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Measures against exclusivity in ride-hailing market should extend beyond interim: Experts

SINGAPORE — Although a new ride-hailing player is unlikely to enter the market before the Uber platform is terminated, experts agree that interim rules to keep the market contestable, if made permanent, will aid potential players’ entry into the market.

Interim measures ordered by the Competition and Consumer Commission of Singapore  will allow potential ride-hailing players to build up their network of drivers, without putting the market leader Grab at a disadvantage, analysts said. Jason Quah/TODAY

Interim measures ordered by the Competition and Consumer Commission of Singapore will allow potential ride-hailing players to build up their network of drivers, without putting the market leader Grab at a disadvantage, analysts said. Jason Quah/TODAY

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SINGAPORE — Although a new ride-hailing player is unlikely to enter the market before the Uber platform is terminated, experts agree that interim rules to keep the market contestable, if made permanent, will aid potential players’ entry into the market.

“This is important because in recent months you have talk of operators like Ryde and Go-Jek coming in,” said Singapore University of Social Sciences (SUSS) transport economist Walter Theseira.

Homegrown app Ryde said late last month it would be launching RydeX, its new private-hire car service, in the coming weeks. Singapore is reportedly one of the markets that Indonesia’s Go-Jek is considering expanding into.

Interim measures ordered by the Competition and Consumer Commission of Singapore (CCCS) on Friday (April 14) will allow potential players to build up their network of drivers, without putting the market leader Grab at a disadvantage, analysts added.

As part of the interim measures, Grab is not to subject new drivers to any exclusivity obligations, lock-in periods or termination fees. Drivers with Uber’s car rental arm Lion City Rental will be free to drive for any ride-hailing platform without facing impediments such as higher rentals or lack of insurance coverage.

Grab must also cease its exclusivity arrangements with all taxi fleets here, if there are no such agreements between any taxi fleet and another ride-hailing platform, and if all taxi operators allow their cabbies to drive for third-party platforms.

SUSS urban transport expert Park Byung-Joon hopes the measures will continue beyond the completion of CCCS’ investigations.

Without these clauses, many drivers cannot switch to different platforms and potential rivals cannot enter the market because much of the taxi fleet have tied up with ride-hailing operators, said Dr Theseira.

Yet, “in the event that all taxi drivers are now ‘free men’ and can take up bookings from any third-party ride-hailing platform, given that Grab has the largest market share and pool of riders, they will still flock to Grab”, said National University of Singapore transport researcher Lee Der-Horng.

In the wake of CCCS’ interim measures, Grab Singapore head Lim Kell Jay had said they should not have the unintended effect of hampering competition and restricting businesses that have invested in Singapore. “We trust the government will continue to be pro-business in providing a path for startups to flourish and become sustainable businesses,” he said.

Meanwhile, it is anybody’s guess if the Land Transport Authority – which is reviewing the regulatory framework for the point-to-point sector, including how to license private-hire car booking service operators – will complete its work by May 7, which is when the Uber platform will terminate.

When it comes to Grab’s acquisition of Uber’s South-east Asia operations, however, the commission’s interim measures are “almost moot” – in the words of NUS Business School associate professor Lawrence Loh – given the certainty of Uber’s exit here.

“Even if CCCS can stop the deal, it cannot stop Uber from unilaterally pulling out,” said Dr Park.

Professor Lee said users cannot expect the same level of operations and customer support on the Uber app and added: “Passengers and drivers would be better moving on to alternative platforms sooner rather than later, to get better service and support.”

During a public hearing conducted by the Philippine Competition Commission (PCC) on the Uber-Grab deal in South-east Asia, chief business officer of Uber Asia Pacific Brooks Entwistle was quoted by social media site Rappler as saying: “(From) a business standpoint, Uber exited eight markets, including the Philippines... Our funding is gone. Our people are gone. We don’t intend to come back to these markets.”

The interim measures are merely a way to allow drivers and riders time to make an orderly switch from Uber to Grab, said experts.

“Many drivers are still facing uncertainties, such as those still holding contracts with Lion City Rental and those that have been previously blacklisted by Grab, so far there has not been much of a clear resolution for them. The extension may potentially give them some time to figure out what to do next,” said Dr Theseira.

For now, users and drivers leaving the Uber app in large droves may mean that the May 7 date may become irrelevant, “because there may be nobody left on the app”, he said.

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