered Uber to keep its local service active while antitrust investigators review the merger. Since the ridesharing outfit had already agreed to delay its shutdown in Singapore, regulators said it would be feasible to ask for a similar move in the Philippines.
Arsenio Balisacan, Chairman of the Philippine Competition Commission (PCC) said in a statement that: “Uber’s compliance with our anti-trust counterpart in Singapore to extend the operation of its app indicates the feasibility of continuing its operations in the Philippines as well.”

The PCC also ordered Grab and Uber to maintain the independence of their business operations, including customer and rider databases, ride hailing services and delivery platforms.

The PCC has gone on record and said that: “This virtual monopolization of the market by Grab can harm the riding public.” Both Grab and Uber declined to comment on the PCC’s decision and comments.

Vietnam – The deal is causing controversy as Grab publicly stated that it would not pay any back taxes Uber owes in Vietnam. According to a Grab representative, "This matter is Uber's responsibility. Grab did not buy Uber's legal status in Vietnam, which is the unit bearing all legal responsibilities for settling tax-related issues with the tax department."

In response, government officials from the Ho Chi Minh City tax department said that the department is still waiting for Grab to submit an official report on the acquisition deal before deciding on how to handle the issue.

Doan Van Hau, chairman of the Vietnam Lawyers' Commercial Arbitration Center, said Grab's refusal is in violation of Vietnamese law and international practices. Quoting Vietnam's Enterprise Law, he stressed that Grab, as the acquirer, is responsible for paying all back taxes owed by its target firm Uber. "Even if Uber and Grab have their own agreements on how to handle this issue, then those agreements must still conform to Vietnamese law."