Uber ordered to continue services beyond April 8
The Philippine Competition Commission (PCC) has ordered Uber to continue its services beyond April 8, delaying Grab’s takeover deal for weeks, or even months.
In a statement, PCC said it ordered both ride-hailing firms to keep separate and independent operations until the antitrust body wraps up its review of the acquisition.
PCC had issued a set of interim measures to preserve the same business conditions prior to the deal. This means riders and drivers should still be able to choose Uber as an alternative to Grab for the time being.
The order echoes a similar move made by PCC’s counterpart in Singapore, which ordered Uber to continue operating the app for another week, or until April 15, due to similar anti-competitive concerns.
Feasibility
Uber’s compliance to the order in Singapore “indicates the feasibility of continuing its operations in the Philippines as well,” PCC Chairman Arsenio Balisacan said.
This comes despite claims made by Uber officials that the company has officially left the market, leaving no one behind to man the app.
The antitrust body, however, did not buy this explanation. Since Uber acquired a 27.5-percent stake in Grab’s regional business as part of the takeover deal, it is not true that Uber has indeed left the country, Balisacan said.
“The PCC believes that Uber is capable of operating its ride-hailing app in the country, despite its claims that it has already exited the Southeast Asia market,” he said.
Integration
“Uber is highlighting its exit, but what it does not emphasize enough is its integration with Grab. Thus, Uber is not truly exiting the Philippine market, but rather effectively merging their operations with Grab here. The deal makes Uber a part-owner of Grab,” he added.
Last month, Grab announced it would acquire Uber in Southeast Asia, calling it the largest acquisition by a Southeast Asian internet company.
The deal has also put other competition authorities in the region on their toes.
In the Philippines, PCC previously said the acquisition would result to Grab controlling around 80 percent of the ride hailing market in the country.
This is a concern especially since Grab has been known for its relatively higher rider fees and how it discriminates against rider destinations.
PCC officials raised these concerns during a public hearing with Grab and Uber representatives on April 5.
Penalties
Should Grab and Uber fail to comply in five working days, they would have to “show cause” within 24 hours after the end of the five-day period, according to an excerpt of the interim measures.
The parties should then explain “why they should not be held in contempt and subjected to penalties.”
PCC did not list the possible penalties. However, according to the Philippine Competition Act, erring parties would have to pay P50,000 to P2 million for each violation.
Moreover, they would have to eventually pay a similar amount for each day they did the violations until the parties fully comply with the order.
The duration of the review depends on the cooperation of the companies, Balisacan said in a previous interview. Under current rules, the review could end in a matter of weeks, or even extend up to six months.
Not business as usual
Representatives from Uber and Grab are yet to comment on the matter.
However, during the public hearing on April 5, officials and lawyers from both companies wanted business to go as planned, noting that some of PCC’s concerns were unwarranted.
Uber’s next move is yet to be seen. But according to Brooks Entwistle, Uber chief business officer for Asia Pacific, the company, which has been losing money in Southeast Asia, does not intend to return to the market.
Falling apart
“Our people are gone. Our funding is gone. Our marketplace is falling apart by every day as we transition [to Grab],” he said during the public hearing.
In the same hearing, Grab external legal counsel Arlene Maneja said the acquisition involves driver contracts as well as other data that drivers consented to give.
The deal does not include the integration of both Grab and Uber systems, she said, therefore concerns such as Grab’s access to Uber’s pricing mechanisms were unnecessary.
“We think, that if it means the commission is going to compel to reverse that business decision, we think that is a burdensome and disproportionate response to what is a valid management protocol,” she said.
