SG competition watchdog seeks feedback as Grab aims to impose SG$0.30 GST

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Grab Singapore has applied to the Competition and Consumer Commission of Singapore (CCCS) to allow the imposition of a SG$0.30 (SG$0.32 with GST) platform fee on each ride. According to CCCS, the company said it invests heavily to provide both passengers and drivers with a safe and pleasant experience on its platform.

According to Grab, the SG$0.30 platform fee per ride will enable it to “maintain and enhance the various safety measures and cover the relevant operating costs”. A third of the funds collected through the platform fee will be committed towards providing benefits for driver welfare, the company said. Grab also told CCCS in its application that this is a practice that is in line with ride-hailing industry norm, citing Gojek which has implemented a SG$0.70 platform fee. As a result, CCCS is inviting public feedback concerning the proposal from 28 July to 11 August.

In September 2018, CCCS fined Grab and Uber SG$13 million over the two firms’ merger, which it said led to “a substantial lessening of competition” in Singapore. Back then, Uber sold its Southeast Asian business to Grab in return for a 27.5% stake in the latter. Grab was fined SG$6.42 million while Uber was fined SG$6.58 million.

In addition to issuing the infringement direction, CCCS also issued directions to both Uber and Grab to lessen the adverse impact of the transaction on drivers and riders and to keep the market open and contestable. Under the directions, Grab is not allowed to change its pre-transaction prices or products without prior approval from CCCS. However, it may apply to CCCS to vary or remove the directions.

Grab is also required to maintain its pre-transaction pricing, pricing policies and product options (including driver commission rates and structures) for all its products in the ride-hailing platform services market.

“Grab submitted that it invests heavily to provide both passengers and drivers with a safe and pleasant experience on its platform. For passengers, these investments centre around improving their safety and security, fraud prevention and identity protection. For drivers, Grab invests to protect their livelihoods and well-being,” CCCS said in a statement.

According to CCCS, it will take into consideration whether Grab should be allowed to recover the investments it claims to have made into passenger safety and driver benefits; what should be the relevant time frame for assessing these additional investments claimed by Grab; as well as whether it is able to provide evidence to substantiate the investments it claims to have made into passenger safety and driver benefits, among others.

Meanwhile, Andrew Chan, MD, Transport, Grab Singapore said it invests millions annually to build and maintain tech features on its passenger and driver apps that contribute to the experience and service levels. Over 80 tech improvements were implemented on the platform in 2019, Chan said.

"The platform fee will enable us to maintain and improve safety measures, cover other relevant operating costs as well as look after our driver-partners’ welfare sustainably. Existing features such as number-masking, the emergency button and driver identity verification help to safeguard our users’ safety and security, as well as prevent fraud. Others like the driver telematics and heat-map support our driver-partners’ well-being and livelihoods while they are on the roads," he explained.

Chan added that if the platform fee is approved, Grab will look at rolling out below improvements for its users:

Doubling the benefit coverage of personal accident insurance for private hire vehicles;
Training allowance to help Grab driver-partners upskill and reskill;
Extend and increase benefit coverage of prolonged medical leave Insurance to all Grab driver-partners; and
Increase Grab’s contribution to GrabCar Medisave Match programme.

Last month, the ride hailing company cut about 360 employees and sunset several non-core products to better match changing business needs given the external environment. However, it is doubling-down on delivery verticals and has redeployed its staff to meet the increased customer demand for deliveries.