Singapore’s anti-trust body proposed fines on ride-hailing firms Grab and Uber, provisionally finding that their merger had reduced competition and suggesting remedies such as the sale of their car-leasing businesses.

The Competition and Consumer Commission of Singapore (CCCS) also warned that it may require the companies to unwind the merger depending on whether the remedies are successful but added a reversal may not be feasible, citing Uber’s exit from the market after the deal.

Uber sold its Southeast Asian business to bigger regional rival Grab in March in exchange for a stake in the Singapore-based firm, following similar deals by the U.S. firm in China and Russia.

But the deal has invited regulatory scrutiny in the region, with the CCCS, in a rare move, launching a probe, days after the transaction was announced.

The commission said in a statement on it proposed the fines because Uber and Grab carried out the transaction despite having anticipated potential competition concerns, leading to lesser competition in the sector in Singapore.

This is the first time the commission would impose fines on a merger transaction. The CCCS said it will consider the companies’ representations before it finalizes the actual amount of the fines.

Grab said in a statement that it disagreed with the regulator’s finding which it said appeared to be based on a narrow definition of competition. “We will take all appropriate steps to appeal against this decision,” it said.

CCCS proposed remedial steps such as removing exclusivity obligations on drivers who use Grab’s ride-hailing platform as well as its exclusivity arrangements with taxi fleets. It also proposed that Grab maintain its pre-transaction pricing algorithm and driver commission rates until competition is revived in the market.

It said it could ask Uber to sell its Lion City Rentals car-leasing unit to any potential competitor who makes a reasonable offer and prevent its sale to Grab without the authority’s permission. CCCS also said remedial measures could include a sale by Grab of its leasing unit.

PUBLIC CONSULTATION

CCCS has invited public feedback on the proposed remedies.

It said it may require the parties to unwind the transaction unless the feedback confirms that any of the proposed remedies, or any further remedies, are sufficient to address the competition concerns, and are implementable in practice.

In its public consultation, the commission noted that an unwinding, including a reversal of Grab’s stake sales to Uber and the transfer of assets from Uber to Grab, may not be feasible as Uber’s exit may not be practically reversed.

“I don’t think unwinding (in a traditional sense) is going to happen, because I just don’t see a practical way for it to happen,” said Walter Theseira, an economics professor at the Singapore University of Social Sciences.

He cited difficulties in separating Grab and Uber’s drivers and customers, as well as dividing Singapore geographically.

Experts have previously said there was little the authorities can do to stop Uber from simply exiting the region.

Some analysts said unwinding could take different forms.

“It doesn’t have to be a total unwinding. But it could be an unwind in the sense for Grab to now sell off part of its business to another ride-hailing service provider,” said Gerald Singham, deputy managing partner at Dentons Rodyk.

The CCCS said the firms completed the deal and began the transfer of the acquired assets immediately, despite their own view that the outcome would be irreversible, thus making it practically impossible to restore the status quo pre-merger.

Its investigations also revealed the parties had even provided for a mechanism to apportion eventual antitrust financial penalties.

Grab was the dominant player in Singapore’s ride-hailing market even before the Uber merger. It also competes with taxi businesses such as ComfortDelGro.

Several new players, such as India’s Jugnoo and Singapore-based Ryde, have recently entered the ride-hailing market in the city-state. Indonesia’s dominant player Go-Jek has also said it would launch services in Singapore.