SINGAPORE – A possible deal between Grab and foodpanda, which has since fallen through, had raised potential worries about competition in the food delivery market, said Singapore’s competition watchdog.

The Competition and Consumer Commission of Singapore (CCCS) said on April 1 that it had started a probe on Jan 10 into the possible acquisition by Grab Holdings of the whole or part of the business of foodpanda operator Delivery Hero in South-east Asia, including Singapore.

“At the time, CCCS had reason to suspect that the possible transaction might result in a substantial lessening of competition in the market for the supply of online food ordering and delivery services in Singapore, which is characterised by few large players, high entry barriers and strong network effects,” it said in a statement.

The investigation centred on whether the possible transaction would infringe section 54 of the Competition Act 2004, which prohibits mergers that have resulted, or may be expected to result, in a substantial lessening of competition in Singapore.

CCCS said it had on Feb 2 issued interim measures directions (IMDs) to Delivery Hero and Grab aimed at ensuring that the market remained open.

The measures, due to last until the completion of its investigation, ceased to be in effect from Feb 23 after CCCS was informed that the possible deal had been abandoned.

Under the IMDs, CCCS had directed the parties to, among other things, not take any action that would cause or contribute to the following scenarios:

• the integration of the parties’ online food ordering and delivery services’ businesses in Singapore;
• the effecting of any agreement between the parties that would materially impair the ability or incentive of either party to compete independently in online food ordering and delivery services here;
• any material impact on the viability and saleability of Delivery Hero’s foodpanda business in Singapore, such as to prejudice CCCS’ ability to direct a divestment subsequently if necessary.

The directions also included one that said Grab should not make any payment to Delivery Hero, and Delivery Hero should not receive any payment from Grab in cash, stock or otherwise in connection with a Singapore merger.

Analysts had earlier said that Grab’s acquisition of foodpanda in South-east Asia, if it had gone through, could lead to it gaining a larger share of the regional online food delivery market, help it grow revenues and give its share price a boost.

The watchdog said in its statement: “The CCCS continues to monitor market practices and will take necessary action to protect the market against mergers or acquisitions which may substantially lessen competition in Singapore.”