Singapore competition watchdog fines Grab, Uber $9.5 million over merger

Uber sold its Southeast Asian business to bigger regional rival Grab in March in exchange for a 27.5 percent stake in the Singapore-based firm. (Reuters)
Updated 24 September 2018
0

Singapore competition watchdog fines Grab, Uber $9.5 million over merger

  • US-based Uber Technologies sold its Southeast Asian business to bigger regional rival Grab in March in exchange for a 27.5 percent stake in the Singapore-based firm
  • Grab said it completed the transaction within its legal rights, and maintained it did not intentionally or negligently breach competition laws

SINGAPORE: Singapore’s anti-trust watchdog fined ride-hailing firms Grab and Uber a combined S$13 million ($9.5 million) over their merger deal, and ordered Uber to sell vehicles from its local leasing business to any rival that makes a reasonable offer.
US-based Uber Technologies sold its Southeast Asian business to bigger regional rival Grab in March in exchange for a 27.5 percent stake in the Singapore-based firm.
The deal invited regulatory scrutiny in the region, with the Competition and Consumer Commission of Singapore (CCCS) — in a rare move — launching an investigation just days after the deal was announced.
The CCCS on Monday said it had finalized several measures to lessen the impact of the transaction on drivers and riders, and open up the market for new players. It also said it found the merger substantially reduced competition in the market.
The regulator said it has fined Uber S$6.6 million and Grab S$6.4 million to deter future completed, irreversible mergers that harm competition. It also ordered Grab to remove its exclusivity arrangements with drivers and taxi fleets.
“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,” CCCS Chief Executive Toh Han Li said in a statement.
The regulator said effective fares on Grab rose 10 to 15 percent after the deal, and that the firm now holds a Singapore market share of around 80 percent.
It told Grab to maintain its pre-merger pricing algorithm and driver commission rates.
It also ordered Uber to sell vehicles of its Singapore-based Lion City Rentals to any potential competitor who makes a reasonable offer based on fair-market value, and prohibited Uber from selling those vehicles to Grab without regulatory approval.
Lion City’s fleet totaled 14,000 vehicles as of December.
Uber said it believed the CCCS’s decision was based on an “inappropriately narrow definition of the market, and that it incorrectly describes the dynamic nature of the industry, among other concerns.” It said it would consider appealing.
Grab said it completed the transaction within its legal rights, and maintained it did not intentionally or negligently breach competition laws.
It added that it had not raised fares since the deal, and said for drivers to have full maximum choice, all transport players, including taxi operators, should also be subjected to non-exclusivity conditions.
It said it would abide by remedies set out by the CCCS.


No need for more talks over draft budget: Lebanon finance minister

Updated 21 May 2019
0

No need for more talks over draft budget: Lebanon finance minister

  • Lebanon’s proposed austerity budget may please international lenders but it could enrage sectors of society
  • Lebanon has one of the world’s heaviest public debt burdens at 150 percent of GDP

BEIRUT: Lebanon’s finance minister said on Tuesday there was no need for more talks over the 2019 draft budget, seen as a vital test of the government’s will to reform, although the foreign minister signalled the debate may go on.
The cabinet says the budget will reduce the deficit to 7.6% of gross domestic product (GDP) from last year’s 11.2%. Lebanon has one of the world’s heaviest public debt burdens at 150% of GDP.
“There is no longer need for too much talking or anything that calls for delay. I have presented all the numbers in their final form,” Finance Minister Ali Hassan Khalil said.
But Foreign Minister Gebran Bassil suggested the debate may go on, telling reporters: “The budget is done when it’s done.”
While Lebanon has dragged its feet on reforms for years, its sectarian leaders appear more serious this time, warning of a catastrophe if there is no serious action. Their plans have triggered protests and strikes by state workers and army retirees worried about their pensions.
President Michel Aoun on Tuesday repeated his call for Lebanese to sacrifice “a little“: “(If) we want to hold onto all privileges without sacrifice, we will lose them all.”
“We import from abroad, we don’t produce anything ... So what we did was necessary and the citizens won’t realize its importance until after they feel its positive results soon,” Aoun said, noting Lebanon’s $80 billion debt mountain.
A draft of the budget seen by Reuters included a three-year freeze on all forms of hiring and a cap on bonus and overtime benefits.
It also includes a 2% levy on imports including refined oil products and excluding medicine and primary inputs for agriculture and industry, said Youssef Finianos, minister of public works and transport.
“DEVIL IN THE DETAIL“
Marwan Mikhael, head of research at Blominvest Bank, said investors would welcome the additional efforts in the latest draft to cut the deficit.
“There will be some who claim it is not good because they were hit by the decline in spending or increased taxes, but it should be well viewed by the international community,” he said.
Jason Tuvey, senior emerging markets economist at Capital Economics, said: “The numbers will be of some comfort to investors, but the devil will be in the detail.”
“Even if the authorities do manage to rein in the deficit, it probably won’t be enough to stabilize the debt ratio and some form of restructuring looks increasingly likely over the next couple of years,” Tuvey said.
The government said in January it was committed to paying all maturing debt and interest payments on the predetermined dates.
Lebanon’s main expenses are a bloated public sector, interest payments on public debt and transfers to the loss-making power generator, for which a reform plan was approved in April. The state is riddled with corruption and waste.
Serious reforms should help Lebanon tap into some $11 billion of project financing pledged at a Paris donors’ conference last year.
Once approved by cabinet, the draft budget must be debated and passed by parliament. While no specific timetable is in place for those steps, Aoun has previously said he wants the budget approved by parliament by the end of May.
On Monday, veterans fearing cuts to their pensions and benefits burned tires outside the parliament building where the cabinet met. Police used water cannon to drive them back.