1. Introduction

Grab and GoJek, South-east Asia’s two most valuable ride-hailing start-ups, are reportedly in advanced talks to merge. According to Bloomberg, both parties “have made substantial progress in working out a deal to combine their businesses”. Following this report, on 3 December 2020, Grab told its employees in an internal note that the firm’s “business momentum is good, and as with any market consolidation rumors, [it is] … in a position to acquire.” Having been locked in an intense and costly battle for dominance in various business (viz. ride-hailing, food delivery and mobile payments) over the last several years, this news has received a mixed response. On the one hand, investors applauded the supposed merger as it would reduce cash burn and create one of the most powerful internet companies in the region. While on the other hand, many raised questions concerning market concentration and compliance with competition regulations. It seems only a matter of time before speculation becomes reality, it would be interesting to see what and how the Competition and Consumer Commission of Singapore (“CCCS”) and the Vietnam Competition Council (“VCC”) would rule under their corresponding domestic laws, especially in light of their previous rulings on the Grab-Uber Merger in 2018 and 2019 respectively.

2. Postulated Grab-GoJek Merger Transaction

While the details of the merger have yet to be finalised, people with knowledge of the talks have said that both Grab and GoJek “have narrowed their differences of opinion”. Although the ultimate aim is to become a publicly listed company, “the two brands may be run separately for an extended period of time” with Grab’s co-founder Anthony Tan heading the new combined entity as its CEO and GoJek’s executives running the new combined business in Indonesia under the GoJek brand. However, they have cautioned that “the talks are still fluid and may not result in a transaction” since “the deal would need regulatory approval and governments may have antitrust concerns about the unification of the region’s two leading ride-hailing companies”.

3. Would the Grab-GoJek Merger constitute an anti-competitive merger?

Across South-east Asia, Grab (valued at more than US$14 billion) has a presence in eight countries while GoJek (valued at approximately US$10 billion) has a presence in five countries. As the region’s two leading ride-hailing companies, it is important for the Government to step in with its anti-monopoly laws to ensure that consumers and other businesses are protected from any anti-competitive effects.

In Singapore, the CCCS has stated that “it is looking at the new development” and “has written to the parties for more information” because even though Singapore has a voluntary merger notification regime, section 54 of the Competition Act (Cap 50B, 2006 Rev Ed) (“CA”) prohibits “mergers that have resulted, or may be expected to result, in a substantial lessening of competition”

In Vietnam, the competition authorities have not made any comment on the potential Grab-GoJek Merger.

Thus, to answer the above stated question should the authorities decide to commence an investigation into the said merger, their respective previous rulings on the Grab-Uber Merger would be of great reliance and therefore should be examined.

3.1 Grab-Uber Merger

Grab and Uber, similar to Grab and GoJek, were rivals in the industry. On 26 March 2018, Grab announced that it had acquired Uber’s South-east Asian business in consideration of Uber acquiring a 27.5% stake in Grab (“Transaction”).

3.1.1 Singapore’s Response

On 27 March 2018, the CCCS commenced an investigation into the Transaction under section 62(1)(d) of the CA as there were reasonable grounds for suspecting that the Transaction has resulted in a substantial lessening of competition in the ride-hailing market in Singapore.

In a bid to ensure the market remained open and contestable during the investigation, the CCCS issued a Notice of Interim Measures Directions to both Grab and Uber on 13 April 2018. The CCCS directed Uber to continue its ride-hailing services until 7 May 2018 to ease the transition for both drivers and riders. Other key interim measures included the maintenance of pre-Transaction pricing and commission levels, the preservation of driver and rider optionality, the prevention of Uber’s operational data (e.g., historical trip data) from being used by Grab to enhance Grab’s market position and the removal of exclusivity obligations on drivers.

Subsequently, on 5 July 2018, the CCCS issued a Proposed Infringement Decision against the parties and conducted a public consultation on possible structural and behavioural remedies to address the competition concerns and restore market contestability. The CCCS‘s decision was finalised on 24 September 2018. Per its findings, the CCCS established that the Transaction amounted to a substantial lessening of competition in the ride-hailing market in Singapore and imposed directions on the parties to mitigate the adverse effects of their breach.

In coming to its decision, the CCCS found that post-Transaction, Grab’s prices increased between 10% and 15%. The CCCS considered, inter alia, that:

(a) The Transaction has resulted in a substantial lessening of competition in the ride-hailing market by removing competition between Grab and Uber, which were each other’s closest competitor in the industry.

(b) With Grab holding around 80% market share, entry by new competitors is likely not sufficient to deter any attempt by it to exploit the reduction in rivalry post-Transaction.

Accordingly, for the first time in history, the CCCS imposed a financial penalty of S$6,419,647 (US$4,831,161.14) on Grab and a financial penalty of S$6,582,055 (US$4,953,382.69) on Uber to deter completed, irreversible mergers that harm competition. In deciding that a financial penalty ought to be imposed, the CCCS noted that the parties were aware, or ought to have been aware, that there were competition concerns arising from the Transaction. It relied on, inter alia, clauses in the Purchase Agreement particularly one which “provides for the agreed apportionment between the parties of any financial penalties and the costs of any antitrust investigations imposed by any antitrust authorities arising out of the consummation of the Transaction”.The CCCS took the view that far from being “precautions”, the provisions, which are “not common”, suggested that both Grab and Uber “had given specific consideration to the likelihood that the Transaction would breach antitrust rules and lead to financial penalties”.

Furthermore, the CCCS also issued directions, which has since been lifted in November 2020, to lessen the impact of the Transaction on drivers and riders, and to open up the market and level the playing field for new players. These include:

(a) Ensuring Grab drivers are free to use any ride-hailing platform and are not required to use Grab exclusively. This is intended to help increase choices for drivers and riders, and make the market more competitive.

(b) Removing all exclusivity obligations, exclusive lock-in periods and /or termination fees on all drivers who rent a vehicle from Lion City Rentals, Grab Rentals and Grab’s rental fleet partners, and ensuring these drivers can use their rented vehicle to drive for any ride-hailing platform.

(c) Removing Grab’s exclusivity arrangements with any taxi fleet in Singapore so as to increase choices for drivers and riders.

(d) Maintaining Grab’s pre-merger pricing algorithm and driver commission rates. This is intended to protect riders’ interests against excessive price surges, and drivers’ interests against increases in commissions that they pay to Grab, while not affecting Grab’s flexibility to apply dynamic pricing under normal demand and supply conditions or restricting the amount of rider promotions and driver incentives that Grab wishes to offer.

(e) Requiring Uber to sell the vehicles of Lion City Rentals to any potential competitor who makes a reasonable offer based on fair market value and preventing Uber from selling these vehicles to Grab without the CCCS’s prior approval.This is intended to prevent Grab and Uber from absorbing or hoarding Lion City Rentals vehicles to inhibit the access to a vehicle fleet by a new competitor. Any such purchase from the time of the Transaction to the date of the CCCS’s final decision shall be reversed unless approved expressly by the CCCS.

3.1.2 Vietnam’s Response

The Grab-Uber merger occurred when the Law on Competition 2004 dated 3 December 2004 (“LOC 2004”) was in force. On 16 April 2018, the Vietnam Competition and Consumer Authority (“VCCA”) decided to conduct a preliminary investigation into the Transaction and made a preliminary determination that the Transaction may have violated the LOC 2004. On 30 November 2018, the VCCA issued the final determination regarding the Transaction. On 9 April 2019, the VCCA issued an additional final determination. These determinations stated that the Transaction was an acquisition of an enterprise; therefore, such merger was a form of economic concentration under Article 17.3 of LOC 2004. Such determinations by the VCCA were based on the following facts and analyses:

(a) Grab Vietnam was assigned Uber Vietnam’s rights and obligations with Uber Vietnam drivers and riders.

(b) Therefore, Grab Vietnam had the right to decide Uber Vietnam operations in relation to the ride-hailing services.

(c) As a result, Grab Vietnam completely controlled and managed Uber Vietnam’s operations.

Because Grab-Uber merger was an economic concentration, according to the VCCA, Grab Vietnam and Uber Vietnam failed to notify the VCCA of the Transaction, and the Grab-Uber merger was prohibited under Article 18 of LOC 2004. VCCA proposed monetary fines of (i) 5% of the total revenue of Grab Vietnam and Uber (Uber Vietnam and Uber B.V in the Netherlands) in 2017 for their failure to comply with the notification obligations; (ii) 5% of the total revenue of Grab Vietnam and Uber (Uber Vietnam and Uber B.V in the Netherlands) in 2017 for conducting a prohibited Transaction under the LOC 2004; and supplementary measures, including (i) maintaining pre-merger pricing algorithm and driver commission rates; and (ii) notifying VCCA and VCC for any change (increase) in the service price and driver commission rates.

On 11 June 2019, the VCC held a closed hearing between the VCCA, Grab Việt Nam, and Uber. After the hearing, the VCC issued the decision that Grab’s acquisition of Uber did not violate Vietnamese competition law. According to the VCC’s assessment, Grab Vietnam did not purchase Uber Vietnam shares, did not hold any voting rights in Uber Vietnam, and did not manage or control Uber Vietnam’s operations. The VCC determined that Uber Vietnam neither provided the ride-hailing services nor did it own or control the Uber application. The Uber application was under the management of Uber B.V in the Netherlands and Uber B.V continued to operate the Uber app after the deal, not Grab Vietnam. As a result, there were not enough elements to meet the condition of an “acquisition”, as defined by law, and to constitute an economic concentration. The VCC’s assessment seemed to have been based on Article 17.3 of LOC 2004 and Article 34 of Decree No. 116/2005/ND-CP which provide one single criterion for determination of market concentration – whether the acquiring enterprise holds sufficient voting rights for controlling financial policies and operations of the acquired enterprise.

3.2 Likely Ruling on Grab-GoJek Merger

3.2.1 Singapore’s Response

With Grab and GoJek being South-east Asia’s two largest ride-hailing providers following Uber’s exit, a potential merger would likely create a monopoly in Singapore’s ride-hailing sector. Moreover, unlike the Grab-Uber merger, the Grab-GoJek merger would also result in Grab dominating the e-wallet payment industry with GoJek out of the picture. Therefore, the Grab-GoJek merger would result in Grab being a de facto monopoly which would be a blatant breach of Singapore’s competition laws.

Based on the CCCS’s ruling on the Grab-Uber merger, it seems to rely on and attach importance to internal corporate documents of the merging parties because it regards them as providing contemporaneous and valuable evidence of how the merging parties view a range of issues, including market definition, the competitive landscape, their closest competitors, the extent and likelihood of market entry, and a transaction’s likely effects on market competition. Thus, there is a high chance that the CCCS would launch an investigation into the matter and the outcome would likely reflect that of the Grab-Uber merger.

For Grab, its financial penalty would probably be much higher than previously since this would be its second time infringing Singapore’s CA.

3.2.2 Vietnam’s Response

Since details of the deal have not been disclosed, if Grab and GoJek decide to enter into an acquisition transaction which is analogous to Grab and Uber, under the LOC 2018, the Grab-GoJek merger may be considered an “economic concentration”. The recent competition acquiror laws seem to have adversely changed for Grab. Specifically, under the LOC 2004 and its guidance legislation that determine one criterion for the acquisition, and what constitutes an economic concentration, are the voting rights of the acquiring enterprise in the acquired enterprise’s charter capital. However, under the LOC 2018 and Decree 35, an acquisition shall be considered an economic concentration if it meets one of the following criteria:

(i) the acquiring enterprise receives more than 50% of the acquired enterprise’s charter capital or more than 50% of the acquired enterprise’s total voting shares;

(ii) the acquiring enterprise owns or uses more than 50% of the acquired enterprise’s total assets;

(iii) the acquiring enterprise has the right to appoint, dismiss or discharge members of Board of Directors and directors;

(iv) the acquiring enterprise is able to decide on the revision or modification of the acquired enterprise’s charter, and;

(v) the acquiring enterprise is able to decide on the acquired enterprise’s important business matters.

If Grab decides to acquire more than 50% of GoJek’s assets, similar to the Uber transaction, Grab meets the second criterion as mentioned above. As a result, under the LOC 2018, the Grab-GoJek merger would constitute an economic concentration.

The Grab-GoJek concentration might be prohibited if it causes (or potentially causes) substantial anti-competitive effects on the Vietnamese market. In order to assess such effects, the LOC 2018 stipulates the process by the National Competition Commission (“NCC”) of assessing the operations of an economic concentration through two stages, including (a) preliminary assessment, and (b) official assessment.

Since Grab captures approximately 73% of the market share in the Vietnamese ride-hailing market, and GoJek holds 10%, Grab and GoJek would have to notify the NCC about their merger. Within 30 days from receipt of a complete and valid notification dossier, the NCC shall notify the preliminary assessment result to enterprises involved in an economic concentration that such transaction is approved or subject to further official assessment. It is noteworthy that, if the NCC is silent after the 30-day preliminary assessment, the participants would be entitled to proceed with their proposed transaction. During the official assessment of economic concentration, the NCC will carry out the evaluation of all factors defined by law in relation to remedies for anti-competitive effects. This process can take up to 90-150 days. Upon completion, the NCC will issue a decision. The decision will approve the merger, prohibit it, or rule that it can be carried out but is subject to certain conditions.


In conclusion, while both Grab and GoJek have so far refused to comment on their potential merger, it is evident that it will only be a matter of time before a merger or acquisition takes place. Both being well-known as the two largest competitors in the ride-hailing industry, with close to full market share when combined, it would not be easy for the transaction to slip by undetected or unpenalised without drawing attention from the relevant authorities.

Go to
  • Expertise
  • People
  • Cases
  • Courses
Hình ảnh
Hình ảnh
Hình ảnh
Hình ảnh
Hình ảnh
Hình ảnh
Hình ảnh
Hình ảnh