PCC slaps P16-million fines on Grab, Uber

Published October 17, 2018, 12:00 AM

by manilabulletin_admin

By Emmie V. Abadilla

The Philippine Competition Commission (PCC) has slapped a P16-million fine on Grab Philippines and Uber for violating key provisions of the Interim Measures Order (IMO) during the merger review period of the anti-trust authority.

Philippine Competition Commission
Philippine Competition Commission

The commission issued the IMO to the two ride-hailing firms to maintain pre-transaction conditions and prevent any action that may prejudice PCC’s ability to review the merger or impose appropriate remedies.

“The IMO is a mechanism protecting the integrity of the PCC review. It requires full compliance by both Grab and Uber and these fines reflect their deficiencies and violations,” explained PCC Chair Arsenio M. Balisacan.

Overall, “Undue difficulties generated by the parties become efficiency challenges in PCC’s review process.”

For failing to keep their businesses separate, PCC collectively fined the two firms P4 million. In addition, PCC penalized them for failing to delay Uber’s assumption of a board seat in Grab during the review period.

Grab, on its own, was found liable of an P8-million penalty for failing to maintain pricing policies, rider promotions, driver incentive and service quality before the transaction.

Uber, as the acquired party, was fined P4 million – half of Grab’s fine for the same set of violations.

The Commission noted that Uber had to comply with the cease and desist order by the Land Transportation Franchising and Regulatory Board (LTFRB) set at that time.

The parties committed ten acts of violation, referring to two out of the seven measures in the order. Each act of violation corresponds to a fine ranging between P50,000 to P2 million.

The interim measures were meant to preserve the market conditions before Grab’s takeover of Uber.
In issuing the IMO, the PCC recognized that non-compliance with the measures would affect and prejudice the quality of the review at that time.

The measures were meant to maintain the independence of the companies’ business operations and other conditions prevailing before their merger this March, taking into consideration factors such as platforms, pricing and payment policies, incentives, promotions, database and on-boarding of drivers.

The measures also intended to make the companies refrain from executing any final agreement or contract that will transfer any asset, equity, interest, including the assumption by Uber of a board seat in Grab; providing access to confidential information between parties, such as pricing, formulas, incentives, operations, marketing and sales policies, promotions, customer and driver database.

Furthermore, they sought to discourage the parties from imposing exclusivity clauses, lock-in periods or termination fees to drivers, or from action leading to reduced viability and saleability of businesses, prejudicing the PCC’s power to review the transaction and impose remedies.

Earlier, PCC asked Grab and Uber to explain why they should not be penalized for their failure to keep their businesses separate, failure to maintain independent operations at pre-transaction conditions, Grab’s access to Uber’s confidential information, Uber’s assumption of board seat in Grab, and further consummation of the transaction in Grab despite the Interim Measures Order.

The Commission also cited the parties’ own Transition Services Agreement that acknowledged Grab and Uber are obliged to comply with the requirements of governmental authorities in places where they operate, including the Philippines.

While Grab Holdings, Inc. and Uber B.V. are businesses operating on a global scale, both MyTaxi.PH, Inc. and Uber Systems Inc. were businesses operating in the Philippines at the time of issuance of the IMO, making the transaction fall under the Philippine Competition Act.