Singapore's Competition Authority Has Not Provided Guidelines On Grab-GoTo Merger Plans

Grab and GoTo plan to merge in Singapore (photo: x @TechinAsia_ID)

JAKARTA The Competition and Consumer Commission of Singapore (CCCS) stated that until now they have not received an official notification from Grab and GoTo regarding the planned merger of the two companies in the lion country.

In an official statement sent via email to Reuters, CCCS revealed that it was aware of media reports regarding the potential for this merger. However, the relevant parties must seek legal advice to ascertain whether the merger is in accordance with Singapore's law of business competition.

"CCCS is open to discussions with the parties through the merger notification process and pre-notification discussions," the authority said.

Grab, a Singapore-based company backed by Uber, as well as GoTo, a competitor from Indonesia, is reported to have held several discussions related to the merger.

However, GoTo reiterated on Wednesday 19 March that there had been no agreement with any parties regarding the transaction, after Bloomberg reported that Grab had started a due diligence process to take over GoTo.

If this merger is realized, Grab and GoTo will control nearly 90% of the online transportation market share in Singapore, as well as more than 91% in Indonesia, based on data from Euromonitor International.

Singapore's competition authorities have a strict track record in overseeing mergers in the transportation sector. In 2018, CCCS imposed a fine of $13 million to Grab and Uber after Grab failed to report its merger with Uber, leading to a significant decline in competition in Singapore.

Last year, Grab also scrapped plans to acquire third-largest taxi operator in Singapore, Trans-cab, after facing intense scrutiny from regulators.

CCCS insists that if a merger is proven to violate the law of business competition, they can impose sanctions of up to 10% of the company's business turnover in Singapore per year, with a maximum of three years. In addition, they can cancel or change the merger deal to eliminate the negative impact on market competition.

"CCCS can impose temporary measures to maintain market competition if needed," he added.

GoTo Shares Decline 2.4%

Responding to reports regarding the potential for this merger, GoTo shares decreased 2.4% on the Indonesian stock exchange on Wednesday (19/3). This performance is worse than the main Jakarta Composite Index (JKSE) stock index which actually rose 1.5% on the same day.

Neither Grab nor GoTo declined to comment further on the rumors of this merger. Grab only stated that they would not respond to speculation, while GoTo said that there was no new information other than official statements that had been submitted to the stock exchange.

With strict regulations on business competition in Singapore and previous experiences with Uber, the merger of Grab and GoTo will certainly be under intense scrutiny before getting the green light from the relevant authorities.