Explainer: What Grab’s failed takeover of Singapore taxi operator Trans-cab means for consumers and the industry

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SINGAPORE — Industry experts have been weighing up the implications of an announcement by Singapore’s consumer watchdog last Thursday (July 25) that ride-hailing platform...

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The companies’ withdrawal comes after CCCS gave a provisional decision earlier this month stating that the proposed acquisition had been “likely to result in a substantial lessening of competition in the market for the supply of ride-hail platform services to drivers and passengers in Singapore”. Generally, mergers and acquisitions between smaller players are regarded as positive as they allow them to capitalise on economies of scale, said the experts.

While the merger allowed the new entity, Strides Premier, to become the second biggest taxi operator, it was still less than half the size of market leader ComfortDelGro in terms of fleet size, he noted. CCCS in its provisional decision on the Grab-Trans-cab deal said that the proposed acquisition would have allowed Grab to “significantly save on the incentives that it would have to pay to drivers”, as opposed to attracting the drivers via alternative means.

This allowed Strides Premier to become the second-largest operator with about 2,500 taxis, overtaking Trans-cab’s position which had about 2,170 taxis then. Market leader ComfortDelGro was miles ahead in terms of fleet size, numbering around 8,700 taxis. Trans-cab could continue operating on its own, though the “stagnating or declining” taxi segment might cast doubts on its long-term prospects, said Associate Professor Nitin Pangarkar from NUS.

 

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