Back in March, ride-hailing platform Grab acquired rival Uber’s Southeast Asia business – a deal that saw Uber pick up a 27.5 per cent stake in Grab. Now, the deal may be in jeopardy after Singapore’s competition watchdog deemed the transaction to have “led to a substantial lessening of competition”.

The Competition and Consumer Commission of Singapore (CCCS) began an investigation into the merger the day after its completion was announced. Upon conclusion of this examination, the CCCS found that the transaction has removed competition between Grab and Uber – each other’s closest competitors in the region – and led to an increase in prices.

It has also been deemed that the deal sets the entry barriers too high for those looking to challenge the duo, as they would struggle to attract both drivers and riders. As a result, Grab and Uber would be able to continue increasing prices, potentially leading to a reduction in service quality and innovation.

On the back of the CCCS’s findings, the watchdog has suggested several potential remedies to the issues surrounding the merger including the removal of exclusivity obligations for drivers, a return to Grab’s pre-transaction pricing model and driver commission rates, and for Uber to sell Lion City Rentals – its car rental subsidiary in Singapore – to another competitor. Even with these proposed remedies, Grab and Uber may still be forced to unwind their deal and face fines for going ahead with transaction despite having knowledge of the potential competition concerns.

“CCCS may require the Parties to unwind the Transaction unless the aforesaid public consultation confirms that any of the proposed remedies, or any further remedies, are sufficient to address the identified competition concerns, and are implementable in practice,” said the CCCS.

“CCCS proposes to impose financial penalties upon Grab and Uber respectively, as CCCS has found that they have carried the transaction into effect despite having anticipated potential competition concerns.”

Grab and Uber now have 15 working days to convince the CCCS not to breakup the merger, making their own representations to the watchdog.