‘Motorcycle taxis need to be legalized before anti-trust review’

MANILA, Philippines — The Philippine Competition Commission (PCC) said motorcycle taxis need to be legalized first before it can review the definition of a competitive market in which ride-hailing services operate, as Grab urges the commission to review the matter.

“If motorcycles are legal as public utility vehicles, that is a first hurdle that must be met before we begin to consider a possible reconsideration of what a relevant market is,” PCC Commissioner Johannes Bernabe told reporters.

“Only when it becomes legal, can we then come to a conclusion based again on studies and analysis of whether or not motorcycles are substitutable with cars and may form part of the same relevant market,” he added.

On Thursday, ride-hailing app Grab Philippines called on the PCC to review the basis for defining the competitive market in which ride-hailing services operate, emphasizing that on-demand and platform-based motorcycle taxis are effectively competing with Grab.

It added that the definition of a competitive market should be broadened to include other denominations and modes of transportation, be it on-demand, street hail, or by other means.

Bernabe said that Grab has previously brought up the topic during the discussions of voluntary commitments in context with the Grab-Uber merger, wherein the former disagreed to plans of expanding the relevant market.

“They were already saying, given at that time, the relevant market should be expanded to not only include four-wheeled private vehicles made available through ride-hailing apps, but it should also include taxis made available through ride hailing apps, taxis which are flagged down on the street, other forms of public transport like buses jeepneys, tricycles, pedicab,” Bernabe said.

“We are not prepared at this point, to say that all these other transport system enumerated should be part of the relevant market,” he added.

The PCC commissioner emphasized that further studies and analysis still needs to be done on whether motorcycle taxis can be considered as substitutes to four-wheeled vehicles booked through ride-hailing apps.

“There are so many factors that need to be considered for us to be able to say that motorcycles and four-wheeled cars are directly substitutable,” he added emphasizing that it’s difficult to categorically say that motorcycle taxis are direct substitutes to four-wheeled vehicles.

“From a supplier perspective, maybe from Grab, they see it as substitutable because they can easily deploy drivers of motorcycles as part of the Grab app,” he added.

Meanwhile, asked if Grab could be freed from its voluntary commitments if it proves to be a direct substitutable to motorcycle taxis, Bernabe said not automatically.

“That’s a case which Grab will have to make, first, that they are indeed substitutable and number two, that the substitute or competitor has acquired a certain percentage or threshold in the market,”he added without disclosing exact threshold figures.

In 2018, Grab made voluntary commitments to the PCC to improve its service quality, pricing and fare transparency, in line with its acquisition of competitor Uber.

Last December, Grab was fined P16.15 million by the PCC for violating its price and service quality commitments during the fourth quarter of the initial undertaking.

“The Commission Order released on Friday comes on the heels of the audit report submitted by Smith & Williamson, an independent monitoring trustee tasked to examine Grab’s compliance with its voluntary commitments on price, service quality, and non-exclusivity for one year or until Aug. 10, 2019,” the PCC said earlier.

The PCC imposed a P14.15 million fine for Grab’s extraordinary deviation on its pricing commitment, and P2 million for exceeding driver cancellations at 7.76 percent instead of the committed 5 percent.

“With the merger of the country’s two biggest ride-hailing apps, Grab’s violations are indicative of its exercise of market power in the absence of a competitor of adequate scale in the market,” it added.

The PCC decision marks the completion of PCC’s first year of monitoring Grab on its voluntary commitments.

Grab was also earlier fined P11.3 million for violating pricing commitments in the first quarter; P7.1 million in the second quarter; and P5.05 million in the third quarter.