SINGAPORE - Months after Uber Technologies sold its Southeast Asian business to the Singapore-based firm Grab, both the companies were slapped with a huge penalty by Singapore's competition watchdog.
Last month, the Competition and Consumer Commission of Singapore (CCCS) claimed that Uber's merger with Grab breached the city-state’s competition laws.
The regulator slapped the companies with a combined fine of $9.5 million and issued the strongest censure till date, imposing restrictions on their businesses in a bid to open up the market to competitors.
Both the companies had a month to appeal the regulator’s penalties and have now announced their respective decisions, with Grab deciding to pay its share of the fine and Uber deciding to go another way.
The regulator had concluded that the merger had driven up prices and led to Grab's Singapore market share increasing to around 80 percent.
The ride-hailing firm was handed a fine of S$6.42 million ($4.7 million).
The Singapore-based firm has announced that it will pay the anti-competition penalty imposed by the CCCS.
Despite holding the largest market share, Grab is likely to face some impact as potential competitors, including Indonesia's Go-Jek and Singapore-based Ryde, plan to launch services in Singapore.
Meanwhile, Uber announced on Monday that it has decided to appeal the competition regulator's decision over its merger.
Uber said in a statement that the CCCS' ruling that the transaction led to a substantial lessening of competition, and that Uber had intentionally breached the law, was “unsupported and incorrect."
The U.S.-based firm said that it was making the appeal independently of Grab, as a matter of principle.
It said, “Our objective is not to challenge the remedies of the decision, which are in fact almost identical to the commitments that Uber and Grab voluntarily offered to the CCCS. Rather, we aim to clarify that the conclusion that our transaction with Grab led to a substantial lessening of competition, and that Uber intentionally breached the law, is unsupported and incorrect."
Further, Uber claimed that the CCCS had used a very narrow definition of the ride-hailing market and called on the regulator to annul its S$6.6 million fine.
Responding to the regulator's allegation that Uber knew that the transaction infringed the law but still moved ahead, Uber said, “To the contrary, our view has always been that in a properly defined market - including at the very least ride-sharing, street-hail taxis and new entrants - the transaction respects the law and does not raise significant concerns."
Apart from the penalties imposed last month, the regulator had also ruled that Uber will be required to sell its car rental business to any rival that makes a reasonable offer.
Further, CCCS had stated that Uber would not be allowed to sell those vehicles to Grab without the watchdog’s permission.
Uber sold its Southeast Asian business to Grab in March this year, in exchange for a 27.5 percent stake in the company.
However, since the deal was signed, it has faced intense regulatory scrutiny.
Last week, the Philippines competition watchdog that had earlier approved the deal, slapped both the firms with fines claiming that they consummated their merger too soon, which caused the quality of service to suffer.