Companies engaging in monopolies manipulate the market by restricting the supply of a product or service. In doing so, market prices increase to improve a company’s bottom line and boost the pockets of shareholders.
The same domination of the market, however, works against the interest of consumers that monopolies serve. They restrict efficiency, the option to innovate and healthy competition. To sum it up, the monopolies lead to a market failure because consumers are forced to buy inferior products or services in the absence of a competing product or service..
Monopolies in the transport network vehicle service (TNVS) sector in the Philippines are no exception. The dominant ride hailing service can render an inferior service and fix prices at the same time in the absence of a worthy competitor. Competition in an ideal free market, in contrast, offers more and superior products and drive inflation lower.
Laws are created to discourage monopolies and foster competition in the market in the hope of providing better services or products to the consumers. But companies often navigate through the intricate landscape of legal ambiguities and grey zones, where the boundaries of law and regulatory statutes can be anything but clear-cut.
The case of a monopolistic foreign-owned ride-hailing service, masquerading as a Filipino firm, is a classic example. It tried to circumvent the country’s antitrust laws until it was exposed. Undeterred, the company again exploited the ambiguity of the laws, or the absence of implementing rules, to pursue its monopolistic goal.
The dominant player in the TNVS sector in the process committed violations of its franchise to operate, the majority of them revolving around deceptive practices that adversely affected its customers.
The Philippine Competition Commission (PCC) in 2019 initially ordered the ride-hailing service to refund P25.45 million to customers for failure to adhere to price monitoring commitments. Subsequently in December of the same year and again in October 2020, the PCC ordered a second and third refund order.
Many in the industry view the disregard for the PCC’s authority as a direct consequence of the TNVS’s seeming dominance and monopoly of the industry. The intransigence follows the exit of its primary competitor, Uber, a few years ago that left Filipinos at the mercy of the remaining TNVS.
A recent report from the Congressional Committee on Metro Manila Development sheds light on the PCC’s position. It alarmingly noted that “the acquisition of Grab Holdings Inc. and My Taxi PH Inc. of the assets and operations of Uber BV and Uber Systems Inc. in March of 2018 created a dominant firm with significant market power in a highly concentrated market.”
The PCC in response imposed fines—P6-million for violating the refund order issued three years ago and an additional P3 million for submitting inaccurate and misleading information in compliance reports. Despite the actions, the TNVS continues to operate with apparent impunity.
The report also noted the TNVS move to deceive the Philippine government to enter the related motorcycle taxi industry. It cited that while only three motorcycle taxi companies passed the government Technical Working Group’s screening, the foreign entity was not among them.
In a move reminiscent of its 2018 strategy, the TNVS bought out a competitor—Move It. The Congressional Report says “the latter’s (Move It) acquisition of Grab appears to be Grab’s pathway to enter the pilot study.”
The same report also noted while the pilot study guidelines remained unclear on how to handle the new ownership of Move It, the Motorcycle Taxi Technical Working Group effectively curtailed the plot by unanimously deciding to suspend the partnership through a status quo order.
However, the parties involved discovered another loophole. Move It offered its services through the Grab platform, effectively granting Grab de facto membership in the pilot study by relinquishing its operations to Grab.
The Pac-man trend is not about to end. The foreign parent company is reportedly in talks with Food Panda, a primary motorcycle delivery service competitor operating in the country. The potential acquisition move has implications not only for the transportation of people but also in the food delivery system.
The legal ambiguities of Philippine laws are taking the Filipino consumers for an unwelcome ride.
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