Uber's $6.58m fine suspended amid appeal

US ride-hailing giant's appeal against ruling on Grab merger to be heard later this year

The $6.58 million fine levied against ride-hailing giant Uber for its merger with former rival Grab last year has been suspended pending its appeal, which will be heard later this year.

Uber's appeal against the commission's ruling that its deal with Grab was anti-competitive is now before the Competition Appeal Board, a spokesman for the Competition and Consumer Commission of Singapore (CCCS) said in response to queries from The Straits Times. An appeal hearing will be held in the second half of this year.

"Uber's obligation to pay the financial penalty has been suspended pending the outcome of Uber's appeal," the spokesman said.

In March last year, Uber announced that it was exiting South-east Asia - including Singapore - and that its regional business would be acquired by Grab.

This was in exchange for the American ride-hailing giant getting a 27.5 per cent stake in Grab, and a seat on the Singapore-based firm's board.

In September, the CCCS said the deal had reduced competition in the ride-hailing sector and had gone against Section 54 of the Competition Act, which prohibits mergers that could significantly reduce competition in any market here.

Both firms were fined a combined $13 million.

In deciding to appeal, Uber argued that the competition watchdog's ruling - which deemed that the deal had substantially lessened competition, and that the American firm had intentionally breached the law - was "unsupported and incorrect".

 
 

Grab decided not to appeal and has paid $6.4 million, its share of the fine.

The CCCS had previously also said that measures imposed on Grab could be suspended if a competitor attains a 30 per cent share of the market for one month, and that both Uber and Grab could have their penalties lifted if this competitor maintains a 30 per cent share for six consecutive months.

Asked whether new entrant Gojek had attained the 30 per cent market share necessary for these clauses to kick in, the commission would say only that it is "monitoring developments in the ride-hailing sector at the moment".

The Indonesian start-up first started rolling out its services here in November last year, as part of a US$500 million (S$677 million) regional expansion.

A survey by research firm Kantar in January found 80 per cent of respondents here saying that Grab was the ride-hailing service they used most frequently.

This tallies with the commission's findings last year that Grab's market share had grown to 80 per cent following the deal with Uber.

Gojek's growth outside its home market is likely to continue to be "slow and bumpy", said Mr Li Jianggan, founder of tech investment firm Momentum Works.

"I would say it would be hard for Gojek to hit the 30 per cent market share, unless they are willing to invest much more on both promotions and product," he added.

While introducing corporate plans or loyalty programmes could help Gojek build its customer base, a quick fix for the Indonesian firm would be to offer lower prices, noted Mr Li.

"This will depend heavily on their fund-raising progress for the current round," he said.