THE PHILIPPINE Competition Commission (PCC) noted in a report released on Monday that Grab Holdings, Inc.’s acquisition of the Southeast Asian business of rival Uber Technologies has led to a surge in prices and deteriorating service quality.
In an executive summary of its statement of concerns, PCC’s Mergers and Acquisitions Office (MAO) found that Grab Holdings’ and MyTaxi.PH Inc.’s purchase of Uber and Uber Systems Inc. on March 25 “has resulted and will likely continue to result in substantial lessening of competition” in the ride-hailing market.
Before the transaction, Grab prices were “flat to declining,” but weeks after the sale saw “higher fares and increased frequency of surge-pricing applied.”
The findings were from the monitoring of 27,648 booking requests and mystery shopper surveys involving 1,104 rides, according to MAO’s report that was e-mailed to reporters on Monday.
“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: increased driver cancellation; forced cancellation of rides; and increased waiting times,” the statement read.
“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 added.
“While the Office notes that there are new entrants to the relevant market, historical data show that it would take a significant amount of time and cost for these new players to grow a driver and rider base sufficient to contest the incumbent. During such period, Grab will not be constrained by any competitor, allowing it to exercise its market power in the relevant market,” it explained.
“Therefore, the Office finds that new entrants in the relevant market are not likely to exert sufficient competitive pressure on Grab.”
This price surge came despite an increase in the supply of drivers for Grab as several Uber drivers transferred.
“Post-Transaction prices of Grab indicate that prices are increasing, while quality of service is deteriorating, to the detriment of the riding public,” the statement read further, noting that passenger surveys and interviews indicated more trip cancellations by drivers and longer waiting times.
“The Transaction results in Grab being able to profitably increase its prices given its market share as riders will not shift to other modes of public transportation,” it noted, adding that other parties’ “entry into the… market will not be timely, likely and significant such that a new entrant will not serve as a competitive constraint against Grab.”
PCC Chairman Arsenio M. Balisacan said in a press conference at PCC’s headquarters in Pasig City that the entry of new ride-hailing companies will not be enough to revive competition in a market that is dominated by a “near monopoly.”
“‘Yung sinasabi naming substantial lessening of competition, pinatunayan dito sa report,” Mr. Balisacan said in the briefing.
“Considering that Grab now holds a near monopoly of both the driver and customer base in the relevant market, Grab can unilaterally raise its prices and reduce the quality of its services, as it experiences no sufficient competitive constraint from any other market participant,” the statement read.
Both companies were notified about MAO’s findings on May 22 and have until this Friday to comment. — Janina C. Lim