Grab SG to implement platform fee as competition watchdog drops restrictions

Grab Singapore will be imposing a SG$0.30 platform fee on each ride after the Competition and Consumer Commission of Singapore (CCCS) lifted restrictions it previously imposed on the firm. In July, Grab applied to the CCCS to allow the imposition of the platform fee, adding that a third of the funds collected through the platform fee will be committed towards offering benefits for driver welfare. Shortly after, CCCS sought for public feedback concerning the proposal.

In a statement to MARKETING-INTERACTIVE, Grab Singapore's MD, transport Andrew Chan said the introduction of a platform fee "will be the only change [it] will be making to [its] fares for the time being". "Otherwise, we are committed to maintain the current pricing structure and policies for at least the next six months given the COVID-19 situation," he added. Chan also stressed that Grab will be prudent with its pricing structure and policies. 

"We welcome the CCCS decision to release the directions that it has imposed on Grab since 2018, and remain committed to adhere to the requirements of the recently announced P2P regulatory framework," Chan said. 

He added that the commitment to elevate users' experience and service levels remains unchanged and the platform fee will enable Grab to maintain and improve safety measures, cover other relevant operating costs as well as look after its driver-partners' welfare sustainability.

CCCS issued an infringement decision against Grab and Uber on 24 September 2018 following the sale of Uber's Southeast Asia business to Grab, in return for a 27.5% stake in the latter. The competition watchdog found that the transaction, which was completed on 26 March 2018, infringed Section 54 of the Competition Act. The section states that mergers that have resulted, or may be expected to result, in a substantial lessening of competition within any market in Singapore for goods or services are prohibited.

Along with the infringment decision, CCCS also issued the directions to the parties to lessen the adverse impact of the transaction on drivers and riders, and to keep the market open and contestable. The directions sought to maintain Grab's pre-transaction pricing, pricing policies and product options in the ride-hailing platform services market and to remove all exclusivity obligations imposed by Grab on drivers and taxi fleets in Singapore. Both firms were fined SG$13 million in total, with Grab being slapped with a SG$6.42 million fine while Uber received a fine of SG$6.58 million.

However, after the implementation of the point-to-point (P2P) regulatory framework, companies such as Tada Mobility Singapore, Gojek, ComfortDelgro and Ryde were awarded ride-hail service operator licences (RSOLs). Other existing taxi operators have also been issued limited RSOLs to offer call booking services. As a result, there are a number of operators in the P2P sector today, CCCS said.

CCCS explained that the P2P regulatory framework administered by the Land Transport Authority and the Public Transport Council ensures that all licensed operators cannot prevent their drivers from driving for other operators. It also ensures that P2P fares are transparent and clearly communicated to commuters, while leaving fare levels to be determined by market forces.

Separately, the CCCS ceased its investigation into GrabFood and Deliveroo in August, which initially came about when both firms refused to supply online food delivery services to F&B operators using Smart City Kitchens' virtual kitchens. This led to CCCS to launch an investigation last September after noting that the conduct which involved the refusal to supply online food delivery services to competing virtual kitchens has ceased. With GrabFood and Deliveroo supplying their online food delivery services, CCCS said F&B operators using virtual kitchens now have the choice of using multiple online food delivery providers to expand their consumer reach.

Photo courtesy: 123RF