PCC orders Uber to continue operations pending merger review

The Philippine Competition Commission (PCC) said on Saturday it has ordered ride-hailing service firm Uber to continue operating its app for the entire duration of its motu proprio review.

“The PCC believes that Uber is capable of operating its ride-hailing app in the country, despite its claims that it has already exited the Southeast Asia market,” PCC Chairman Arsenio Balisacan said in a statement.

“Uber is highlighting its exit, but what it does not emphasize enough is its integration with Grab. Thus, Uber is not truly exiting the Philippine market, but rather effectively merging their operations with Grab here. The deal makes Uber a part-owner of Grab,” Balisacan said.

Uber Technologies agreed to sell its Southeast Asian business to regional rival Grab.

Uber will take a 27.5-percent stake in Grab, and Uber CEO Dara Khrosrowshahi will join Grab’s board.

As a result, the companies will implement an operational merger in the Philippines.

On the heels of the acquisition deal, Uber will be available in the Philippines only until April 8. Grab is currenly conducting an on-boarding process for Uber drivers to migrate to the Grab platform.

Grab Philippines counry head Brian Cu, for his part, said the on-boarding process will not be affected by the PCC's order.

Cu said Grab will continue to on-booard drivers that are on the Land Transportation Franchising and Regulatory Board's masterlist.

Balisacan said the merger will not be beneficial for the riding public.

“This move by Uber in the Philippine market leads to further substantial concentration of what is, to begin with, an already highly concentrated ride-sharing market. This virtual monopolization of the market by Grab can harm the riding public,” Balisacan said.

Early this week, the PCC announced it is looking at the possibility of reviewing the move of Grab to buy the Southeast Asian business of Uber motu proprio.

As a motu proprio case, the PCC can review business transactions on its own, without any notification from the companies involved in mergers and acquisitions (M&A) that fall within the purview of the antitrust law.

The PCC said it has conducted a public hearing with representatives of the parties on Thursday regarding the imposition of interim measures.

On Friday, the PCC issued interim measures on Grab's acqusition of Uber in the Philippines.

The directive also puts Grab's move to acquire its competitor to a halt while the antitrust body is reviewing the deal.

The interim measures orders Grab and Uber to maintain the independence of their business operations and other conditions prevailing prior to March 25, 2018, which include ride hailing and delivery platforms; pricing and payment policies including incentives and promotions to riders; product options; customer and rider database; and on-boarding of new partner drivers as well as the fees, charges, and incentives to partner drivers, among other measures.

“Uber’s compliance with our antitrust counterpart in Singapore to extend the operation of its app indicates the feasibility of continuing its operations in the Philippines as well,” Balisacan said.

The PCC said that its order shall not prevent Uber employees from exercising their freedom to seek employment opportunities elsewhere and Uber drivers from switching to Grab or to use both platforms.

The PCC has the mandate to protect competition in the market and prohibit anticompetitive conduct, including mergers and acquisitions of businesses and companies that may substantially prevent, restrict, or lessen competition.

A merger or acquisition review using competition lens will determine whether the merger of two players in the ride-sharing market will substantially lessen competition. The PCC may prohibit any merger should anticompetitive concerns arise out of the transaction review.

The PCC is mandated under the Philippine Competition Act to review mergers, acquisitions and joint ventures of firms across all sectors. —ALG, GMA News