History Repeats Itself As Grab & Gojek Allegedly Talking About Merging

By
Shawn Ambrose
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Keep your friends close, but keep your enemies closer. 

This phrase actually means you should stay on your toes and be wary of your enemies’ malicious intentions, so they can’t ruin your life.

Grab, however, seems to have taken this phrase literally.

History Repeats Itself As Grab & Gojek Allegedly Talking About Merging

Ride-hailing firms Grab and Gojek are reportedly close to finalising a deal to combine their businesses, four years after the former merged with Uber.

If successful, the deal could be the biggest Internet merger in Southeast Asia, according to Bloomberg. 

People with knowledge of the talks said that while the two companies have resolved many of their disagreements, some parts of the deal still need negotiation.

SoftBank Group’s Mr Masayoshi Son, a major Grab investor, is reportedly part of the talks.

One possible scenario could see Grab co-founder Anthony Tan become CEO of the combined business.

Meanwhile, Gojek executives would run the new entity in Indonesia under the Gojek brand.

The main aim of the merger seems to be becoming a publicly listed company.

While the final details are already reportedly being worked out, representatives of Grab, Gojek, and SoftBank declined to comment.

But wait, wasn’t Grab punished for doing the same thing with Uber?

Fined a Combined $13 Million in 2018 For Merger

You’re right, and this is why the merger needs regulatory approval before it can be finalised.

Back in 2018, Grab and Uber were fined a combined $13 million after they merged in March.

The Competition and Consumer Commission of Singapore (CCCS) said the merger had infringed Section 54 of the Competition Act, which prohibits mergers that could significantly reduce competition in any market here.

See, at the time, Grab and Uber were the two main ride-hailing businesses competing for customers.

The competition compelled both companies to make their prices and incentives more attractive, so customers would choose them over the other.

However, when Grab acquired Uber’s Southeast Asia operations, this pressure to make prices and incentives attractive wasn’t as strong, which usually leads to a hike in prices.

And this is exactly what Grab did. 

In 2018, the CCCS found that Grab had increased its fares between 10 and 15% after its merger with Uber.

This is one of the reasons CCCS imposed a freeze on Grab’s pricing algorithm and driver commission rate, meaning they couldn’t alter their pricing policies nor commission rates.

This restriction has since been eased.

However, considering Grab now has other competitors like TADA and RYDE, it’s unknown if the CCCS will deem the merger as an infringement of Section 54 of the Competition Act.

If the deal goes through, we’ll have to say goodbye to Gojek after just two years of operating in Singapore.

Image: TY Lim / Shutterstock.com & TY Lim / Shutterstock.com

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Shawn Ambrose
Email: [email protected]