Grab abandons Trans-Cab acquisition amid antitrust concerns: What it means for Singapore’s ride-hailing market

In a major shift for Singapore’s ride-hailing market, Grab, Southeast Asia’s leading ride-hailing and food delivery company, will no longer acquire Trans-Cab, Singapore’s largest private taxi operator. The decision, conveyed to the Competition and Consumer Commission of Singapore (CCCS), concludes a year-long effort by the Nasdaq-listed Grab to strengthen its market position.The deal’s termination follows a provisional ruling from the CCCS two weeks prior, which indicated that the merger would likely cause a significant reduction in competition, violating Section 54 of the Competition Act. This section prohibits mergers that can lead to anti-competitive outcomes.What was the CCCS verdict?On July 25, CCCS announced that with the termination of the proposed acquisition, both Grab and Trans-Cab have withdrawn their application for a decision on the merger. Consequently, CCCS has also ceased its assessment of the proposed deal. The watchdog’s provisional decision on July 11 had concluded that Grab’s takeover of Trans-Cab would likely entrench its dominant market position to the detriment of drivers and passengers. This conclusion was reached after an in-depth review initiated in January.The commission warned that the acquisition could significantly weaken rival ride-hailing platforms, potentially leading to higher prices for passengers and drivers. CCCS noted that the deal would have deprived other platforms of a crucial source of drivers, exacerbating the industry’s existing driver shortage. This shortage would hinder rival platforms’ ability to fulfill trip requests, making them less attractive to both passengers and drivers over time.What did the proposed deal entail?The Strait Times had reported that the deal was valued at S$100 million ($75.62).The proposed buyout, spearheaded by GrabRentals, Grab’s car-rental arm, included around 2,000 taxis, over 300 private-hire vehicles, and Trans-Cab’s vehicle workshop and fuel-pump operations.In a statement last year, Yee Wee Tang, Grab Singapore’s managing director had said that adding that more drivers on the platform would mean quicker and more reliable rides for its users.He had said that Singapore had “faced an industry-wide driver supply crunch” since the pandemic, which had resulted in higher prices on its platform. The boost to its number of drivers would “benefit passengers with more reliable allocation, especially during peak hours”, and Trans-cab’s maintenance facilities could allow for improved operations and reduced costs.Initially expected to close by the fourth quarter of 2023, the deal encountered regulatory challenges in October 2023 when CCCS raised concerns about its potential anti-competitive effects following a preliminary review.Despite commitments from Grab to address these concerns, the watchdog’s second, more detailed review maintained that the acquisition could stifle competition. Industry analysts suggested that even if the deal had proceeded, Grab might have sought to revalue its initial offer, estimated at over $100 million, due to potential changes in Trans-Cab’s fleet value and vehicle certificate prices.Not the first failed consolidation bid in Singapore’s ride-hailing marketGrab’s unsuccessful bid to acquire Trans-Cab is reminiscent of the 2017 proposed merger between ComfortDelGro and Uber. ComfortDelGro’s attempt to purchase a 51% stake in Uber’s car rental unit, Lion City Holdings, for $642 million, was halted by a CCCS review due to antitrust concerns. Uber eventually exited Southeast Asia, selling its operations to Grab, which led to both companies facing substantial fines for anti-competitive practices.According to Statista, the ride-hailing market in Singapore will reach a revenue of US$0.93bn this year and is dominated by Grab. The post Grab abandons Trans-Cab acquisition amid antitrust concerns: What it means for Singapore's ride-hailing market appeared first on Invezz