PCC says ride-hailing sector still uncompetitive

The antitrust body will renegotiate the conditions that Grab Philippines had previously agreed to, a year after the same conditions paved the way for the approval of the company’s deal to buy Uber out of the market.

These conditions, which are called voluntary commitments, took effect in August 2018 with the hopes that they would improve market conditions in a way that would feel as if Uber were still a competitor.

The voluntary commitments, which included keeping Grab’s fares close to how they were when Uber was still a competitor, were supposed to expire last Aug. 10. But instead of disclosing how Grab met or failed its yearlong commitments, the PCC said in a statement on Tuesday that the voluntary commitments would remain in effect for 71 days, or from Aug. 11 to Oct. 20.

This will give time for the competition watchdog and the biggest player in the ride-hailing market so far to decide on new or amended commitments that will be effective for another period to be agreed upon.

The PCC said that the new commitments might include adjusted metrics to hold Grab in check for its price surges, driver discrimination through booking cancellations and service quality.

“Exactly a year after PCC rendered a Commitment Decision on Grab’s acquisition of rival Uber on Aug. 10, 2018, the competition authority finds that the dominance of the merged firms remains unchallenged and competition has not improved in the ride-hailing market,” the statement read.

The market remains uncompetitive despite the entry of a number of transport network companies, which had big shoes to fill when Uber exited the Philippines and the rest of Southeast Asia.

It was not clear, however, why the PCC chose to take this route despite noting that the market still has not recovered.

Last year, PCC officials warned that failure to comply with these commitments would have been met with a fine of P2 million per breach, “or even the unwinding of the transaction” —a threat that might now seem unlikely for some given the long time since Uber’s exit.

On one hand, the commitments could keep Grab in check from exercising its market power as a virtual monopolist, said PCC Chair Arsenio M. Balisacan. “On the other hand, we also advocate for allowing smaller players to grow or formidable new competitors to enter the market, which will be more beneficial to the riding public.”

But this is not the only issue that faces the ride-hailing industry. The Land Transportation Franchising and Regulatory Board (LTFRB), which regulates the ride-hailing industry, also faces charges under the Ease of Doing Business law, according to the Anti-Red Tape Authority (Arta).

This is in light of how the LTFRB handled the accreditation of transport network vehicle services (TNVS), which left an unnecessary long backlog that inconvenienced drivers, including Grab drivers who even held a protest against it.

In a press briefing on Tuesday, Arta Director General Jeremiah Belgica said that some applicants even waited for their approval for a year, even though their applications have already been completed.

He said that LTFRB board officials, including Chair Martin Delgra III, could be liable for not following the prescribed timeline of the law in processing applications and for imposing additional requirements.

Whether or not Arta will push for this is not yet sure. Also on Tuesday, Arta said it has issued an order to automatically approve the TNVS applications that have been completed, duly paid and duly heard from July 7 last year to July 24, 2019.

The Arta directed the LTFRB to submit a list of these TNVS applications three days after the agency received a copy of the order. Arta also recommended to remove some of the additional requirements such as a bank certificate of conformity.