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Grab Holdings, a well-known regional tech business and owner of the super app “Grab,” is said to be thinking of buying foodpanda, a well-known meal delivery platform in Southeast Asia’s burgeoning food delivery market.
According to sources, foodpanda’s owner, Delivery Hero, located in Germany, plans to sell its operations in Singapore, Cambodia, Laos, Malaysia, Myanmar, Thailand, and the Philippines, especially those that operate under the foodpanda brand.
Currently, Grab retains a strong position in the Southeast Asian food delivery market, accounting for 54 percent of the gross merchandise value (GMV) of the area, according to tech research company Momentum Works.
Comparatively, foodpanda comes in last with 19 percent, while Gojek from Indonesia has a 12 percent market share.
On the other hand, it has been difficult for Delivery Hero to maintain its development. Since its founding in 2011, the company has not turned a profit. It posted a net loss of 832.3 million euros in the first half of this year, which is a slight improvement from the 1.495 billion euros in losses it recorded in the previous year.
Potential effects on pricing, competition, and consumer choices
Although the possible merger would be good for Delivery Hero’s business, analysts and experts are worried about the potential effects it could have on pricing, competition, and consumer choices.
CGS-CIMB analysts Ong Khang Chuen and Kenneth Tan stated in a Technode Global study that antitrust approval is a big barrier to Grab’s takeover intentions. They contend that this can alter the current competitive environment and possibly result in monopolistic dominance over the food delivery industry.
The researchers added that in Singapore, Malaysia, and the Philippines, Grab will be able to control more than 90% of the market for online food delivery.
Such an event might have significant ramifications for shoppers, delivery drivers, and business owners, particularly in the Philippines where Grab has previously run afoul of the law over purported anti-competitive actions.
The effects of Grab’s hegemonic position in the transport network vehicle service (TNVS) market have already been felt by Filipinos. Critics have said that Grab has been charging exorbitant fees, particularly during rush hour and in cities like Manila where the transportation system is notoriously chaotic.
Additionally, according to reports, Grab Philippines has received multiple fines from the Philippine Competition Commission (PCC) for a variety of infractions, such as failing to fulfill refund orders on time and “providing incorrect and misleading information in the compliance reports that the company submitted concerning refund orders.”
Although there are other companies in the market, none have been able to seriously contend with Grab’s hegemony. Even the accreditation of other ride-hailing services hasn’t been able to threaten Grab’s market dominance. This incident demonstrates Grab’s market dominance and the challenges rivals encounter when trying to enter it.
Merger concerns raised
Consumers and industry stakeholders in the Philippines and even the rest of Southeast Asia are particularly concerned about the prospective merger between Grab and foodpanda.
The threat of tighter regulation in the food delivery industry emphasizes how crucial it is to maintain robust competition to provide customers with greater offers, discounts, and innovations.
Grab’s increasing market sway serves as further evidence of the need for stringent oversight and regulatory scrutiny to protect Filipino consumers’ and business stakeholders’ interests.
It is essential that we lay a strong emphasis on fostering fair competition and defending the interests of consumers as we plan the future of the food delivery sector.
To make sure that, first and foremost, the livelihoods of delivery riders, the worries of merchants, and, above all, the accessibility and affordability of food delivery services for consumers are protected, the future of foodpanda and any impending market transformation should be studied with careful consideration.
The lessons learned from the transportation network vehicle servicing industry serve as a clear reminder of the need to maintain competition to receive the most advantage in terms of pricing within this constantly changing sector.