Grab-Uber deal emphasises need to prevent monopoly in taxi market

Friday, 2018-04-13 11:38:17
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Many have raised doubts about the likelihood that Grab might capitalise on its monopoly to increase prices.
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NDO - Uber’s withdrawal from the Vietnamese market not only marks the failure of one of the largest providers of software that connects taxi drivers and customers but has also left a sense of loss among local consumers.

As soon as the news emerged of Uber selling its Southeast Asia operations to Grab, many people have raised doubts about the likelihood that Grab might take advantage of its monopoly to increase prices.

Consumer reports suggest that on the first two days after the acquisition, Grab’s charges on many rides in Hanoi were hiked by 8-10%. For the same rides, Uber’s charges were usually 10-20% lower.

Grab’s promo codes are ample but fail to work most of the time, especially during rush hours. A great number of drivers are also worried about the merger between Uber and Grab since the number of drivers and the rate of commission will be higher.

In addition, if drivers cannot accept the new commission rate set by Grab, the company is willing to fire them without hesitation since it is recruiting thousands of former Uber drivers.

The Grab-Uber merger deal manifests an obvious risk of a giant’s monopoly and consumers will be the hardest hit since they will have fewer choices and will have to pay higher prices.

Following the announcement of the acquisition, Vietnam’s competition authority had a working session with Grab but the company failed to present any proof that the combined market share of Uber and Grab is less than 30%, the threshold for a company to be considered as holding a dominant position and capable of considerably restricting competition under Vietnamese law.

The competition authority has urged Grab to provide evidence and thoroughly assess the combined market share before the deal is finalised to ensure that it complies with Vietnamese law.

In a market economy, competition is inevitable, and each company has their own price and market development strategies. If a monopoly charges too much while its services are not commensurate, they will face a boycott.

Regulators need to ask Grab to provide sufficient data so that they could take prompt action if they uncover any signs of monopoly in order to protect consumer rights and guarantee fair competition between taxi firms.

Traditional taxi companies, for their part, need to embrace new technology as a way to enhance their services and meet consumers’ demand for better quality.