PCC Fines Grab, Uber PHP16 Million for Violating Order
The Philippine Competition Commission (PCC) may have approved Grab Philippines’s acquisition of Uber Philippines on August 10 but it seems the antitrust authority isn’t finished yet with the whole matter as it has meted a PHP16 million fine on both companies “for violating key provisions of the Interim Measures Order (IMO) during the merger review period of the antitrust authority.”
The fine stems from both Grab and Uber’s failure to keep their respective business separate as the acquisition was still being reviewed by the PCC. The PHP16 million fine is broken down as follows: PHP4 million collectively for both Grab and Uber for failing to keep the businesses separate and by granting Uber a seat on Grab’s board during the review period; PHP8 million for Grab for failing to maintain the conditions before the acquisition such as pricing polices, rider promotions, driver incentives, and service quality; and PHP4 million for Uber for failing to comply with the Land Transportation Franchising and Regulatory Board’s (LTFRB) cease and desist order at that time pending the result of the PCC’s review.
“The IMO is a mechanism that protects the integrity of the PCC review and adjudicatory process. It requires full compliance by both Grab and Uber and these fines reflect their deficiencies and violations. Undue difficulties generated by the parties become efficiency challenges in PCC’s review process,” said PCC Chair Arsenio M. Balisacan in a statement.
According to the PCC, when it issued the IMO, it was to preserve the market conditions before Grab officially took over Uber. This included the following:
- Maintain the independence of their business operations and other conditions prevailing prior to March 25, 2018 (i.e. platforms; pricing and payment policies; incentives; promotions; database; on-boarding of drivers; etc.)
- Refrain from executing any final agreement or contract that will transfer any asset, equity, interest, including the assumption by Uber of a board seat in Grab;
- Refrain from providing access between parties any confidential information (i.e. pricing, formulas, incentives, operations, marketing and sales policies, promotions, customer and driver database);
- Refrain from imposing exclusivity clauses, lock-in periods and/or termination fees to drivers;
- Refrain from acts that may lead to reduced viability and saleability of businesses;
- Refrain from acts that will prejudice the PCC’s power to review the transaction and impose remedies; and
- Refrain from performing any act that may lead and/or further lead to the consummation of the transaction.
By not complying with the IMO, the PCC feels that its review of Grab’s acquisition of Uber has been affected. If that is indeed the case, then it is odd that the antitrust authority still approved the acquisition on August 10.
The PCC also cited the parties’ own Transition Services Agreement that acknowledged Grab and Uber are obliged to comply with the requirements of governmental authorities in places where they operate, including the Philippines. While Grab Holdings Inc. and Uber B.V. are businesses operating on a global scale, both MyTaxi.PH, Inc. and Uber Systems Inc. were businesses operating in the Philippines at the time of issuance of the IMO, making the transaction within the scope of the Philippine Competition Act.
“This is a fair reminder to parties subjected to merger reviews to cooperate and comply with the Commission’s orders. Selective compliance adds to the burden of the review process, which in turn have real-life consequences on the public. We urge future transactions to observe due diligence,” Balisacan concluded.