Uber Sale Off to Bumpy Start With Southeast Asia Regulators

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By Lien Hoang

Uber Technologies Inc.'s proposed sale of its Southeast Asian operations to rival Grab suffered another blow April 16 when Philippine regulators said they would review the deal to “level the playing field.”

It’s the latest development in an array of actions from Southeast Asia’s competition regulators over the transaction. Singapore has already ordered Uber not to exit its market during a pending antitrust probe, and its regulators said April 13 that Grab should end its exclusivity agreements with all taxi fleets. The Competition and Consumer Commission also said Uber must continue doing business in the island state until May 7.

Competition agencies in the region have been investigating the transaction since the two app makers announced a share-swap March 26. Founded in Malaysia, Grab is supposed to take over Uber’s business in the region, but the rocky transition has been marked by app glitches and regulatory suspicion.

The Uber app stopped serving the Philippine market April 16, even though the government ordered it not to do so. Philippine regulators demanded that the ride-hailing company explain by April 17 why it didn’t obey the order.

Malaysian authorities said they are following the transaction closely. The Vietnam Competition Authority in Hanoi launched a 30-day investigation April 13 into “signs of violating regulations on economic concentration stated in the competition law.”

Under the proposal, Uber would hand over its operations in eight Southeast Asian countries in exchange for a board seat and 27.5 percent stake in Grab.

Ultimate Departure

Regulators might not be able to forestall Uber’s departure from Southeast Asia, but their actions can still keep competition lively, said Benjamin Wong, a teaching assistant in competition law at the National University of Singapore.

“The interim measures decision keeps the market contestable, which prevents Grab from raising barriers to entry into the Singapore market,” he told Bloomberg Law. “This is particularly significant because of the existence of potential entrants into the market, such as Ryde and Go-Jek.”

The Ryde app focuses on carpooling in Singapore, Hong Kong, and Malaysia. Go-Jek is a motorbike taxi company from Indonesia.

93 Percent

“Grab’s buyout of Uber will mean gobbling up 93 percent of the ride-hailing market,” the Philippine Competition Commission said. “In the end, PCC stands with the passengers to protect them from the perils of monopoly.”

Regulators in both the Philippines and Singapore are requiring the two companies to retain the pricing policies they had before they sealed their deal.

Grab can’t use Uber’s historical trip data but can take data from Singaporean users who convert to the app voluntarily, Singapore’s interim measures said. Grab is also required to make explicit that Uber riders and drivers have no obligation to migrate to Grab.

“The parties are each other’s closest competitors and have a significant combined market share,” the Singapore commission said. “Their close rivalry can be seen from the surge in Uber’s fares following the recent outages of Grab’s app.”

Uber referred all media questions to Grab, which has agreed to the Singapore government’s terms.

“The interim measures should not have the unintended effect of hampering competition and restricting businesses that have already been investing in the country over the years,” Grab Singapore head Lim Kell Jay said in a statement. “We’re proud to headquarter in Singapore, where the country’s free-market economy and policies enable businesses to compete and innovate vigorously to solve customer needs.”

To contact the reporter on this story: To contact the reporter on this story: Lien Hoang in Ho Chi Minh City at correspondents@bloomberglaw.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com

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