Grab and Uber’s merger is facing heat from the anti-trust body in Singapore, which wants to fine the companies and warned it could unwind the deal if it hurts competition.
According to Reuters, while Uber sold its Southeast Asian operations to Grab in March and got a stake in Grab as part of the deal, the transaction is now getting more scrutiny by regulators, including the Competition and Consumer Commission of Singapore which took the rare step of starting an investigation into the deal days after the two companies announced it. The commission said it is proposing fines because Grab and Uber went ahead with the deal despite anticipating it would result in less competition in Singapore. Reuters noted it marks the first time the Competition and Consumer Commission of Singapore (CCCS) imposed fines on a merger deal. It is looking at the companies’ arguments on the matter before coming up with the amount of fines the two will face. The commission also wants Grab and Uber to get rid of exclusivity contracts with drivers and exclusivity agreements with taxi fleets. It also proposed Grab maintain its pricing algorithms prior to the deal with Uber as well as its commission rates until competition picks up again.
The CCCS also said that it could unwind the deal in the absence of feedback from the companies that they will follow the proposed remedies or any other remedies the commission puts forth. Uber was able to turn a $2.5 billion profit during the first quarter of 2018, due to the company selling its Southeast Asian business to Grab and its Russian business to Yandex. According to Bloomberg, Uber revealed it has $6.3 billion in cash, not including a $1.5 billion term loan that the company inked in March. Uber valued the paper gain from selling its Russian and Southeast Asian businesses in exchange for stock in local companies at $2.9 billion. But the company also had a loss of $312 million before interest, taxes and other expenses in the same quarter.