The Philippine Competition Commission imposed a P16.15-million fine on Grab Philippines for allegedly violating its price and service quality commitments.
The order released on Dec. 13, 2019 was based on the audit report submitted by Smith & Williamson, an independent monitoring trustee tasked to examine Grab’s compliance with voluntary commitments on price, service quality and non-exclusivity for one year or until August 10, 2019.
The fine is the latest in a string of penalties faced by Grab for violating its commitments. Each violation incurs an administrative penalty ranging from P50,000 to P2 million as provided by the Philippine Competition Act.
With the merger of the country’s two biggest ride-hailing apps, Grab’s violations are indicative of its exercise of market power in the absence of a competitor of adequate scale in the market.
“The ride-hailing market has seen profound changes in the past year as a result of Grab’s acquisition of Uber. With the commitments in place, PCC aims to maintain pre-transaction market conditions and will discipline any tendency to exercise monopolistic power with corresponding penalties,” said PCC chairman Arsenio Balisacan.
Grab Philippines said in a statement its passengers would get a refund from the ride-hailing company no later than February 2020 because of the violations on its pricing commitments.
PCC said that for the fourth leg of the initial undertaking, it imposed a fine P14.15 million for Grab’s extraordinary deviation on its pricing commitment and P2 million for exceeding driver cancellations at 7.76 percent instead of the committed 5 percent.
The Singaporean transport network company said it respects the findings of the PCC on its May 11 to August 10, 2019 monitoring, after the antitrust body identified certain deviations from Grab’s voluntary commitments.
“TNVS is initially intended to augment the mass transportation system in the country. At the current rate, the TNVS is now carrying the heavy load of serving commuters which the current mass transport system is unable to accommodate,” Grab said.
Grab said it would disburse the total computed administrative penalty of P14,150,000 to the GrabPay Wallets of those passengers who took Grab rides from May 11 to Aug. 10, 2019 in compliance with the order of the PCC.
The disbursement will happen no later than Feb. 10, 2020, with a corresponding communication to the relevant passengers five days prior to the disbursement. The additional P2 million administrative penalty related to the breach of committed driver cancellation rate would be paid to PCC.
“As the new monitoring year begins with the new system-wide average monitoring scheme, Grab is hopeful in fulfilling its commitments to the PCC, however, it highlights that as a platform, pricing will still be influenced by factors such as lack of supply, and the traffic situation,” the company said.
Grab’s pricing commitment to PCC is separate and independent of the fare structure of the Land Transportation Franchising and Regulatory Board.