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Signage for Uber Technologies and Grab are displayed outside a building in Singapore, on April 26, 2018.
Singapore’s decision to fine ride-hailing giants Grab and Uber will not have any substantial impact on either company, and the situation underscores the global shortcomings of existing regulations to protect customers, a transportation expert told CNBC.
Following Uber’s sale earlier this year of its Southeast Asia business to the Singapore-based Grab, the city-state’s anti-trust watchdog on Monday slapped Grab and Uber with fines totaling about 13 million Singapore dollars ($9.5 million). The Competition and Consumer Commission of Singapore also directed the companies to open up the local market to new players and reduce the impact of a less-competitive field on drivers and consumers.
Although the multimillion-dollar price tag may seem steep, industry observers deemed the response as relatively positive news for Grab, which now dominates the market.
“These imposed fines are even less impactful than a slap on the wrist for Uber and Grab,” Corrine Png, CEO of transport research consultancy Crucial Perspective, told CNBC. She pointed to the massive market value of both companies and also to the fact that Grab raised billions of dollars in fresh funds following Uber’s withdrawal from the regional market.
In fact, she added: “The Billion Dollar question is whether Grab and Uber went ahead with the merger of their Southeast Asian operations knowing that any fine or penalties permitted by existing regulations would be dwarfed by the jump in Grab’s market valuation resulting from this merger?”
Uber is currently valued at $72 billion and Grab at $11 billion, according to the latest available data on CB Insights. The Singapore-based tech firm, which is backed by Japan’s SoftBank Group, raised about $2 billion in funding from Toyota and a host of financial firms in recent months.
Png added that Grab’s estimated valuation had jumped from $6.5 billion before the Uber deal, and that the American tech company had walked away with 27.5 percent of the Singapore-based firm.
“The reality on the ground is that the current existing regulations are not equipped to effectively protect consumers against this new breed of fast-growing ride-hailing tech giants with extensive reach and deep pockets,” Png said.
The Singaporean regulator began investigating the merger on grounds that it might have broken the country’s competition act and said that it received “numerous complaints” from both passengers and drivers using Grab’s services.
Source : CNBC
