Anti-trust body clears Grab-Uber merger subject to service, price conditions

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Metro Manila (CNN Philippines, August 10) — The anti-trust body on Friday cleared the merger between ride-hailing apps Grab and Uber, but it required the surviving entity to comply with a set of commitments to restore pricing and service quality before the takeover.

The Philippine Competition Commission (PCC) set these seven conditions for Grab that were present before it merged with its biggest rival in March:

  1. Revert to the previous market average for acceptance and cancellation rates of Grab drivers before the merger. PCC pointed out it received "persistent complaints" that it takes customers several attempts to get a ride. Grab was told to commit to bring down ride cancellation to 5 percent after 12 months. PCC also ordered Grab to respond immediately to complaints, giving them six hours to answer a non-serious complaint and three hours to reply to a serious one.
  2. Provide a fare breakdown in trip receipts. The receipts will have to show fare surge, discounts, and per-minute waiting time.
  3. Prohibition from setting prices that have an "extraordinary deviation" from the minimum allowed fare. PCC said if Grab violates this condition, it will be penalized for an equivalent of five percent of Grab's commission — or roughly ₱2 million. "It should not deviate by 22 percentage points from what it was from a year before," PCC Commissioner Johannes Bernabe said.
  4. Remove the "destination masking" or the ability of drivers with low rating to view the destination of the customer trying to book a ride.
  5. Prohibition from imposing a new policy that will force drivers and operators to be exclusive to Grab.
  6. Submit quarterly reports on commitment to driver incentives.
  7. Implement safety and rewards program for drivers.

"PCC binds Grab to these conditions in order to clear the Uber acquisition... The PCC's commitment decision holds Grab to a standard as if Uber were present in the market. In effect, while Grab operates as a virtual monopolist, the commitments assure the public that quality and price levels that would prevail are those that had been when they still faced competition from Uber," PCC Chairman Arsenio Balisacan said.

Any violation will result in fines of up to ₱2 million per offense. It could also possibly lead to an "unwinding of the acquisition," Balisacan said.

An appointed and impartial third-party monitoring board will make sure Grab complies to the set commitments for a period of one year starting today.

Grab thanked the anti-trust watchdog for ensuring fair competition.

To address the worries of the riding public, Grab said it will ensure to keep fares within a reasonable price range, aligned with the approved fare structure of fare regulators.

"We emphasize out commitment to further uphold our service quality and continuously provide our consumers and partners fair and transparent operations," it said in a statement. 

The ride-hailing app vowed to comply with the commitments.

"We assure the PCC, our regulators, and stakeholders that we will act responsibly and adhere to the voluntary commitments," it said.

PCC opened the review May after complaints the merger was negatively affecting Grab's partner drivers and commuters.