Despite being hit today by a new penalty by the Philippine Competition Commission (PCC)—a ticket amounting to PHP 16.15 million—Grab Philippines says it respects the judgment handed.
The country's antitrust body fined Grab because of violations in its commitments from May to August of this year. According to a PCC statement, of the P16.5 million fine, P14.5 million is for “extraordinary deviation on its pricing commitment" while the remaining P2 million is for driver cancellations that went up to 7.76 percent.
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In a statement from Grab, the company explains that these deviations were caused “by the lack of TNVS (transport network vehicle service) supply to service the steadily growing commuter demands, coupled with the worsening traffic situation.” TNVS was initially intended to augment the mass transportation system in the country. At the current rate, says Grab, the TNVS is “carrying the heavy load of serving commuters which the current mass transport system is unable to accommodate.”
But what does this mean for us riders?
Of the total amount, Grab will comply with the PCC order by disbursing the computed administrative penalty of PHP 14,150,000.00 to the GrabPay Wallets of passengers who took booked rides from the said period. This will happen no later than February 10, 2020, and each affected passenger will be contacted five days prior to disbursement. The remaining PHP 2 million related to the “breach of committed driver cancellation rate” will be given to the PCC.
Last month, the PCC ordered the company to refund its riders PHP 5 million in charges from a total of PHP 23 million it was charged in the past year. With this December ruling, that 2019 amount has increased to almost PHP 40 million.
“Overcharging is not the correct word to be used for the fines,” Grab Philipppines president Brian Cu said in an interview for ANC’s Market Edge in November. “What happened was the PCC found certain deviations in our pricing commitments. This is based on the voluntary commitments that we made last year after the merger of Grab and Uber.” Those voluntary commitments included a “fare-in range,” which had a very technical computation that Grab was supposed to stay within.
He went on to explain that despite being within the fare matrix of the Land Transportation Franchising and Regulatory Board (LTFRB), the prices went outside of the commitments they made to the PCC. “This fare-in range moved… and unfortunately, even though our fares did not change throughout that period, the fare-in computation meant that we deviated from certain commitments,” he says.
The PHP 5 million to be refunded, he clarified, was not based on any computation of how much was charged. “The refund was a fine imposed by the PCC as part of this PHP 23 million fine,” he says. Meaning, instead of just accepting the fine, the PCC ordered that a part of it should be reverted back to the riders.
While it did not contest these latest fines, Grab did contest ones from a few quarters back. “We contested those fines because of how technical the way the fare commitments were computed,” he says. Their motion for reconsideration (MR) for the first couple of fines were denied, and they believed future MRs would result in the same denial.
“What we said when we discussed with the PCC is that we’ll move forward, comply with these fines, and move forward with a new way of computing these pricing commitments,” he says.
In the recent statement by the app, it says that both Grab and the PCC acknowledge that the last quarter of this fare-in-range monitoring scheme is “highly technical and does not apply to the current market conditions. Given the current lack of TNVS supply, worsening traffic conditions, and the ever-growing commuter demand, Grab’s fares remain to be compliant with the LTFRB’s fare matrix,” the company insists.
As the new monitoring year begins with the new system-wide average monitoring scheme, Grab is hopeful it will fulfill its commitments to the PCC. “However, it highlights that as a platform, pricing will still be influenced by factors such as lack of supply, and the traffic situation.”