Grab completes Trans-Cab acquisition after interim ruling that deal likely violates antitrust law

SINGAPORE – Ride-hailing giant Grab’s year-long bid to buy taxi operator Trans-Cab has come to an end, with the parties informing Singapore’s competition authority they will not proceed with the planned takeover.

This comes two weeks after the Competition and Consumer Commission of Singapore (CCCS) issued an interim ruling on the deal, finding that it would likely lead to a significant lessening of competition in the passenger transport market, thereby violating Section 54 of the Competition Act, which prohibits anti-competitive mergers.

In a statement on July 25, CCCS said that with the completion of the proposed acquisition, Grab and Trans-Cab had withdrawn their application to the CCCS for a decision on the merger. ​​Accordingly, CCCS had also completed its assessment of the proposed transaction.

The CCCS said Grab and Trans-Cab expressed their respect for the regulatory process and appreciation to the CCCS for its thorough review in the letter. The CCCS also noted Grab’s commitment to operating in compliance with competition law and the company’s intention to make a positive contribution to the competitive landscape here.

“The CCCS encourages companies planning acquisitions to engage with the CCCS early in the process if they consider their plans may raise competition concerns,” the watchdog said.

Grab and Trans-Cab have been given 10 working days to propose solutions to address the issues raised by the CCCS in its interim decision, issued on 11 July following an in-depth review of the proposed buyout that began in January.

Once these 10 business days have passed, the CCCS would have to decide whether to block the transaction or not – a decision that is currently moot.

In its interim decision, the CCCS found that the proposed acquisition of Trans-Cab by Grab would likely entrench and strengthen Grab’s dominant position in the passenger transportation market, to the detriment of drivers and passengers.

The company said the proposed deal would significantly weaken competing ride-hailing platforms, which in turn could lead to higher prices for passengers and drivers if it goes ahead.

The watchdog said this was because Grab’s proposed purchase of Singapore’s third-largest taxi operator would deprive other ride-hailing platforms of an important source of drivers at a time when the industry is grappling with a driver shortage.

This would in turn impact the ability of competing platforms to fulfil ride requests and over time would become less attractive to passengers and drivers, the CCCS added.

On July 20, 2023, the Straits Times newspaper reported that Grab wants to buy Trans-Cab.

The proposed buyout, led by GrabRentals, Grab’s car rental arm, would include about 2,000 taxis and more than 300 rental vehicles, as well as the Trans-Cab car repair shop and fuel station.

The deal was expected to close in the fourth quarter of 2023, but CCCS expressed concerns about the acquisition in October 2023 after an initial two-month review, citing the potential to raise barriers to expansion and entry for competing platforms.

The competition regulator then initiated a second, more detailed review because it still had concerns about the likely reduction in competition if the deal went through, despite Grab’s unspecified commitments to the CCCS.

Industry observers say that even if the proposed deal goes through, Grab could demand a revaluation of its original offer, which was said to be worth more than $100 million.

This is because the Trans-Cab fleet would be old by then and by then the prices of vehicle entitlement certificates could have fallen significantly, reducing the value of the existing vehicle fleet.

Grab’s failure to buy Trans-Cab is reminiscent of the proposed 2017 merger between Singaporean taxi giant ComfortDelGro and U.S. ride-hailing company Uber.

ComfortDelGro had offered to buy a 51% stake in Lion City Holdings, the car-sharing company wholly owned by Uber, for $642 million, but the competition watchdog conducted a review and decided to move to a second, more detailed phase after raising antitrust concerns.

Before a decision could be made, in March 2018, Uber announced it was pulling out of Southeast Asia and selling its assets to Grab.

As a result, Grab and Uber came under antitrust scrutiny, with the CCCS imposing a combined fine of $13 million on both companies for their merger, which the regulator found violated competition rules.