Developments last week have been favorable to the commuting public, which has long been suffering from a near monopoly in the ride-hailing sector. The Philippine Competition Commission (PCC) started by pointing out that a year after Uber left, ride-hailing has remained uncompetitive, referring to Grab as the very dominant player in this service.
A virtual monopoly leaves the riding public with no alternative. Competition, on the other hand, forces players to improve efficiency and lower prices. The near-monopoly position of Grab explains the numerous complaints on fare surges even beyond rush hours, canceled bookings and other aggravations that riders have to endure since no alternative service exists.
At about the same time as the PCC announcement, the Anti-Red Tape Authority (Arta) called out the the Land Transportation Franchising and Regulatory Board (LTFRB) for sitting on the applications of transport network vehicle services (TNVS) drivers. The next day, Transportation Secretary Arthur Tugade directed the LTFRB to approve all complete but pending applications of these ride-hailing drivers.
The Department of Transportation ordered the LTFRB to immediately release certificates of public convenience (CPCs) to qualified ride-hailing driver-applicants. Tugade also directed Transportation Undersecretary for Roads Mark de Leon and the LTFRB to comply immediately with Arta’s directive to automatically approve all pending TNVS applications and issue them the corresponding CPCs.
Arta’s action followed complaints from TNVS drivers alleging irregularities in the processing of their TNVS applications by the LTFRB. According to the complaints, their applications already had the complete requirements, but they could not operate as drivers and operators while waiting for the issuance of the CPCs.
Aside from these developments, the PCC announced that it would also renegotiate the conditions that Grab had previously agreed to when it sought the PCC’s approval of the Grab-Uber deal, which resulted in the departure of Uber from Southeast Asia.
Those conditions, called voluntary commitments, took effect in August 2018 with the hope that they would improve market conditions, particularly the maintenance of reasonable fares that existed when Uber was still around. But those hoped-for improvements have not materialized.
Exactly a year after PCC’s decision on Grab’s acquisition of rival Uber on Aug. 10, 2018, the competition authority lamented that the dominance of Grab (the surviving firm in the agreement with Uber) remains unchallenged, and competition has not improved in the ride-hailing market. It said the market continues to be uncompetitive despite the entry of a number of smaller transport network companies, which had big shoes to fill when Uber exited the Philippines and the rest of Southeast Asia.
The PCC gave only a hint of what the new commitments would be, saying they would include adjusted metrics to hold Grab in check for its fare surges, instances of driver discrimination through booking cancellations and service quality. The commitments should be designed to prevent Grab from exercising its market power as a virtual monopolist, according to PCC Chair Arsenio M.
Balisacan. They may also include measures that will allow smaller players to grow, or for formidable new competitors to enter the market for the benefit of the riding public.
Last year, PCC officials warned that Grab’s failure to comply with the commitments would be met with a fine of P2 million per breach, or even the “unwinding of the transaction.”
It’s really a puzzle why the LTFRB appears to be acting in a way that commuters feel is against their interest, with the regulatory agency throwing up all possible roadblocks to the approval of more ride-hailing companies that can compete with Grab, or more driver-applicants to increase supply and bring rates down.
It’s a good thing the PCC and Arta are keeping an eye on such government agencies that, by their continuing failure to protect commuters and do their job with dispatch, openness and efficiency, are a huge disservice to the public.