Competition watchdog rejects Uber-ComfortDelGro joint venture

The Competition Commission of Singapore listed 10 issues that require further in-depth assessment.

The Competition Commission of Singapore (CCS) pushed the review of the proposed joint venture (JV) between ComfortDelGro (CDG) and Uber Technologies into the second stage of review. According to DBS Equity Research, the CCS was unable to determine whether the JV would not raise competition concerns.

DBS analyst Andy Sim said, "We believe this could be alluding to the current market talk Uber selling its Southeast Asian operations to Grab." Recent reports suggested that Uber is planning to sell its Southeast Asian business to Grab.

The CCS listed 10 issues that require further in-depth assessment. These include “whether there will be lessening of competition in the industry, given the various contractual and shareholding relationships between players, as well as potential consolidation in the industry."

CDG said it intends to file all relevant documents and to address concerns alongside Uber. It was indicated that phase 2 of the review can take up to 120 working days, given a "more comprehensive examination of the effects of the transaction."

CDG and Uber's deal involves the former acquiring a 51% stake in the latter's wholly-owned car rental subsidiary in Singapore, Lion City Holdings Pte Ltd. Uber will retain 49%. Valued at about $642m, with a cash consideration of $295m, it ranks as CDG’s single largest deal to-date.

Should the deal be approved and come to fruition, CDG's net profit is projected to rise by 5%. It could also lift its falling driver retention rate and defend its market share, given the jams from ride-hailing firms it bumped into recently.