Grab-Uber deal calls for end of monopoly in ride-hailing market

Friday, 2019-02-15 12:39:06
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There is still plenty of room for growth in the ride-hailing market, an attractive pie to both domestic and foreign companies.
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NDO - The final verdict on whether Grab’s acquisition of Uber violates Vietnam’s competition laws has yet to be decided, pending further investigation. But the impact of Grab’s monopoly on service quality has already been too obvious.

A level playing-field

The negative sides of Grab’s monopoly following its acquisition of Uber’s Southeast Asia business are not only present in Vietnam. In other countries, the merger immediately invited fines from national competition agencies.

In September 2018, the Competition and Consumer Commission of Singapore (CCCS) imposed a fine of SG$13 million (US$9.5 million) on the two companies for their merger deal.

The CCCS found that Grab had raised their fares by 10-15% after eliminating its rival Uber, adding that they had received numerous complaints from both riders and drivers on fare and commission increases.

Later in October, the Philippine Competition Commission decided to fine Grab for failing to maintain conditions as before the acquisition, such as pricing policies, rider promotions, driver incentives and service quality.

In Vietnam, the competition authority VCA also launched a probe into the deal in April 2018, immediately after Uber officially ended its operation in the Vietnamese market.

Preliminary results suggest that Grab’s acquisition of Uber’s Southeast Asia business showed signs of violating Vietnamese competition law.

Later in January this year, a council was established to deal with the case, but an extension of 60 days has been given for further investigation, meaning the public will have to wait longer before the final verdict is reached.

In fact, since Uber withdrew from Vietnam, many enterprises, including local ones such as Fastgo and Be, have entered the market to fill the void.

Under the pressure of competition, Grab seems to have backed down. In August last year, Grab immediately returned to a previous policy of offering significant promotions to riders.

During the recent Lunar New Year, a number of GrabBike drivers reported that fares were unable to rise too much due to the pressure from GoViet.

It is apparent that a competitive market will help mitigate negative issues, ensure service quality and bring more benefits to consumers.

But according to experts, the capacity of new services is nothing compared with the US$10 billion Grab in terms of both capital and experience, thus they could hardly compete with Grab in pricing and promotions in the long run.

GoViet, considered the closest competitor to Grab, has offered only motorbike service for now, so Grab remains in a dominant position in the Vietnamese market.

Therefore, it is necessary for the government to intervene in order regulate the market better, prevent monopoly, create a level playing field and protect the interests of consumers.

Prices up, quality down

Many Grab users have reported higher fares after the company acquired Uber’s Southeast Asia business despite Grab’s repeated denial of fare hikes. Consumers stated that for the same distance and during the same hours, Grab’s fares have increased considerably, especially during rush hours or bad weather when the fares are exorbitant compared with conventional taxi.

According to many riders, the frequency and amount of promotions have also dropped sharply in tandem with falling quality, with more and more reported cancellations by drivers, causing them much inconvenience.

Thu Hoai in Hanoi’s Dong Da district reported that during the Lunar New Year, she tried to book a Grab car but all her three bookings were cancelled without a reason. She added that some drivers even called and asked her to cancel the ride because they would not pick her up. Frustrated, Hoai decided to call a conventional cab.

Viet Ha in Hoan Kiem district said that “I booked a ride from Nha Tho to Kim Lien and waited for over 15 minutes but the car had still not arrived. I called the driver but it took a long time for him to answer. He said he was unable to pick me up due to a traffic jam and conveniently asked me to cancel the booking.”

He said under Grab’s policy, drivers can cancel the ride five minutes after arriving at the pick-up point without seeing the customers. This mechanism is apparently in favour of drivers, with many customers complaining that they could wait for half an hour but when they arrived just 2-3 minutes late, the drivers already cancelled the booking and drove away.

Hieu, a GrabCar driver, explained that after Grab acquired Uber, all customers rushed to Grab for the ride-hailing service, so a number of drivers have become more self-important and less earnest in doing their job.

More importantly, as commissions rise while bonuses are scrapped, or are very little, drivers tend to pay less attention to reward points and focus more on easy rides to run as many trips as possible.

With a new promotion and commission policy, coupled with frequent ride cancellations and reduced quality, Grab is losing its lustre of a cheap and handy technology-based ride-hailing service that used to win praise of consumers.

Many customers have announced their boycott of the service, saying they cannot accept the vagueness in fare calculation and a policy not in favour of users.

In the meantime, conventional taxi companies are undergoing positive changes after losing a significant market share to technology-based services.

In a market where there is still plenty of room for growth, if the quality of one service drops, others will immediately jump into the market for a bigger slice of the pie. It is a good sign. The market is exclusive to no one and those who conduct their business in a non-transparent manner will fall to the bottom of customers’ choices.