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Grab fined nearly P200M in first year after merger

The Philippine Competition Commission (PCC) has imposed a fine of P16.15 million on Grab Philippines for the surge in its rates from May to August in violation of its commitments.

This brought to P195.194 million the total amount of penalties imposed on Grab in its first year of operations following its acquisition of Uber’s assets.

Grab became the dominant player in the ride-hailing services market in the country following its merger with Uber, which exited the Philippines in April 2018.

“With the merger of the country’s two biggest ride-hailing apps, Grab’s violations are indicative of its exercise of market power in the absence of a competitor of adequate scale in the market,” PCC chairperson Arsenio M. Balisacan said in a statement.

In the first quarter of its operations following the merger, Grab was fined P11.3 million. It was also fined in the succeeding quarters: P7.1 million in the second quarter; and P5.05 million in the third quarter.

For the fourth quarter, which covers the period May 11 to August 10, Grab was fined P14.15 million for “extraordinary deviation on its pricing commitment” and P2 million for exceeding driver cancellations at 7.76% instead of the committed 5%.

The fines imposed in the third and fourth quarter, P5.05 million and P16.15 million or a total of P21.2 million will be refunded to customers.

Grab passengers from May 11 to August 10 can expect rebates within 60 days through GrabPay credits.

The PCC decision comes on the heels of the audit report submitted by Smith & Williamson, an independent monitoring trustee tasked to examine Grab’s compliance with its voluntary commitments on price, service quality, and non-exclusivity for one year or until August 10, 2019.

Grab’s pricing commitment to PCC is separate from and independent of the fare structure set by the Land Transportation Franchising and Regulatory Board (LTFRB).

While LTFRB has imposed a fare matrix for all transport network vehicle services, the PCC binds Grab to its voluntary commitments, including keeping its fares within a range as if a competitor like Uber were present in the market.

As such, PCC fines Grab for fares that deviate from its pricing commitments to the Commission, although this is not considered overcharging based on the fare matrix imposed by LTFRB.

In 2018, Grab Holdings, Inc. and MyTaxi.PH Inc. acquired the assets of Uber B.V. and Uber Systems Inc. in the Philippines as well as in Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand and Vietnam.

“The ride-hailing market has seen profound changes in the past year as a result of Grab’s acquisition of Uber. With the commitments in place, PCC aims to maintain pre-transaction market conditions and will discipline any tendency to exercise monopolistic power with corresponding penalties,” Balisacan said.

Grab is available in Manila, Cebu, Davao, Pampanga, Cagayan de Oro, Bacolod, Baguio, Bataan, Naga, Iloilo and Tacloban. (Ventures Cebu)

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