Competition Law & Anti-Trust

Grab to appeal Fines imposed for Uber Merger

Date: 26 October 2018; Type: Legal News; Source: Philippine News Agency

MANILA, Oct 26 (PNA) - Grab Philippines will appeal the decision of the Philippine Competition Commission (PCC) which imposed a PHP12-million fine for allegedly violating the interim measures order imposed during the review of its acquisition of Uber’s operations, its lawyer said Friday.

“We respectfully disagree with PCC's decision. Grab completed the transaction legally, and did not violate the interim measures order,” Lawyer Miguel Aguila, Grab's counsel, said in a statement.

The ridesharing firm reiterated that its transaction with Uber was done in a legal manner and did not violate the PCC’s orders particularly the maintenance of independent operations and other conditions such as platforms, pricing and payment policies, incentives, promotions, database, onboarding of drivers, among others, prior to the merger on March 25.

“Grab and Uber operations in the Philippines remained separate and without any integration nor was there automatic transfer of passenger and drivers’ data. Grab did not take over Uber operations and did not do anything to violate the interim measures after it was put into effect,” Aguila added.

He said Uber’s acquisition of an equity stake and board seat in the company was consummated prior to the issuance of the interim measures order.

“The interim measures should be interpreted to apply prospectively and should not cover acts already consummated before its issuance,” Aguila said.

He said Grab's fares and surge rates are within the minimum allowed fares set by the Land Transportation Franchising and Regulatory Board (LTFRB).

“Grab’s price algorithm, until the LTFRB suspended the time component in its fares, remained the same. The supposed increase in price was affected by the higher incidence of surge, which was driven by the low supply of vehicles and high concentration of demand,” Aguila said.

Meanwhile, the PCC said it has yet to receive a copy of Grab’s motion for reconsideration.

“To date, we have not yet received a copy of Grab’s motion for reconsideration. The parties have until October 29 within which to file their MR,” PCC Chairman Arsenio Balisacan said in a text message to the Philippine News Agency (PNA).

PCC, in its decision issued on October 11, imposed a fine of PHP8 million against Grab for failure to maintain the pre-merger business conditions during the review and another PHP4-million fine for proceeding with the execution of their agreements during the review period.

Uber was also imposed a fine of PHP4 million for failure to maintain the pre-merger business conditions during the review.

The commission said both Uber and Grab violated two of its seven-interim measures it has imposed last April.

These are maintaining independent business operations and other conditions (platforms, pricing and payment policies, incentives, promotions, database, onboarding of drivers, etc.) prior to the merger on March 25 and refraining from executing any final agreement or contract that will transfer any asset, equity, interest, including the assumption by Uber of a board seat in Grab.

Other measures include: refrain from providing access between parties any confidential information (i.e. pricing, formulas, incentives, operations, marketing and sales policies, promotions, customer and driver database); refrain from imposing exclusivity clauses, lock-in periods and/or termination fees to drivers; refrain from acts that may lead to reduced viability and saleability of businesses; refrain from acts that will prejudice the PCC’s power to review the transaction and impose remedies; and refrain from performing any act that may lead and/or further lead to the consummation of the transaction.

The commission has approved the acquisition deal last August after Grab has submitted its voluntary commitments to the PCC which includes improving the quality of its service, particularly response time to rider complaints.

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