The House of Representatives on Tuesday called on the government to transfer the supervision of transportation network companies (TNCs) from the Land Transportation Franchising and Regulatory Board (LTFRB) to the Department of Transportation (DOTr) and ensure that no monopoly prevails in the ride-hailing sector.
House Committee on Appropriations Vice Chairman Luis Raymund F. Villafuerte Jr. of the Second District of Camarines Sur and House Committee on Transportation member Party-list Rep. Ciriaco Calalang of Kabayan issued separate statements in the wake of the recent acquisition by Grab Philippines of the Southeast Asian operations of its main rival, Uber.
Emerging monopoly?
Senators, meanwhile, raised the red flag on Tuesday on the Grab-Uber merger deal over its impact on competition policy and commuter welfare.
Following reports confirming the Grab buyout of its sole competitor, the chairmen of two vital Senate committees urged caution in the merger of Grab and Uber, prodding regulators to closely watch merger’s possible impact on competition policy and consumer welfare.
Sen. Sherwin T. Gatchalian, economic affairs committee chairman, alerted government regulators to specifically guard against an emerging potential monopoly in the ride-hailing business.
“Even though [neither] Grab nor Uber has notified the Philippine Competition Commission [PCC] about the recent buyout by the former of the latter, the regulator should be wary about a creation of a new monopoly in the ride-sharing industry that can be detrimental to commuters,” Gatchalian said.
In a news statement, the senator stated that, in the absence of any competition, the PCC should closely look out and guard against “any possible anticompetitive practices that will take advantage of this situation.”
“We believe that this buyout is not favorable to the Filipino commuters, as it would lessen choices for all of us,” Gatchalian said, adding that “the PCC is now our last bastion for fair and reasonable conduct in the ride-sharing industry.”
Sen. Grace Poe, who chairs the public services committee tasked to review franchises, however, did not rule out the possibility that another investor may be enticed to enter the TNVS business to compete with the Grab-Uber monopoly.
“Although this is a business decision that should ultimately be settled between Grab and Uber, it is still imbued with public interest,” Poe said, adding, “We all know that thousands of commuters rely on TNVS to ferry them to work and other places of destination.”
She added “the most important thing is that service to our commuters will not be disrupted.”
Ill-conceived guidelines
According to Villafuerte, the buyout by Grab of its biggest rival in the business has led to a monopoly in the ride-hailing business in the country.
“This monopoly would leave the public at the mercy of a single mega transport network vehicle services company that would be able to dictate fare prices and be less enthusiastic in improving its services, knowing that riders are left with very limited options,” Villafuerte said.
Grab has recently announced that it had acquired Uber’s operations in the Philippines and the rest of Southeast Asia. Under the share swap agreement, Uber would be getting a 27.5-percent stake in Grab. Uber will shut down its operations here starting April 8 as part of the deal.
Villafuerte said the LTFRB has been coming up with ill-conceived guidelines for TNVS because of its misguided interpretation on the role of these service providers.
“The LTFRB treats TNVS as common carriers like taxicabs and passenger buses when the nature of the service they provide clearly show that they are not. This is probably the reason it is having a hard time coming up with the guidelines,” Villafuerte said.
He added that, to provide a permanent solution to this issue, Congress should swiftly tackle and approve his proposal of coming up with a separate regulatory framework for TNVS and TNCs like Grab.
Villafuerte earlier filed House Bill 6467, which, among others, proposes that the DOTr, and not the LTFRB, should have authority over TNCs and TNVS, because the vehicles used in these point-to-point transport services are private carriers and not common or public carriers that fall under LTFRB supervision.
He said TNVS like the drivers of Uber and Grab should be classified as private carriers because they can choose not to offer their car-riding services by signing off from the platform, and their services are by special agreement only, unlike “common carriers,” which are persons, corporations or associations engaged in the business of carrying or transporting passengers or goods or both for compensation.
Villafuerte said TNCs do not provide transportation services, but merely link a potential customer with a third-party driver or TNVS, and are thus not parties to a transportation contract.
To protect the riding public, he said, the bill requires TNCs and TNVS to secure permits from the DOTr, which is authorized to compel them to secure comprehensive insurance policies; conduct safety inspections of prospective TNVS before these are approved for use; and oversee drivers through stringent background checks, among other requirements.
Not good
Given the new development of the sale by Uber of its entire Southeast Asia business to Grab, Calalang, for his part, said the Philippines now suddenly finds itself with a ride-hailing service monopoly, “a situation that is not good for the riding public because of the lack of competition and competitive pricing.”
“It may take some weeks or months for the effects of the Uber sale to Grab to cascade to the Philippines, but it will eventually happen,” Calalang said.
“The urgent task now before the LTFRB is for it to adjust to the new situation by allowing the entry of more ride-hailing services and promulgating sound fare-setting mechanisms. U-HOP, the other TNC, as it is now is not as large an operation as Grab will very soon be,” he added.
Calalang said the LTFRB should proactively encourage other TNCs to enter the Philippine market in order to serve more passengers and break the monopoly of Grab.
“The LTFRB can do so by reducing red tape inside the office, setting new regulations opening the TNC sector to new investors both local and foreign and creating an environment ready for the influx of new TNCs,” he said.
“Such a proactive move shall benefit the riding public, healthy competition naturally breeds innovations, new technologies, higher standard and lower prices,” the lawmaker added.
He added the riding public needs more choices and better price options, and this means having more than just Grab and U-HOP, saying two or three more TNCs can address the huge demand, not just in Metro Manila, Metro Cebu and Metro Davao but also in the highly urbanized cities of Cavite, Laguna and Bulacan.
“A liberal, yet public safety grounded LTFRB policy, through a board resolution encouraging more TNCs to be accredited, is what the new environment calls for,” he said.
“If, after some reasonable time, the LTFRB is unable or unwilling to protect the riding public with these measures, then it may very soon be necessary for Congress to divest the LTFRB of its power to regulate TNCs,” he added.
According to Calalang, the Congress might opt to regulate the TNCs with its power to grant legislative franchises or transfer the regulatory authority of the LTFRB over TNCs to another government agency.
6 comments
tama naman si senator poe, maraming commuter ang umaasa s mga TNVS kaya bakit aalisin ng LTFRB?
mukhang si sen.poe lang tlga ang nagtatrabaho s senado ah
mas effective ang mga TNVS hindi maarte s pasahero at hind bulok ang mga sasakyan
kaya bkit ititigil mag operate ang mga grab at uber? paatras kung mag isip ang LTFRB eh
nkakabilibg si senator poe kung pano magtrabaho at mag asikaso para s mga needs ng mga kababayan natin
they still have taxi competitors., they arrived in this decision to merge basically one of the reasons is because of incompetent regulators like LTFRB.