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Grab And Uber Are Merging; Should We Be Worried?

This week, thousands of Uber users received a heartbreaking e-mail from the ride-hailing company that it is ceasing all operations and turning it over to Grab starting April 8, 2018.

 

Right off the bat, the announcement has sent people disappointed and worried. What will happen to Uber drivers? Will we have less cars available? And most importantly, what will happen to fares?

 

 

 

 

 

The Uber-Grab merger did not publicize the value of the deal but under its terms, Uber will cease operating in all of its South East Asian territories while taking a 27.5 percent stake in the Singapore-based Grab. Uber's chief executive, Dara Khosrowshahi, will also join Grab's board of directors.

Right now, Grab and Uber are the only ride-hailing apps offering its services in the Philippines. Because of Uber’s move to sell its soul to Grab, many believe that this will lead to a Grab monopoly—ergo, higher prices. 

Well, there’s still the PCC.

According to Philippine law, the Philippine Competition Commission (PCC) is an independent, quasi-judicial body formed to implement the Philippine Competition Act. This means that the PCC is tasked to promote and maintain market competition within the Philippines to keep competition in any industry healthy and, therefore, keep prices fair.

According to the regulations set by the PCC, in mergers that are either valued at P2 billion or where the value of either parties are at P5 billion, the deal will have to be reviewed by the PCC before it goes through. This means that Grab and Uber will have to wait for PCC to complete its review of the deal, whether it will not negatively effect the consumers, before everything is set in stone.

PCC Commissioner Johannes Bernabe emphasized that the public should be wary of mergers and acquisition deals because this may result in anti-competitive effects like poor quality of service and higher fares.

Grab and Uber will, of course, justify their deal and come forward with their proposals to ease the mind of the PCC. According to PCC Chairman Arsenio Balisacan, “We may actually undertake a motu propio review of the transaction. Once that’s known, they may come forward and try to discuss with us what’s our concerns. They come forward with remedies to avoid this costly process of undoing a consummated transaction.”

“We have to establish an analysis that transaction could lead to lessening of competition, if that’s the case and we tell the parties that information and if they don’t address concerns to our satisfaction, we will disallow the transaction,” Balisacan adds.

The Land Transportation Franchising and Regulatory Board (LTFRB) is also joining the party, and pledges to make sure that Grab is not taking advantage of its monopoly of the market to raise its prices. Lawyer Aileen Lizada, LTFRB board member, said that the LTFRB has the authority to regulate Grab’s fare and they cannot increase their fares without the approval of the committee. Otherwise, Grab risks their accreditation cancelled or suspended.

Right now, registration of three other ride-hailing firms are still pending before the LTFRB. We have been hearing the names of Lag Go, Owto, Hype, Hirna, and Micab expressing their interest to enter the Philippine market—and for the commuters’ sake, we hope that LTFRB completes its review and assessments of these companies soon.