Spore M&A Lawyer: Grab, Uber & the Spore Competition Commission: Could the SCC have acted earlier?
Abbreviations
Pre-Grab Announcement
The SCC is a statutory board of the Ministry of Trade and Industry.
The SCC administers and enforces the Act which empowers the SCC to investigate and adjudicate anti-competitive activities, issue directions to stop and/or prevent anti-competitive activities and impose financial penalties.
SCC's Functions & Duties
Section 6 of the Act imposes upon the SCC the following functions and duties:
Section 54 prohibits mergers that may be expected to result in a substantial lessening of competition within any market in Singapore for services, subject to certain exceptions.
It follows that the SCC's functions and duties include preventing mergers that infringe the Section 54 prohibition.
System for Merger Notification
A party to an anticipated merger (that infringes the Section 54 prohibition) can apply to the SCC for its advice or notify the SCC of the anticipated merger and apply for a decision. (Sections 55A and 57 of the Act).
It could be that the SCC specifically drew Grab and Uber's attention to the above in the SCC's letter to them dated 9 March 2018 (explaining Singapore's merger notification regime and SCC's powers).
No Application from Grab & Uber
However, in this case, neither Grab nor Uber applied to the SCC. Instead, on 19 March 2018, Uber wrote to SCC saying that it (Uber) will reach out to SCC if it enters into an agreement that has effects on competition in Singapore. Thereafter, on Mon, 26 March 2018, Grab announced the transaction.
SCC Investigation
The very next day, on Tue, 27 March 2018, the SCC started an investigation into Grab and Uber's transaction because they felt that there were reasonable grounds for suspecting a Section 54 infringement.
Section 62 provides that the SCC may conduct an investigation if "there are reasonable grounds for suspecting (certain infringements, including a Section 54 infringement)."
Because of this, the SCC could not conduct any investigation unless and until "there are reasonable grounds for suspecting" an infringement of one of the stipulated prohibitions under the Act.
Could the SCC have acted earlier?
Whether the SCC could have acted earlier depends on whether there was sufficient evidence to constitute reasonable grounds for suspecting an infringement of one of the stipulated prohibitions under the Act. It is unclear what the pre-26 March 2018 news reports (of a potential transaction between Grab and Uber) actually said. Even if such news reports speculated correctly about the nature of the potential transaction, this may not be sufficient to constitute reasonable grounds for suspecting an infringement of the Section 54 prohibition.
Grab's Announcement
Ultimately, it was Grab's announcement on Mon, 26 March 2018 that put matters beyond doubt:
It is difficult to see the reasoning behind Grab's statement that,
Questions:
If you have any question about the above or need any help, please call Lam & Co. at 6535 1800.
About Lam & Co.
For M & A and corporate matters, Mr Philip Lam brings:
Competition Act
Section 55A allows a party to an anticipated merger to apply to the SCC for its advice on whether the anticipated merger (if carried into effect) is likely to infringe the Section 54 prohibition.
Section 57 provides that a party to an anticipated merger of the relevant type which applies for the anticipated merger to be considered under that section shall:
SCC Notice of Interim Measures Directions dated 13 April 2018
SCC Notice: Public Consultation on Possible Remedies to address Potential Competition Concerns arising from Grab/Uber Merger dated 5 July 2018
SCC Media Release dated 5 July 2018
SCC Frequently Asked Questions for the Issuance of the Proposed Infringement Decision against Grab and Uber dated 6 July 2018
Singapore M&A Lawyer | Contact: 6535 1800 | Return to Home Page | Key to All Articles & Links
- the Act -- the Competition Act (Cap. 50B)
- IMD -- Interim Measures Directions
- PID -- Proposed Infringement Decision
- Proposed IMD -- Proposed Interim Measures Directions
- SCC -- Competition and Consumer Commission of Singapore
Pre-Grab Announcement
- Before 26 March 2018 -- There were news reports of a potential transaction between Grab and Uber.
- 9 March 2018 -- The SCC wrote to Grab and Uber and explained Singapore's merger notification system and SCC's powers.
- 19 March 2018 -- Uber wrote to SCC informing that it (Uber) will reach out to SCC if it enters into an agreement that has effects on competition in Singapore.
- Mon, 26 March 2018 -- Grab announced it has acquired Uber's Southeast Asian business and Uber was acquiring 27.5 % in Grab.
- After this announcement, the SCC sent another letter to Grab and Uber requesting for clarifications, including the date on which they intend to file a merger notification with SCC.
- SCC noted that Grab and Uber had announced that they had begun transferring Uber's assets to Grab and migrating Uber's drivers and riders to Grab and Uber has started redirecting its riders to download Grab's app (instead of Uber's app).
- Tue, 27 March 2018 -- The SCC started an investigation into Grab and Uber's transaction because they felt that there were reasonable grounds for suspecting a Section 54 infringement.
- Wed, 28 March 2018 -- At about 9.47 a.m., the SCC got Grab and Uber's Joint Response.
- Good Friday, 30 March 2018 -- The SCC issued its Notice of Proposed IMD. The Proposed IMD required Grab and Uber to not take action that may:
- lead to integration of their businesses in Singapore
- reduce the viability and saleability of Grab and Uber's businesses and
- prejudice the SCC giving of any direction under Section 69 of the Act in any manner.
The SCC is a statutory board of the Ministry of Trade and Industry.
The SCC administers and enforces the Act which empowers the SCC to investigate and adjudicate anti-competitive activities, issue directions to stop and/or prevent anti-competitive activities and impose financial penalties.
SCC's Functions & Duties
Section 6 of the Act imposes upon the SCC the following functions and duties:
- (a) to maintain and enhance efficient market conduct and promote overall productivity, innovation and competitiveness of markets in Singapore;
- (b) to eliminate or control practices having adverse effect on competition in Singapore;
- (c) to promote and sustain competition in markets in Singapore;
- (d) to promote a strong competitive culture and environment throughout the economy in Singapore;
- (eb) to prevent suppliers in Singapore from engaging in unfair practices.
Section 54 prohibits mergers that may be expected to result in a substantial lessening of competition within any market in Singapore for services, subject to certain exceptions.
It follows that the SCC's functions and duties include preventing mergers that infringe the Section 54 prohibition.
System for Merger Notification
A party to an anticipated merger (that infringes the Section 54 prohibition) can apply to the SCC for its advice or notify the SCC of the anticipated merger and apply for a decision. (Sections 55A and 57 of the Act).
It could be that the SCC specifically drew Grab and Uber's attention to the above in the SCC's letter to them dated 9 March 2018 (explaining Singapore's merger notification regime and SCC's powers).
No Application from Grab & Uber
However, in this case, neither Grab nor Uber applied to the SCC. Instead, on 19 March 2018, Uber wrote to SCC saying that it (Uber) will reach out to SCC if it enters into an agreement that has effects on competition in Singapore. Thereafter, on Mon, 26 March 2018, Grab announced the transaction.
SCC Investigation
The very next day, on Tue, 27 March 2018, the SCC started an investigation into Grab and Uber's transaction because they felt that there were reasonable grounds for suspecting a Section 54 infringement.
Section 62 provides that the SCC may conduct an investigation if "there are reasonable grounds for suspecting (certain infringements, including a Section 54 infringement)."
Because of this, the SCC could not conduct any investigation unless and until "there are reasonable grounds for suspecting" an infringement of one of the stipulated prohibitions under the Act.
Could the SCC have acted earlier?
Whether the SCC could have acted earlier depends on whether there was sufficient evidence to constitute reasonable grounds for suspecting an infringement of one of the stipulated prohibitions under the Act. It is unclear what the pre-26 March 2018 news reports (of a potential transaction between Grab and Uber) actually said. Even if such news reports speculated correctly about the nature of the potential transaction, this may not be sufficient to constitute reasonable grounds for suspecting an infringement of the Section 54 prohibition.
Grab's Announcement
Ultimately, it was Grab's announcement on Mon, 26 March 2018 that put matters beyond doubt:
- Grab today announced that it has acquired Uber’s Southeast Asia operations.
- Grab will integrate Uber’s ridesharing and food delivery business in the region into Grab’s existing multi-modal transportation and fintech platform. With the combined business, Grab will drive towards becoming the #1 online-to-offline (O2O) mobile platform in Southeast Asia and a major player in food delivery.
- Grab will extend its leadership as the most cost efficient Southeast Asian platform, as it takes over Uber’s operations and assets in Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. As part of the acquisition, Uber will take a 27.5% stake in Grab …..
- Grab believes the acquisition will add to, among others, vibrant and competitive ride-hailing, delivery and transportation spaces, and it will make a merger notification to the Competition Commission of Singapore.
- (underlining added to the above quotes from Grab's announcement)
It is difficult to see the reasoning behind Grab's statement that,
- "(they believe) the acquisition will add to, among others, vibrant and competitive ride-hailing, delivery and transportation spaces, …".
Questions:
If you have any question about the above or need any help, please call Lam & Co. at 6535 1800.
About Lam & Co.
For M & A and corporate matters, Mr Philip Lam brings:
- 1. his vast legal experience,
- 2. his MBA degree in Banking & Finance; and
- 3. his access to a broad panel of deep domain specialists.
Competition Act
Section 55A allows a party to an anticipated merger to apply to the SCC for its advice on whether the anticipated merger (if carried into effect) is likely to infringe the Section 54 prohibition.
Section 57 provides that a party to an anticipated merger of the relevant type which applies for the anticipated merger to be considered under that section shall:
- (a) notify the Commission of the anticipated merger; and
- (b) apply to it for a decision.
- (a) the section 34 prohibition has been infringed by any agreement;
- (b) the section 47 prohibition has been infringed by any conduct;
- (c) the section 54 prohibition will be infringed by any anticipated merger, if carried into effect; or
- (d) the section 54 prohibition has been infringed by any merger.
SCC Notice of Interim Measures Directions dated 13 April 2018
SCC Notice: Public Consultation on Possible Remedies to address Potential Competition Concerns arising from Grab/Uber Merger dated 5 July 2018
SCC Media Release dated 5 July 2018
SCC Frequently Asked Questions for the Issuance of the Proposed Infringement Decision against Grab and Uber dated 6 July 2018
Singapore M&A Lawyer | Contact: 6535 1800 | Return to Home Page | Key to All Articles & Links
