Antitrust watchdog Philippine Competition Commission (PCC) has slapped fines amounting to 16.15 million pesos ($318,000) on Grab Philippines, the local unit of Southeast Asia’s ride-hailing giant, for overpricing and higher driver cancellations.
In its decision, PCC said Grab violated its price and service quality commitments when it overcharged riders and its drivers cancelled too many bookings between May and August this year.
The PCC order was based on the audit report submitted by Smith & Williamson, a London-based independent entity tapped to monitor Grab’s compliance with voluntary commitments on price, service quality and non-exclusivity for a year which ended on Aug. 10, 2019.
PCC ordered Grab to return about 14 million pesos ($276,000) in overcharges to its customers and to pay a fine of about 2 million pesos ($39,000) for too many driver-initiated ride cancellations this year.
Grab’s pricing commitment to PCC is separate and independent from the fare structure of the Land Transportation Franchising and Regulatory Board (LTFRB), the country’s transport regulator.
While LTFRB has imposed a fare matrix for all transport network vehicle services (TNVS), the PCC binds Grab to its voluntary commitments, including keeping its fares within a range as if a competitor like Uber were present 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,” PCC chair Arsenio M. Balisacan said in a statement.
The fine is the latest in a string of penalties faced by Grab for violating its commitments. The company was earlier fined 11.3 million pesos in the first quarter, 7.1 million pesos in the second quarter, and 5.05 million pesos in the third quarter of the undertaking.
In response to the PCC order, Grab said it will be disbursing the 14.15 million pesos administrative penalty to the GrabPay wallets of passengers who took Grab rides from May 11 to August 10.
“Grab Philippines respects the findings of the Philippine Competition Commission on its May 11-August 10, 2019 monitoring, after the antitrust body identified certain deviations from Grab’s voluntary commitments which is caused by the lack of TNVS supply to service the steadily growing commuter demands, coupled with the worsening traffic situation,” the company said.
Grab has signed a new set of voluntary commitments as a continuing condition for the antitrust authority’s clearance of Grab’s acquisition of Uber in the Philippines in 2018.
The PCC said it still finds insufficient competition in the ride-hailing market although that could change if Indonesian ride-hailing giant Gojek gets approval to operate in the country.
Gojek has found the Philippine market hard to crack so far as its application has been turned down twice already due to failure to meet foreign ownership rules. The firm resubmitted its application in November, with a target date of 2020.
Nikkei Asian Review had earlier reported that Gojek has secured a partnership with local e-commerce pioneer Paulo Campos for its latest attempt.
“We have seen the documents and we have endorsed it to the DoTR,” Land Transportation Franchising and Regulatory Board chairman Martin Delgra told the publication, referring to the Department of Transportation, which has final say over the licence application.
Other accredited TNVS players in the Philippines are Hype, Hirna, Owto, MiCab, Go Lag, ePickMeUp, SnappyCab, and Ryd, although Grab remains the dominant player.