WHILE the Philippine Competition Commission (PCC) intends to force Uber into continuing its operations in the Philippines, pending the review of its acquisition by rival Grab, both transportation network companies strongly opposed the interim measures proposed by the antitrust body.
Commissioner Stella A. Quimbo listed the possible interim measures that the competition watchdog would want to apply as part of its motu propio review of the merger between Grab and Uber during Thursday’s public hearing on the transaction.
Its main initial order involves maintaining the operations of Uber beyond April 8, the date that it is expected to take a complete exit from the Philippine market.
“The parties have to maintain the independence of their business operations and other conditions prevailing prior to March 25, which include, among others, 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 fees, charges and incentives to partner drivers,” Quimbo said during the public hearing.
Likewise, the possible measures may require both parties to refrain from providing access to confidential information, such as pricing, formulas, incentives, operations, marketing and sales policies, promotions, partner drivers and customers.
They may likewise be ordered to stop from imposing exclusivity clauses, lock-in periods and/or termination fees, and from performing any act that may lead to reduced viability and salability of the parties’ businesses.
“These are intended to ensure the integrity of the review is reserved. We want to conduct a proper review—one that is unbiased and reflective of market conditions,” Quimbo said.
Interim measures are put in place as the watchdog starts its motu propio review of the acquisition of Uber by Grab, rivals in the ride-hailing market.
The measures announced on Thursday, PCC Chairman Arsenio M. Balisacan noted, are still subject to an official order. The antitrust body will be deliberating the remedies proposed by both Uber and Grab before coming up with a firm decision.
“Based on the hearing, from the views and comments that we heard, we will further deliberate the interim measures, and then we will issue the order,” he said.
The agency aims to issue the official order before April 8, when Uber ceases to operate in the Philippines.
Tension continued to heat up inside the room, as the PCC and the parties involved discussed the interim measures presented by the government agency.
According to Grab Philippines External Legal Counsel Arlene M. Maneha, there is no need for the PCC to issue the somewhat “disproportionate” interim measures.
“We think the interim measures will not be necessary,” she said. “Any concern that the commission might have is not a real concern because nothing in the transaction merges the operations.” Maneha added that the acquisition in the Philippines only involved the drivers’ contracts, employees and other assets.
It, however, does not include proprietary assets, such as the app, pricing and incentive mechanisms, and marketing and sales policies, among others.
“We would like to emphasize the transaction does not involve the integration of the operations of both apps,” Maneha said. “We do not and will not have access to pricing mechanism and policies relating to sales and incentives.”
Also, it will be impossible for Uber to continue with its operations in the Philippines, according to Uber Chief Business Officer for Asia Pacific Brooks Entwistle.
“We no longer have any funding for me to use on this markets,” he said. “Our ability to hold or reinstate the is simply no longer there.”
Maneha added that the decision of Uber to leave the Philippines stemmed out from a corporate decision due to the $700-million losses it incurred in Southeast Asia.
“We have to emphasize that Uber exited this market. This is a very important fact. Uber has exited, it has made that commercial decision,” she stated. Already, Uber Philippines drivers are migrating to Grab, almost immediately after the March 25 announcement of the regional acquisition.
To recall, Grab’s founders announced in Singapore last week that they are acquiring Uber’s Southeast Asia units, namely: the Philippines, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand and Vietnam.
Under the deal, Grab is taking all of Uber’s shares in Southeast Asia. In exchange, Uber will receive a 27.5-percent stake in Grab.
Maneha added that there is no substantial lessening of competition in the space, as Filipino commuters still have other modes of transportation to choose from.
“The perception that there is high concentration in the relevant market would not be an accurate assessment. The market is far bigger,” she said, citing buses, jeepneys and even tricycles as other modes of option for commuters.
This, she said, is the case in Singapore, a highly-developed market with efficient public transportation.
Commissioner Johannes Benjamin R. Bernabe, however, did not buy the idea, saying that public transportation in the Philippines is unlike other nations.
“Public transport is very much developed in other jurisdictions, but in the Philippines it is not,” he said. “There are valid considerations, which are unique to the Philippines, and are considered by the mergers and acquisitions office for the interim measures.” Maneha added that there will be “sufficient competitive constraints in the market” given the forthcoming entry of new players in the ride-hailing space.
Land Transportation Franchising and Regulatory Board (LTFRB) Board Member Aileen B. Lizada listed four possible entrants in the market, namely: Hype, Lag Go, Owto, and Picar.
“We think that there will be sufficient competitive constraints in the market. We think that the anti-competitive concerns would be low because there are very low barriers to entry,” Maneha said.