THE Philippine Competition Commission (PCC) has penalized Grab and Uber P16 million for violating two interim measures on their merger.
In a news briefing on Wednesday, the PCC said it imposed a fine on the two parties for “causing undue difficulties” on the agency’s review of their controversial transaction. PCC Commissioner Stella Luz A. Quimbo explained Grab and Uber violated two interim measures, largely on failure to maintain their premerger conditions.
“This is for violating the interim measures order that the PCC issued last April 6. These fines are not for a finding of a substantial lessening of competition, but rather the fines are imposed for causing undue difficulties on the PCC review and decision-making process,” Quimbo said.
“The interim measures order [IMO] contained a total of seven interim measures. The PCC found violations in two of these measures,” she added.
The PCC found a total of 10 counts. Each count could be imposed a maximum of P2 million in fine under the Philippine Competition Act. Broken down, half of the fine (P8 million) is to be shouldered by Grab.
Uber is ordered to pay P4 million for, like Grab, failure to maintain its premerger conditions during the review, while the two parties are slapped P4 million in penalty for proceeding with the execution of their agreements even as the PCC is still looking into the acquisition.
The IMO, PCC Chairman Arsenio M. Balisacan said, is crucial in maintaining the agency’s review procedure, as well as its adjudicatory integrity. The IMO was issued to the parties to maintain premerger conditions in order to prevent any action that may prejudice the PCC’s ability to study the merger or to impose appropriate remedies.
“The IMO is a mechanism that protects the integrity of the PCC review and adjudicatory process. It requires full compliance by both Grab and Uber, and these fines reflect their deficiencies and violations,” Balisacan said.
The interim measures, the PCC said, is also intended to preserve the market conditions before Grab’s takeover of Uber. The PCC believes noncompliance with the IMO will influence and prejudice the quality of the review at that time.
Under the IMO, Grab and Uber were directed to maintain the independence of their operations and other conditions, such as platforms, pricing and payment policies, incentives, among others, in effect prior to March 25. The two parties were also instructed to refrain from executing any final agreement or contract that will transfer any asset, equity and interest by Uber to Grab.
The PCC also told Grab and Uber to refrain from providing access between them any confidential information, and to refrain from imposing exclusivity clauses, lock-in periods and termination fees to drivers.
Further, Grab and Uber were mandated to refrain from acts that may lead to lower viability and salability of businesses, as well as acts that will prejudice the PCC’s power to review the transaction and impose remedies. Last, they were told to refrain from performing any act that may further lead to the fulfillment of the merger.
“This is a fair reminder to parties subjected to merger reviews to cooperate and comply with the Commission’s orders. Selective compliance adds to the burden of the review process which, in turn, have real-life consequences on the public,” Balisacan said.
“We urge future transactions to observe due diligence,” he added.
In March, Grab acquired Uber’s operations in Southeast Asia in a move that put competition officials on their feet, as the buying party positioned itself as a dominant player in the ride-hailing market.