Grab ends Trans-Cab buyout after provisional ruling that deal would likely flout antitrust laws

Ride-hailing giant Grab’s year-long bid to purchase taxi operator Trans-Cab has ended, with the parties telling Singapore’s competition watchdog that they will no longer be proceeding with the proposed acquisition.

This comes two weeks after the Competition and Consumer Commission of Singapore (CCCS) issued its provisional ruling on the deal, saying that it was likely to lead to a substantial reduction of competition in the ride-hailing market, thereby infringing Section 54 of the Competition Act, which prohibits anti-competitive mergers.

In a statement on July 25, CCCS said Grab and Trans-Cab have withdrawn their application to the watchdog for a decision on the acquisition. Accordingly, CCCS has ended its assessment of the proposed deal.

CCCS said Grab and Trans-Cab had expressed in a letter their respect for the regulatory process and their appreciation to the competition watchdog for the thorough review. CCCS also noted Grab’s commitment to operating in compliance with competition laws, and the company’s intention to contribute positively to the competitive landscape here.

“CCCS encourages businesses with acquisition plans to engage CCCS at an early stage of the process if they assess that their plans are likely to raise competition concerns,” the watchdog said.

Grab and Trans-Cab had 10 working days to offer solutions to deal with the concerns that CCCS had raised in its provisional decision, which was issued on July 11 after an in-depth review of the proposed buyout that began in January.

After these 10 working days, CCCS would have had to decide whether to block the deal or not – a decision that is now moot.

Asked why it chose not to proceed with the takeover, Grab said it did not have anything to add beyond the statement it issued on July 11, in which Grab Singapore managing director Yee Wee Tang said the company had wanted to support Trans-Cab in its digital transformation and help to improve its drivers’ livelihoods.

Trans-Cab founder and chairman Teo Kiang Ang told The Straits Times on July 11 that he did not have an opinion on the provisional ruling, and the taxi company would continue to operate as usual.

In its provisional decision, CCCS said that Grab’s proposed takeover of Trans-Cab would likely entrench and strengthen Grab’s already dominant position in the ride-hailing market, to the detriment of drivers and passengers.

It said the proposed deal would significantly weaken rival ride-hailing platforms here, which in turn could lead to higher prices for passengers and drivers, if it went through.

Grab’s proposed purchase of Singapore’s third-largest taxi operator would deprive other ride-hailing platforms of an important source of drivers at a time when the industry is facing a driver crunch, the watchdog said.

This would in turn affect the ability of rival platforms to fulfil trip requests and, over time, make them less attractive to passengers and drivers, CCCS added.

The Straits Times broke the news on July 20, 2023, that Grab wanted to buy Trans-Cab.

The proposed buyout, which was helmed by GrabRentals, Grab’s car-rental arm, would have included about 2,000 taxis and more than 300 private-hire vehicles, as well as Trans-Cab’s vehicle workshop and fuel-pump operations.

The deal was expected to close by the fourth quarter of 2023, but CCCS raised concerns about the takeover in October 2023 after a preliminary two-month review, citing the potential for the move to raise barriers to expansion and entry for rival platforms.

The antitrust regulator then initiated a second, more in-depth review, as it still had concerns about a likely reduction in competition should the deal proceed. This was despite unspecified commitments that were made to CCCS by Grab.

Industry observers had said that even if the proposed deal went through, Grab might have called for a revaluation of its initial offer, which was said to be worth more than $100 million.

This is because Trans-Cab’s fleet would have aged and, by then, vehicle certificate of entitlement prices might have fallen substantially, pulling down the value of its existing vehicle fleets.

Grab’s failure to purchase Trans-Cab mirrors the proposed merger in 2017 between Singapore taxi giant ComfortDelGro and US ride-hailing firm Uber.

ComfortDelGro had proposed to buy 51 per cent of Uber’s wholly owned car rental unit Lion City Holdings for $642 million, but the competition watchdog stepped in to conduct a review and decided to proceed to a second, more in-depth phase after raising antitrust concerns.

But before a decision was made, Uber announced in March 2018 that it was exiting South-east Asia and selling its operations to Grab.

This sale led to both Grab and Uber coming under antitrust scrutiny, with the CCCS fining the two companies a combined $13 million for their merger, which the watchdog found to be anti-competitive.

Source: Straits Times © SPH Media Limited. Permission required for reproduction.

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