THE Philippine Competition Commission (PCC) has ordered Grab to refund its users amounting to P5.05 million for violating its commitments to regulate prices and improve service quality as a virtual monopoly in the ride-hailing market.
PCC Chairman Arsenio M. Balisacan on Monday announced the agency imposed a penalty of P23.45 million on Grab for breaching its price commitments. The fine is an accumulation of all of the firm’s violations during the three quarters of its undertaking, he explained.
Of this total, Grab has to transmit to government coffers the sanctions for the first quarter and the second quarter and return to its users the penalty for the third quarter.
“To break this down, a fine of P11.3 million has been imposed for the first quarter, P7.1 million for the second quarter and P5.05 million for the third quarter. To kick off the refund system, the disgorgement mechanism shall be applied on the third-quarter fine, with Grab being ordered to refund P5.05 million to affected riders,” Balisacan said in a news briefing.
Grab has to refund its passengers through their accounts in GrabPay—the app’s online wallet—within a period of 60 days from receipt of the order, Balisacan explained.
Over one year since Grab acquired the operations of rival Uber in the whole of Southeast Asia, it has yet to see a respectable competitor in the Philippine ride-hailing market, Balisacan said. As such, the PCC directed Grab to keep on implementing its nonexclusivity, service quality and price-related commitments, which are conditions for the Uber merger to be cleared.
These commitments include allowing drivers to choose to operate with any transport network company, not tying them through an agreement, policy or incentive, and obliging Grab to assist drivers when applying for permits and licenses, even when serving for competitors.
Further, Grab should remove the feature allowing the driver to view the passenger’s destination that used to result in cancellation of booking if the endpoint is too far. The firm is also tasked to be transparent with its customers by showing how fares are arrived at.
“Now entering the second year of PCC’s monitoring, we have maintained the same framework, but introduced new mechanisms to ensure Grab’s compliance with its commitments,” the PCC chief said.
“One of these new tools to be implemented is the disgorgement mechanism that will return price excesses to riders if Grab breaches the monthly average fare cap set by the commission. This mechanism ensures that the public will directly be given a rebate through their individual GrabPay accounts,” he added.
According to Balisacan, Grab can be penalized up to P2 million per breach under the extended undertaking of its commitments, which will be monitored by a third- party audit firm, soon to be identified by the PCC through a selection process.
“The PCC stands to guard against any breach of the extended undertaking through an appointed impartial third-party trustee to independently monitor Grab on its commitments. Violations will subject Grab to fines up to P2 million per breach, or even the nullification of the decision conditionally clearing the transaction,” Balisacan added.
In an interview with reporters, PCC Commissioner Johannes R. Bernabe said the antitrust body will keep on regulating Grab’s operations until such time competition concerns are addressed and a respectable competitor enters the market.
According to PCC officials, Grab has a share of roughly 99 percent of the ride-hailing market—effectively making it a monopoly in this transport sector. As such, they will only clear Grab of its commitments once a competitor with a 20-percent share enters the market.
Last year the competition regulator initiated a motu proprio review of the Grab-Uber merger, as it argued the buyout virtually made the acquiring party a monopoly in the ride-hailing market in the Philippines.
Grab: We’re complying
In response to the PCC’s order, Grab said it is working within the bounds of the fare matrix set by the Land Transportation Franchising and Regulatory Board. Still, the firm committed to work closely with the antitrust agency in implementing the refund, which will be communicated to its patrons five days before payment.
Further, the lone player in the ride-hailing market said it is looking forward to complying with its service and price commitments under the guidance and oversight of the PCC.
“We respect the PCC and its mandate to protect the consumers of the Philippines and create a healthy competitive environment. Grab Philippines has worked closely with the PCC to form and finalize these voluntary commitments,” Grab said in a statement.
Image credits: Alysa Salen