The Philippine Competition Commission is keeping the cap on Grab’s price increase to 22.5 percent in December 2019, despite the anticipated hours-long traffic, as it fined the ride-hailing app P5 million for the excessive fare it charged riders during the previous months.
Competition Commission chairman Arsenio Balisacan said the refund, known as the “disgorgement mechanism,” was part of the new set of commitments in the extended undertaking between the two entities.
“This effectively extends the PCC’s hold on Grab to conditions that prevent it from behaving like a monopolist to the detriment of the riding public,” Balisacan told reporters.
The extended undertaking put in place more streamlined commitments and metrics on pricing, service quality and non-exclusivity, which Grab is compelled to abide by to address competition concerns.
On Nov. 1, 2019, Grab’s extended undertaking took effect and will be enforced for one year, with an extended lookout for exclusivity deals for three more years to give way for new players to effectively compete on a level playing field.
A disgorgement mechanism is a tool that will keep Grab’s pricing behavior in check and continue the PCC’s monitoring authority over Grab’s pricing behavior.
In the first undertaking, excess pricing was absorbed by the commission as overcharging penalties, but the new undertaking provided the penalties to be reverted back to consumers as a refund instead of going to the Commission and eventually to the national coffers.
Consumers may expect a refund anytime in March 2020, with the assumption that Grab will not file for a motion for reconsideration that it is entitled to exercise 15 days after the notification sent by the PCC on Nov. 12, 2019.
The Commission did not have the volume of riders using the app, but it assured consumers that the refund will be “disgorged” or Grab will face another violation that will subject it to another penalty.
The refund will be credited automatically to the user’s GrabPay account.
“While Grab’s commitments signal its willingness to behave within a competitive space and in accordance with the competition law, the PCC will keep a watchful eye on potential violations,” Balisacan said.
In fact, the Commission has imposed a total fine of P23.45 million on Grab for breaching its pricing commitments during the first to third quarters of the initial undertaking―P11.3 million for the first quarter, P7.1 million for the second quarter and P5.05 million for the third quarter.