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Singapore issues $9.5 million fine to human cloud firms Uber and Grab

September 24, 2018

Human cloud, ride-sharing firms Uber and Grab were fined S$13.0 million (US$9.5 million) by the Competition and Consumer Commission of Singapore. The fine comes after Uber’s sale of its Southeast Asian business to Grab in March.

According to the commission, the transaction led to substantial lessening of competition in ride-hailing platforms in Singapore, and fares increased by 10% to 15%.

Grab has 80% market share in Singapore and the strong network effect makes it difficult for potential competitors to scale and expand, according to the commission. To help improve competition going forward, the commission also ruled that Grab riders must be free use any ride-hailing platform, not just Grab. Grab must maintain pre-merger pricing algorithm and driver commission rates.

“Mergers that substantially lessen competition are prohibited and CCCS has taken action against the Grab-Uber merger because it removed Grab’s closest rival, to the detriment of Singapore drivers and riders,” said Toh Han Li, chief executive of the commission. “Companies can continue to innovate in this market, through means other than anti-competitive mergers.”

Uber’s portion of the fine is S$6.6 million (US$4.8 million). Grab’s portion of the fine is S$6.4 million (US$4.7 million).

Reuters reported that Uber said it believed the decision was based on an “inappropriately narrow definition of the market” and may appeal. Grab denied that it violated the law, but that it would abide by the commission’s decision.

Separately, MarkeWatch reported that research by the JPMorgan Chase Institute in the US found drivers for Uber and fellow human cloud/ride-sharing platform Lyft are making 53% less in 2017 than they did in 2013.