The price and quality of Grab Philippines’ services have worsened after it acquired its only rival in the market, Uber, but not even the entry of new players could challenge the transport firm’s influence in the ride-sharing market, the country’s competition watchdog said on Monday.
The Philippine Competition Commission (PCC) monitored the market before and after Uber ended its Philippine operations in April, following Grab’s regional acquisition of Uber in March.
“Results of the market investigation, as well as comments from the riding public on the effects of the Transaction submitted to the Office, indicate that the quality of services of Grab has decreased post-Transaction in the following manner: (i) increased driver cancellation; (ii) forced cancellation of rides; and (iii) increased waiting times,” the PCC statement of concerns noted.
“This is compounded by the loss of a competitor in Uber where trips were less likely to be cancelled due to features which mask the destination of a prospective rider until the start of a trip,” it also stated.
The PCC’s statement of concerns was published on Monday. It is part of PCC’s ongoing review of the Grab-Uber deal, wherein the watchdog could approve, block, or allow the transaction while imposing conditions to address anti-competitive concerns.
However, even in the absence of a verdict, the statement of concerns issued by PCC’s Mergers and Acquisitions Office (MAO) hinted that the market has already become problematic after the Grab-Uber deal.
Higher fares after Uber’s exit
After Uber left the market last month, Grab imposed higher fares and more frequent surge-pricing “despite an increase in the supply of Grab drivers,” PCC said, noting Grab now has a 93 percent hold of the market after Uber drivers switched apps.
The antitrust body based the post-acquisition price increase on more than 27,000 booking requests and 1,100 rides surveyed before and after Uber’s exit on April 16. PCC said the surveys gathered information on the actual prices, service, and booking conditions of Grab and its potential competitors.
The deal has “resulted and will likely continue to result in substantial lessening of competition in the relevant market,” PCC said.
Moreover, PCC found out that transport network companies (TNCs) such as Grab cater to a captive market, “an overwhelming majority” of whom would still choose to book a ride despite price increases.
Not enough market pressure against Grab
Amid pressure to allow more players in the market, the Land Transportation Franchising and Regulatory Board (LTFRB) have so far accredited five TNCs.
PCC, however, said that historical data shows that it would require “a significant amount of time and cost” to grow their operations that would be enough to contest Grab.
“During such period, Grab will not be constrained by any competitor, allowing it to exercise its market power in the relevant market. Therefore, the [MAO] finds that new entrants in the relevant market are not likely to exert sufficient competitive pressure on Grab,” PCC said.
The parties involved have 10 days to comment on the PCC-MAO’s statement of concerns. A representative from PCC said that Grab and Uber received their copies on May 23.
Conflict with LTFRB order
In April, PCC tried to keep Grab from flexing its muscles in the unchecked market by imposing some interim measures. However, this became more difficult after the LTFRB stepped in.
The PCC imposed those interim measures on Grab and Uber prior the release of the statement of concerns to keep the findings of the review accurate. Those interim measures included the resumption of independent and separate operations for the time being.
Scheduled to end its services on April 8, Uber, at the time, agreed to extend the availability of its app until April 15, given the ongoing PCC review. Grab-Philippines, on the other hand, had said it shouldered the costs of Uber’s one week extension.
However, following the release of PCC’s interim measures, the LTFRB slapped Uber with a cease-and-desist order, requiring the firm to stop its operations on April 15.