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Notice of Infringement Decision Sale of Uber's Southeast Asian Business

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Notice of Infringement Decision Sale of Uber's Southeast Asian Business Section 68 of the Competition Act (Cap. 50B) Notice of Infringement Decision Sale of Uber’s Southeast Asian business to Grab in consideration of a 27.5% stake in Grab Date: 24 September 2018 Case number: 500/001/18 1 CONTENTS EXECUTIVE SUMMARY ..................................................................................................... 3 CHAPTER 1: THE FACTS .................................................................................................... 4 A. BACKGROUND ............................................................................................................ 4 B. THE PARTIES................................................................................................................ 6 C. THE TRANSACTION.................................................................................................... 9 CHAPTER 2: LEGAL AND ECONOMIC ASSESSMENT .............................................. 13 A. THE SECTION 54 PROHIBITION ............................................................................. 13 B. COMPETITION ISSUES ............................................................................................. 18 C. THE COUNTERFACTUAL ........................................................................................ 18 D. RELEVANT MARKETS ............................................................................................. 29 E. MARKET STRUCTURE ............................................................................................. 56 (a) Market Shares and Market Concentration ............................................................. 56 (b) Barriers to Entry and Expansion ............................................................................ 61 (c) Actual and Potential Competition .......................................................................... 77 (d) Countervailing Buyer Power ................................................................................. 91 F. COMPETITION ASSESSMENT ................................................................................. 93 (a) Non-Coordinated Effects ....................................................................................... 93 (b) Coordinated Effects ............................................................................................. 104 (c) Vertical Effects .................................................................................................... 106 G. EFFICIENCIES .......................................................................................................... 108 H. PROPOSED COMMITMENTS ................................................................................. 110 I. OVERALL ASSESSMENT ....................................................................................... 119 CHAPTER 3: INFRINGEMENT DECISION AND CCCS’S ACTION ........................ 119 A. ADDRESSEES OF THE INFRINGEMENT DECISION .......................................... 119 B. DIRECTIONS ............................................................................................................. 121 C. FINANCIAL PENALTIES ......................................................................................... 129 (a) Financial Penalties – General Points ................................................................... 129 (b) Calculation of Penalties ....................................................................................... 134 (c) Penalty for Uber................................................................................................... 140 (d) Penalty for Grab................................................................................................... 141 (e) Conclusion on Penalties....................................................................................... 142 ANNEX A: THE PARTIES’ ORGANISATIONAL CHART 2 EXECUTIVE SUMMARY 1. The Competition and Consumer Commission of Singapore (“CCCS”) has issued an infringement decision (“ID”) today as it has assessed that the sale of Uber’s1 Southeast Asian business to Grab 2 in consideration of Uber holding a 27.5% stake in Grab (“Transaction”) has resulted in a substantial lessening of competition (“SLC”) in the market for two-sided platforms matching drivers and riders for the provision of booked chauffeured point-to-point transport services (“CPPT platform services”) in Singapore (“Platform Market”). 2. After due consideration of the information obtained from Grab, Uber and third parties, CCCS finds that the Transaction has resulted in an SLC in the Platform Market by removing competition between Grab and Uber, which were each other’s closest competitor in the provision of CPPT platform services in Singapore. The merged entity is likely to be able to increase effective price and has evidently done so since the completion of the Transaction. Further, post-Transaction, Grab would have the ability and incentive to tie chauffeured private hire car (“CPHC”) rental companies and drivers who rent from these CPHC rental companies in exclusive arrangements and reinforce Grab’s position in the Platform Market by increasing the barriers to entry. 3. Given that SLC concerns have arisen from the Transaction in the abovementioned market, CCCS has also assessed the claimed efficiencies submitted by Grab and Uber (collectively, “Parties”). However, CCCS finds that the evidence does not suggest that the efficiencies claimed by the Parties are demonstrable, timely and/or will be sufficient to outweigh the detriment to competition arising from the Transaction. 4. Whilst Grab submitted to CCCS two (2) sets of commitment proposals dated 14 June 2018 and 26 July 2018 respectively, CCCS is of the view that neither would be appropriate or sufficient to address the SLC concerns arising from the Transaction in the Platform Market. 5. For the reasons set out in this ID, CCCS finds that the Transaction has infringed section 54 of the Competition Act (Cap. 50B) (“Act”). As such, CCCS directs a set of remedies and imposes financial penalties upon the Parties. 1 All references to “Uber” in this Notice may refer to Uber Technologies, Inc., and its subsidiaries and any other related entities including but not limited to Uber Singapore Technology Pte. Ltd., Lion City Holdings Pte. Ltd., Lion City Rentals Pte. Ltd., Lion City Automobiles Pte. Ltd., and LCRF Pte. Ltd.. 2 All references to “Grab” in this Notice may refer to Grab Inc., and its subsidiaries and any other related entities including but not limited to GrabCar Pte. Ltd., GrabTaxi Holdings Pte. Ltd., GrabTaxi Pte. Ltd., Grab Rentals Pte. Ltd. and Grab Rentals 2 Pte. Ltd.. 3 CHAPTER 1: THE FACTS A. BACKGROUND 1. On 26 March 2018, Grab3 and Uber4 (each a “Party”, and collectively referred to as the “Parties”) announced the sale of Uber’s Southeast Asian business to Grab in consideration of Uber acquiring a 27.5% stake in Grab (“Transaction”).5 2. Prior to the aforesaid announcement, there had been news reports speculating that there could be a potential transaction between Grab and Uber without definite details. On 9 March 2018, the Competition and Consumer Commission of Singapore (“CCCS”)6 sent a letter to each Party, explaining Singapore’s merger notification regime and CCCS’s corresponding powers to investigate, give directions, impose financial penalties and/or impose interim measures on merging parties. On 19 March 2018, Uber sent a letter informing CCCS that it will reach out to CCCS in the event it enters into an agreement that has effects on competition in Singapore. 3. After the announcement of the Transaction, CCCS sent a second letter dated 26 March 2018 to the Parties requesting clarifications on the details of the Transaction and whether (and if so, when) the Parties intended to notify the Transaction to CCCS. 4. CCCS notes that Uber and Grab began transferring Uber’s assets (including information and data) to Grab and migrating Uber drivers and riders to Grab’s chauffeured point-to- point transport platform (“CPPT platform”) immediately after the announcement and completion of the Transaction. 7 In particular, Uber started redirecting its riders and drivers to download the Grab app, and informing them that the Uber service will no longer be available in Southeast Asia after 8 April 2018.8 5. On 27 March 2018, CCCS commenced an investigation into the Transaction under section 62 of the Competition Act (Cap. 50B) (“Act”) as there were reasonable grounds for suspecting that section 54 of the Act had been infringed. 3 All references to “Grab” in this Notice may refer to Grab Inc., and its subsidiaries and any other related entities including but not limited to GrabCar Pte. Ltd., GrabTaxi Holdings Pte. Ltd., GrabTaxi Pte. Ltd., Grab Rentals Pte. Ltd. and Grab Rentals 2 Pte. Ltd. 4 All references to “Uber” in this Notice may refer to Uber Technologies, Inc., and its subsidiaries and any other related entities including but not limited to Uber Singapore Technology Pte. Ltd., Lion City Holdings Pte. Ltd., Lion City Rentals Pte. Ltd., Lion City Automobiles Pte. Ltd., and LCRF Pte. Ltd.. 5 Grab Merges with Uber in Southeast Asia, Grab, 26 March 2018 (https://www.grab.com/sg/press/business/grab- merges-with-uber-in-southeast-asia/). 6 CCCS was named the Competition Commission of Singapore (“CCS”) prior to 1 April 2018. Where appropriate, references to CCCS in this Notice may refer to CCS. 7 Grab Merges with Uber in Southeast Asia, Grab, 26 March 2018 (https://www.grab.com/sg/press/business/grab- merges-with-uber-in-southeast-asia/); Emails sent to riders on 26 March
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