October 1, 2018
Singapore court rules against Uber in a blow to the firm’s re-branding
Uber’s road to a branding overhaul got even rockier this week, with a Singapore court slapping fines and finalised restrictions on the firm- catching recent merger partner Grab in the same net. The merger of the two firms in March this year, the court ruled, has served to drive up prices throughout the city.
Uber Technologies Inc. sold its Southeast Asian branch to regional rival Grab in March earlier this year, in exchange for a 27.5 percent stake in the firm. The Competition and Consumer Commission of Singapore found fares on Grab to have risen 10 to 15 percent in the wake of the deal, with the ride-hailing firm securing a Singaporean market share upwards of 80 percent.
The antitrust watchdog has also ruled that Grab drivers cannot be tied to Grab exclusively, and that exclusivity arrangements with any taxi fleets must be removed. At the same time, Uber is now required to sell its car rental business to any rival with a reasonable offer; vehicles cannot to be sold to Grab without the Commission’s permission.
As of December, Uber’s car rental business, Lion City, had a fleet of around 14,000 vehicles.
The timing of the ruling will no doubt be received as a major blow by Uber brand managers, with the firm already struggling to put out fires wrought by a series of corporate scandals, including mistreatment of drivers and allegations of sexual harassment and discrimination in the workplace. The firm’s co-founder and chief executive, Travis Kalanick, resigned just over a year ago.
Earlier this month, Uber hired its first ever chief marketing officer, Rebecca Messina, a Coca-Cola veteran with executive level experience in ventures and emerging brands. As Uber’s inaugural CMO, she will be responsible for overseeing Uber’s global marketing teams- including those in the Southeast Asian market.
So far, Uber has charged this latest ruling in Singapore as being based on an “inappropriately narrow definition of the market,” while Grab says it completed the deal within its legal rights and denies breaching competition laws. While Uber has hinted at appealing the decision, Grab says it will abide by any remedies set out by the Commission.
Indonesian competitor Go-Jek has welcomed the court’s decision ahead of plans to launch services in Singapore. “We’re encouraged to see the measures being taken to level the playing field,” the company says. Meanwhile, Uber seems determined to go ahead with “new direction” messaging.
Uber “is really reshaping its leadership team and its overall agenda,” Messina said earlier this month, insisting on a new era of integrity for the firm. With a month to appeal this latest decision in Singapore, it is difficult to know how this new legal controversy will fit into Uber’s adamant insistence of a new direction.
The Uber-Grab deal remains under antitrust review in Vietnam, where courts have warned the merger may be blocked if combined market share exceeds 50 percent. In the Philippines, at least, the deal has gone ahead- though remains under close monitoring by the watchdog there.
With Uber’s initial public offering (IPO) scheduled for the second half of 2019, Messina is undoubtedly working against the clock- and, it seems, Asia’s courts.