Uber-ComfortDelGro tie-up: Watchdog identifies several issues that could affect competition
The proposed tie-up between taxi giant ComfortDelGro and ride-sharing firm Uber still hangs in the balance, with the competition watchdog saying the first phase of its review could not “conclusively determine” competition issues would not arise. TODAY file photo
SINGAPORE — The proposed tie-up between taxi giant ComfortDelGro and ride-sharing firm Uber still hangs in the balance, with the competition watchdog saying the first phase of its review could not “conclusively determine” competition issues would not arise.
In a statement on Monday (Feb 19), the Competition Commission of Singapore (CCS) said it has pinned down several issues that may affect competition in the market. They require further assessment.
The issues include whether the UberFlash service launched last month involved coordination on pricing between competitors and whether ComfortDelGro’s flat-fare option without surge pricing will continue to be available to commuters.
Other issues include whether the availability of street hails and phone bookings will be affected by the tie-up, and if taxi and private-hire car drivers can accept bookings from multiple ride-sharing platforms if they wish to.
The CCS has requested that the parties submit further information by Mar 5, unless they can address the concerns identified.
The CCS will then conduct an “in-depth assessment” that includes canvassing public feedback and views.
It will also determine whether the proposed tie-up would restrict or reduce competition, or abuse a dominant position.
The second phase of this review could take up to 120 working days from the time the additional information is received, the CCS said.
Under the Competition Act, in cases where agreements are eventually found to prevent, distort or restrict competition, firms are given immunity from a financial penalty from the time they notify the CCS of a proposed partnership, until the commission reaches a decision.
Such immunity, however, does not apply to agreements that abuse a dominant position or mergers that result in or may cause a substantial reduction in competition.
“Therefore, if (UberFlash) is subsequently found to infringe (these), the parties must terminate the service or they may be liable to financial penalties imposed by the CCS,” the watchdog told TODAY last month.
When contacted, Uber and ComfortDelGro said they intend to file all relevant documents and address the CCS’s concerns and questions.
Both said they remain committed to the partnership.
Launched on Jan 19, the UberFlash service combines cars from the low-cost UberX service with ComfortDelGro taxis on Uber’s app. It is subject to surge pricing, where fares rise when demand goes up.
Both companies had said the service would offer fares up to 10 per cent cheaper than the regular price on the UberX service.
A week after the service was launched, TODAY reported that many taxi drivers from ComfortDelGro were not participating in it after complaining that their earnings have been hit by low fares.
About 30 per cent of ComfortDelGro drivers who signed up for the service were not using it then, Uber’s figures showed.
The launch of UberFlash came more than a month after the two companies announced a S$642 million tie-up that will see ComfortDelGro acquiring a 51 per cent stake in Uber’s car-rental arm here.
Dogged by stiff competition from private-hire car firms, ComfortDelGro announced last week that its full-year operating profit sank by 11.5 per cent to S$409.2 million in 2017. The company ascribed the weaker performance to a drop in its taxi business.
At the end of last year, its fleet of Comfort and CityCab taxis stood at 13,244, about 21 per cent smaller than a year ago.
