Just as a rumor emerges that Uber may link up with rival Careem in the Middle East, the global ride-hailing giant is facing scrutiny from Singapore’s anti-trust watchdog following its recent merger with Southeast Asian competitor Grab.
In March 2018, Uber backed away from having a direct presence in the Southeast Asian market by selling its regional business to Grab in exchange for a 27.5% stake in the Singapore-based company. Through the deal, Grab took control of Uber’s ride-hailing busniness and UberEats food delivery services in Singapore, Thailand, Cambodia, Vietnam, Malaysia, Indonesia, Myanmar and the Philippines.
The move quickly sparked an investigation from the Competition and Consumer Commission of Singapore (CCCS). This week, the watchdog concluded that the deal led to a substantial decrease in competition in Singapore’s ride-hailing services sector, after collecting evidence from both companies and third parties. “The merged entity is likely to be able to increase prices and has in fact done so since the completion of the transaction,” reads a statement from CCCS published on Thursday, July 5.
As a result, CCCS suggested a number options to revive competition, and proposed financial penalties for both Uber and Grab. One proposal on the table is to remove all of Grab’s exclusivity arrangements with any taxi fleet.
The commission is currently inviting public feedback on the proposed solutions, and furthered that it may force Uber and Grab to unwind their merger if it cannot implement sufficient remedies to address “competition concerns.”
The potential setback for Uber in Singapore comes just as the San Francisco-based company has reportedly entered into preliminary talks to merge with Dubai-based Careem. Such a move could also impact ride-hailing competition in the Middle East, where Careem and Uber are locked in an intense battle for customers.
Uber and Careem do not disclose market specific financials, however it is unlikely they are profitable due to eroding margins from stiff competition.