SO, it turns out that the merger of Uber and Grab in Singapore may not actually be a good thing.

Yes, the fact that the No. 1 and 2 ride-sharing apps merged and created a monopoly is apparently not going to lead to greater competition and better service for consumers.

This might not seem like a revelation. Monopolies aren’t generally associated with great customer service but that the Competition and Consumer Commission of Singapore (CCCS)  has actually recognised the fact is significant.

This is a test case for Singapore and even globally as regulators come to terms with fast growing, fast changing but enormously powerful apps and technologies.

Uber and Grab are not just apps, they move millions of Singaporeans.

Over three million people (of a five million resident population) in the city have used the services and tens of thousands use Grab daily.

It’s effectively part of our public transport system; it literally transports thousands of the public.  So changes within the space impact the entire city.

Traffic along the East Coast Parkway beside the Marina Bay Sands Hotel... ride sharing has become part of the transportation network of Singapore. — Picture from commons.wikimedia.org

Through the merger, Grab has gained a stranglehold over the vehicle transport market. Regular taxis, weakened by years of competition from Uber and Grab, are are no longer in a competitive position.

The CCC has endorsed this position saying Grab "is (now) likely to be able to increase prices and has in fact done so.”

The commission has threatened to fine the merged Grab entity and even raised the prospect of unwinding the merger as it puts consumers at a major disadvantage.

Now that doesn’t mean Uber is coming back. The merger has already happened, the company has exited the market and regulators can’t force firms to stay.

In practice, parts of the business may have to be sold and Grab will remain the dominant market player.

However, the overall decision which at least indicates the government is watching the space and the newly super-powerful Grab is heartening.

It also sets a complicated precedent.

CCCS has rarely ever issued fines for a merger before. It can’t really be said that Grab is the only pseudo-monopolistic player operating in our market and what about good old Google and the online advertising cabal?

However, Grab is the most visible monopoly as the public saw what was fierce competition becoming a single player market overnight.

Of course, Grab for its part has denied it is in a monopolistic position and insists it faces competition. It argues any move to regulate the space or punish it for succeeding would effectively stifle competition and innovation in Singapore.

Singapore is known for its light touch and innovation-friendly regulation but the CCC ruling shows that there is also a duty the consumer.

Ultimately Uber and Grab (even in its possibly monopolistic form) offer a valuable service. What is key though is that innovation shouldn’t be allowed to transform into a cartel. What the authorities need to do going forward is to create an environment that allows real alternatives.

Perhaps the fines imposed should be used to fund a home grown/ community driven alternative to Uber? With an official/municipal call for proposals?

It might also be time to consider a regulators frameworks that would break the monopoly without breaking the model. Driver caps — limiting the number of drivers or vehicles on the road at any one time — have been discussed.

But these moves could also stifle the freedom of choice Grab brings to the table.

How the CCC tackles ride sharing is going to be watched around the world. But just what the next move will be is unclear.