PCC orders Grab to pay ₱5-M refund to customers, sets monthly price cap

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The Philippine Competition Commission gives Grab until January to refund ₱5.05 million to customers for charging extremely high fares between February and May this year.

Metro Manila (CNN Philippines, November 18) — Riders who had to pay high fares for their Grab bookings may soon receive refunds from the ride-hailing app company, as ordered by the Philippine Competition Commission (PCC).

The regulator announced Monday that it has ordered Grab to return about ₱5.05 million in fares due to "overcharging" from customers who booked their services between February and May 2019.

PCC issued the order to Grab last November 14 and gave it 60 days to refund customers.

As a practice, Grab prices its fares based on demand, with prices surging during peak hours. This is not the first time for the antitrust body to require fare refunds from Grab. In July 2018, Grab was made to pay a ₱10-million penalty for overcharging, including a rebate for imposing ₱2 per minute of "waiting time" to riders.

The PCC has mandated Grab to comply with its initial price and service commitments after its merger with Uber last year, which the regulator found to be close to a monopoly. The PCC earlier required Grab to restore pricing and service quality before its merger with Uber, after the latter sold its business to the Singapore-based ride-hailing company when it exited Southeast Asian markets in 2018.

Among these commitments were bringing the average acceptance and cancellation rates to the level they were at before the merger, keeping fares at a level comparable to the period before the merger, and ensuring transparency in pricing.

PCC discovered then that the merger led to price increases and "service deterioration."

In January, the anti-trust body fined Grab ₱6.5 million for submitting insufficient data on fare monitoring. This is on top of a ₱16-million penalty on Grab Philippines and Uber in October 2018 for "violating key provisions" of the merger review.

Conditions set

The newly-imposed refund is part of the fresh set of conditions imposed by the government on Grab to protect consumers, as Grab continues to enjoy a virtual monopoly in this transportation segment.

The PCC also placed Grab under monitoring for the second straight year. An "extended lookout" for exclusivity deals would also last for three more years in response to Grab's market dominance.

The PCC admitted that Grab still enjoys a virtual monopoly of the market with no huge contenders to match its reach and scale.

The regulator imposed a new system that will return excess payments to riders if Grab "breaches the monthly average fare cap set by the Commission." Rebates would be awarded through individual GrabPay accounts within a month from receiving a notice of breach, the PCC said. Grab should also be more transparent in computing fares.

Monthly price caps have also been set for Grab services, limiting fare surges by about a fifth of the base fare during high-demand situations.

"The monthly average fare cap restricts Grab’s ability to increase prices beyond pre-transaction levels, limiting the average fare increase to 22.5% in most months," the PCC said in a statement.

Under the deal, Grab partner-drivers are given the "power of choice" to work for other transport network companies and cannot be tied to Grab alone. Grab must still assist drivers in applying for licenses and permits.

Drivers also need to maintain an average completion rate for bookings at 70 percent per month starting April. For those who cannot comply, Grab must remove the "see destination" feature for bookings to improve passenger experience — a feature some passengers say is discriminatory against them.

Refunds coming

Grab Philippines said it will pay the refunds to customers and will announce the process of payment at least five days before the money is returned to riders' accounts.

"The antitrust body has identified certain deviations from Grab's voluntary commitments, and based on the recent order from the PCC, Grab will be paying a total computed amount of ₱5,050,000 to the passengers who took Grab rides from February until May 2019," the company said in a statement Monday afternoon.

Grab added that it will "work closely with the PCC" for the payments, and would adhere to its voluntary commitments made with the PCC.

The PCC said it has so far imposed a total of ₱23.45 million in fines for the ride-sharing firm, representing quarterly penalties since the start of the year. The third quarter refund worth ₱5.05 million came from this new system on price caps.

Further violations like breaching the price cap would merit a penalty of ₱2 million per breach, the regulator said. These voluntary commitments made by Grab are viewed as the compromise for the PCC's approval of its acquisition of Uber's operations.

CNN Philippines Correspondent Makoi Popioco contributed to this report.