The Competition Commission of Singapore (CCS) is reviewing the proposed merger between land transportation services corporation ComfortDelGro and Uber Technologies subsidiary Lion City Holdings would see a diminishment in the taxi services sector.
On December 8, the SGX-listed land tranport services corporation entered into a deal to acquire a 51 per cent stake in Lion City Holdings for about S$295 million ($218 million). Lion City Holdings is the operator of Lion City Rentals (LCR), which owns a fleet estimated at 14,000 vehicles.
It is seeking public feedback on the impact of the deal and is conducting a public consultation from 21 December to 8 January 2018 as part of the review. Given the highly competitive nature of the city-state’s car rental market.
The joint venture (JV) will aid the firms to leverage each other’s operational and technological excellence and create a path for ComfortDelGro’s taxi drivers to receive ride requests on the Uber driver app, thereby increasing their potential earnings. It also increases the transport options of the taxi services.
There are a large number of companies of different sizes and business models operating in Singapore, and the commission seeks to assess if the ComfortDelGro-Lion City Holdings partnership will prevent, restrict or distort the competition in Singapore and result in abuse of their dominant position.
If approved, the deal will see Uber’s mobile app and ComfortDelGro taxi’s smartphone mobile application integrated to form uberFLASH, in a move that would permit consumers to book ComfortDelGro taxis via the Uber app.
The proposed collaboration between ComfortDelGro, Lion City and Uber, covers booking services for meter-fared taxi services, with meter fares continued to be set by ComfortDelGro but does not overlap with ComfortDelGro’s street-hail business. Additionally, it will combine the fleet resources of both ComfortDelGro and Uber to “efficiently and effectively” cater to consumers in Singapore.
Singapore’s taxi services market is dominated by an oligopoly that involves transport network connectors Uber and Grab and incumbents like ComfortDelGro and SMRT. Earlier this year, Grab was reported to be in discussions with SMRT regarding the acquisition of its taxi business.