11 July 2024

(View Media Release in PDF)

1. The Competition and Consumer Commission of Singapore (“CCCS”) has issued a Statement of Decision (Provisional) (“SDP”), a step towards finding that the proposed acquisition by Grab Holdings Limited (“Grab”) through GrabRentals Pte. Ltd. (“GrabRentals”) of Trans-cab Holdings Ltd. (“Trans-cab”) (collectively, the “Parties”) (the “Proposed Acquisition”) is likely to result in a substantial lessening of competition in the market for the supply of ride-hail platform services to drivers and passengers in Singapore (the “Ride-Hail Platform Market”);^[1] thereby infringing section 54 of the Competition Act 2004 (the “Act”), which prohibits anti-competitive mergers.^[2]

CCCS’s Review of the Proposed Acquisition

2. CCCS has found that Grab is dominant in the Ride-Hail Platform Market. Businesses are not prohibited from either having a dominant position^[3] or striving to protect their market position through competitive merit (e.g., introducing innovative products). However, mergers that protect, enhance or perpetuate the dominant position in ways unrelated to competitive merit can be anti-competitive. CCCS has found that the Proposed Acquisition is likely to entrench and strengthen Grab’s already dominant position in the Ride-Hail Platform Market to the detriment of drivers and passengers.

3. CCCS notes that Grab’s plans to acquire Trans-cab, which is one of the largest fleets (taxi or private-hire car) not owned by or in partnership with any ride-hail platform in Singapore, to increase the availability of drivers on its ride-hail platform comes at a time when rival ride-hail platforms are facing driver supply shortages.

4. The Proposed Acquisition will significantly weaken Grab’s rival ride-hail platforms by depriving them of an important source of drivers (i.e. Trans-cab drivers). Data analysed by CCCS indicates that drivers who rent from ride-hail platform-owned fleets tend to use more of that ride-hail platform as compared to drivers who do not rent from such fleets (i.e. the former group of drivers are less likely to use a platform that is different from the one they have rented their vehicle from). There are also various strategies which may be employed by Grab to induce Trans-cab drivers to increase their usage of Grab’s ride-hail platform. The Proposed Acquisition is thus expected to result in a greater degree of “stickiness” of Trans-cab drivers to Grab’s ride-hail platform and a potential reduction in usage of rival ride-hail platforms. Consequently, rival ride-hail platforms’ access to Trans-cab drivers post-merger is likely to be significantly restricted.

5. It may be difficult for rival ride-hail platforms to replace any loss of Trans-cab drivers on their respective ride-hail platforms in a timely manner due to:

a) Driver supply shortages faced by rival ride-hail platforms;

b) “Stickiness” of drivers to certain ride-hail platforms;

c) Lack of major non-affiliated taxi or private-hire car fleets to partner with;^[4]

d) High cost of fleet ownership and expansion; and

e) High cost of driver incentives.

6. Therefore, the Proposed Acquisition is likely to (a) affect the ability of rival ride-hail platforms to fulfil trip requests and, over time, make them less attractive to passengers and drivers due to indirect network effects (i.e. drivers tend to prefer ride-hail platforms with a larger number of passengers, and passengers tend to prefer ride-hail platforms with a larger number of drivers) (as shown in Figure A below)^[5] and (b) affect the ability of rival ride-hail platforms to expand the scale of ride-hail platform services offered. This will weaken competitive constraints exerted by rival ride-hail platforms on Grab.

7. If competition constraints on Grab from rival ride-hail platforms are weakened, drivers and passengers could face higher prices (in the form of higher commissions and fees net of incentives)^[6] and fewer choices for ride-hail platform services. Grab has also recognised that through the Proposed Acquisition, it will likely be able to significantly save on the incentives that it would have to pay to drivers as compared to if it employed alternative means to increase driver supply.

Next Steps

8. While the SDP is not a final decision, we welcome the Parties to offer solutions to address the competition concerns raised, before CCCS makes a final decision whether to clear or block the Proposed Acquisition at the end of the Phase 2 review. The Parties now have 10 working days from the receipt of the SDP to make their representations to CCCS. CCCS will then decide whether to issue a favourable or unfavourable decision, after consideration of the representations, as well as all available information and evidence.

9. For more information on the merger review process in Singapore, please refer to Annex 1.

Encl. Infographic: CCCS Issues Provisional Decision on Proposed Acquisition of Trans-cab by Grab

^[1] Ride-hail platform services are intermediary services that match drivers with passengers for ride-hail trips. They are distinct from ride-hail services, which are transportation services provided by drivers to passengers through a platform using a phone or mobile application. They are also distinct from street-hail services, which are transportation services provided by drivers to passengers hailing a taxi at taxi stands or flagging down a taxi by a road (i.e. without the use of a platform). There are currently five Class 1 Ride-Hail Service Operator Licence holders – Grab, TADA, ComfortDelGro, Gojek and Ryde. A ride-hail platform operator that has less than 800 bookable vehicles on its platform is exempted from the requirement to hold a Ride-Hail Service Operator Licence.

^[2] On 7 August 2023, CCCS embarked on its Phase 1 review following the acceptance of an application from the Parties for a decision on the Proposed Acquisition. On 16 October 2023, CCCS raised competition concerns with the Parties on the Proposed Acquisition after completing its preliminary Phase 1 review. Following further filing of the relevant documents by the Parties on 25 January 2024, CCCS commenced an in-depth Phase 2 review of the Proposed Acquisition. For more information on the Phase 1 review of the Proposed Acquisition, please refer to CCCS’s media release dated 14 August 2023 and CCCS’s media release dated 16 October 2023.

^[3] Dominant businesses have substantial market power. This generally means that they do not face sufficiently strong competitive pressure and have the ability to sustain prices above competitive levels.

^[4] Drivers may either rent taxis from taxi fleets, rent cars from private-hire car fleets or use their own cars to provide ride-hail services.

^[5] Indirect network effects occur when a platform depends on two or more user groups. As more people from one group join the platform, the platform becomes more valuable to users in the other group. This is different from direct network effects, which occurs when the value of a platform to users in a group increase because of more users in the same user group.

^[6] Grab earns revenue from drivers in the form of commissions and fees net of incentives, and earns revenue from passengers in the form of fees net of incentives.