The Competition and Consumer Commission of Singapore (CCCS) has raised “competition concerns” about Grab’s proposal to acquire Singapore’s third-largest taxi operator, Trans-cab.

CCCS said in a statement on Monday that it was unable to conclude at the end of its Phase 1 review that the proposed acquisition “does not give rise to any competition concerns”.

“CCCS has raised competition concerns with the parties (Grab and Trans-cab) on the proposed acquisition, based on information received from the Parties and third-party feedback from industry players and members of the public during the Phase 1 review,” it said.

In particular, notwithstanding that licensed ride-hail operators are prohibited from imposing exclusive arrangements that prevent their driver-partners from driving for rival ride-hail operators under the Point-to-Point Transport regulatory framework, third-party feedback received by CCCS suggests concerns on the effect of Grab’s ownership of the Trans-cab fleet on Trans-cab drivers’ usage of rival ride-hail platforms, which may raise barriers to expansion and entry for Grab’s rival ride-hail platforms, given the importance of scale in the ride-hail platform industry, the commission explained.

“Accordingly, CCCS needs to review the competition effects of the proposed acquisition in greater detail,” CCCS added.

At this stage, the parties may offer commitments to address the potential competition concerns of the proposed acquisition raised by CCCS.

“Otherwise, CCCS will proceed to a more in-depth Phase 2 review of the proposed acquisition upon CCCS’s receipt of the relevant documents from the parties. Commitments may also be offered at any time during a Phase 2 review,” the commission added.

The statement comes after the CCCS completed its Phase 1 review of the proposed acquisition by Grab through its wholly-owned subsidiary, Grab Rentals Pte Ltd of 100 percent stake in Trans-cab.

NASDAQ-listed Grab and Trans-cab announced in July the signing of an agreement for GrabRentals to acquire 100 percent of the shares in Trans-cab.

Grab said in a statement then that Trans-cab, a local brand that has been serving Singaporeans since 2003, has a combined taxi and private-hire-vehicle (PHV) fleet of more than 2,500 vehicles, and is accretive on a net income basis to Grab’s business. The acquisition includes Trans-cab’s taxi and car rental business, maintenance workshop, and fuel pump operations.

On Aug 7, 2023, CCCS embarked on its Phase 1 review following the acceptance of an application from the parties for a decision on whether the proposed acquisition, if carried into effect, would infringe section 54 of the Competition Act 2004, which prohibits mergers that have resulted, or may be expected to result, in a substantial lessening of competition within any market in Singapore.

GrabRentals owns a fleet of private-hire cars for rental to drivers for the provision of ride-hail services to passengers, according to the statement.

In Singapore, Grab operates primarily over a mobile application across the digital financial services, delivery and mobility sectors, which also include ride-hail platform services. Trans-cab is a licensed street-hail service operator in Singapore and also owns a fleet of private-hire cars for rental to drivers for the provision of ride-hail services.

Trans-cab offers phone taxi booking services to passengers but only for the taxi fleet operated by Trans-cab. The parties overlap in the provision of private-hire car rentals for ride-hail services in Singapore and ride-hail platform services in Singapore, CCCS added.

The CCCS is a statutory board of the Ministry of Trade and Industry. CCCS administers and enforces the Competition Act 2004 which empowers CCCS to investigate and adjudicate anti-competitive activities, issue directions to stop and/or prevent anti-competitive activities and impose financial penalties.

CCCS is also the administering agency of the Consumer Protection (Fair Trading) Act 2003 which protects consumers against unfair trade practices in Singapore. The commission said its mission is to make markets work well to create opportunities and choices for business and consumers in Singapore.

According to the statement, Section 54 of the Competition Act 2004 prohibits mergers that have resulted, or may be expected to result, in a substantial lessening of competition in Singapore.

CCCS is generally of the view that competition concerns are unlikely to arise in a merger situation unless:

– The merged entity has/will have a market share of 40 percent or more; or
– The merged entity has/will have a market share of between 20 percent to 40 percent and the post-merger combined market share of the three largest firms is 70 percent or more.

Merging entities are not required to notify CCCS of their merger but they should conduct a self-assessment to ascertain if a notification to CCCS is necessary. If they are concerned that the merger has infringed, or is likely to infringe, the Act, they should notify their merger to CCCS. In such cases, CCCS will assess the effect of the merger on competition.

Grab acquires Singapore’s third largest taxi operator Trans-cab through its GrabRentals arm