Price, quality of Grab worsened

The price and quality of Grab Philippines’ services have worsened after it acquired its only rival in the market, that not even the entry of new players could challenge the company’s influence, the competition watchdog said.

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.

This is according to PCC’s statement of concerns, which was published on Monday. The statement is part of PCC’s ongoing review of the deal, wherein the watchdog could approve, block or allow the transaction while imposing conditions to address anticompetitive 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 had already become problematic after the deal.

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.

Amid pressure to allow more players in the market, the Land Transportation Franchising and Regulatory Board (LTFRB) has so far accredited five TNCs.

PCC, however, said that historical data showed 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 statement of concerns. A representative from PCC said that Grab and Uber received their copies last May 23.

In April, PCC tried to keep Grab from flexing its muscles in the market unchecked by imposing some interim measures. However, this became more difficult after the LTFRB stepped in.

Prior to the release of its statement of concerns, PCC imposed interim measures on Grab and Uber to keep the findings of the review accurate, which included the resumption of independent and separate operations for the time being.

Scheduled to end its services on April 8, Uber agreed to extend the availability of its app to April 15 given the ongoing PCC review.

However, following the release of PCC’s interim measures, LTFRB slapped Uber with a cease-and-desist order, requiring the firm to stop its operations on April 15.