THE Competition and Consumer Commission of Singapore (CCCS) has issued a provisional decision saying that Grab’s acquisition of taxi operator Trans-cab, if given the go-ahead, would significantly reduce competition.
In a statement on Thursday (Jul 11), the competition watchdog noted Grab’s already-dominant position among ride-hailing platforms, and said the acquisition would likely entrench and strengthen its position.
Trans-cab has one of the largest taxi fleets not owned by, or in partnership with, any ride-hailing platform. This means its drivers are free to use any platform in the market, and pick up street-hailing passengers as well.
In contrast, other taxi fleets are either affiliated to a platform or have signed partnerships with a platform. For example, ComfortDelGro’s fleet is affiliated with Zig, its ride-hailing platform, and also in partnership with Gojek; SMRT has been in partnership with Grab since September 2020.
With Trans-cab’s fleet getting on board Grab’s ride-hailing platform under the proposed acquisition, Grab’s rival platforms would have that many fewer drivers to draw from – and there is already a driver shortage in Singapore, CCCS noted.
Data that it analysed shows that drivers who rent from fleets owned by ride-hailing platforms tend to use more of that platform than those who do not.
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CCCS added: “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.”
It noted the shortage of drivers, and the lack of other major non-affiliated taxi or private-hire car fleet that Grab’s rival ride-hailing platforms can partner with.
CCCS also pointed out the high barriers to entry and what it takes for these platforms to stay in business, given the high cost of fleet ownership, expansion and giving incentives to attract drivers.
With fewer competition constraints on Grab, drivers and passengers could face higher prices and fewer choices for ride-hailing platforms, said CCCS.
“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,” said the commission.
Yee Wee Tang, managing director at Grab Singapore, said in a statement that Grab’s move to acquire Trans-cab is part of a drive to support Trans-cab in its digital transformation, and to improve its drivers’ livelihoods.
He emphasised the use of technology to help drivers improve earnings, which is important in maintaining a pool of good drivers.
“Thanks to this innovation, we have shown that we can both increase driver earnings and reduce fares for passengers at the same time,” he said.
Grab first announced its plan to acquire Trans-cab via its GrabRentals arm in July 2023. About three months later, CCCS first raised competition concerns following a preliminary review; it then started an in-depth review of the matter early this year.
With CCCS’ provisional decision now announced, Grab and Trans-cab have 10 working days to respond by offering solutions to the competition concerns raised. CCCS will then make a final decision on whether to clear or block the acquisition.
