Competition Law & Anti-Trust

PCC orders Uber, Grab to explain Shutdown of Uber Operations

Date: 16 April 2018; Type: Industry Updates; Source: Philippine News Agency

MANILA, Apr 16 (PNA) - The Philippine Competition Commission (PCC) has ordered ridesharing companies Uber and Grab to explain why they failed to maintain their separate business operations which was stipulated in the interim measures.

The PCC has imposed interim measures to ensure the credibility of its review on Grab's acquisition of Uber’s operations in Southeast Asia.

The Commission reiterated that it will continue with its moto propio review despite the shutdown of Uber’s operations in the country.

“As the antitrust authority, our lens is always focused on the market-in this case, we are reviewing the potential effects on competition in the merger between Grab and Uber in the ride-hailing platform,” the PCC said in a statement Monday.

The mobile app of Uber was deactivated Monday after it has earlier announced that it will operate in the Philippines until April 15.

The ridesharing company said that it no longer has the funds and manpower to continue its operations.

Grab has acquired Uber’s ridesharing and food delivery businesses in Southeast Asia integrating them into its transportation and financial technology (fintech) platform last March 26. In return, Uber will receive a 27.5 percent stake in Grab’s shares.

“Grab’s buyout of Uber will mean gobbling up 93% of the ride-hailing market. The accreditation of new TNCs (transportation network companies) is a welcome development to allow passengers to have more choices. We note, however, that the incoming TNCs are left with only 7% share in the market,” according to the PCC.

“Established firms have the advantage of an existing user base due to 'network effects.' This means that when you buy a firm, in effect, you also get its customer base. This is an advantage that a newcomer does not have. PCC’s review will take into consideration these factors to level the playing field in this market,” the commission said.

The PCC has formulated various interim measures that would ensure the credibility and integrity of its review on the merger of Uber and Grab for possible anti-competition concerns.

Among these include maintaining the independence of their business operations; refraining from sharing confidential information, such as pricing and operations; and refraining from imposing exclusivity clauses. Both Uber and Grab were also asked to refrain from performing any practice that could lead to reduced viability of their businesses and prejudice the PCC’s power to review the transaction and impose remedies.

The PCC is conducting its review to determine how the acquisition of Uber would affect the ride-sharing market, as well as its impact on the thousands of its partner drivers who could be displaced.

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