Uber's deal to take a 27.5 percent stake in Grab in exchange has raised a red flag with Singapore's competition watchdog, which said on Friday it was investigating a suspected breach of competition law.

Malaysia's Competition Commission would keep tabs on Grab, especially if the company imposed unfair practices or sudden fare increases, a government minister said.

"We won't take it lightly. We will monitor this because it is still early days and we don't know what will happen next," said Nancy Shukri, whose portfolio oversees the public transport licensing authority.

"We have stressed that if there is any anti-competitive behavior, the Competition Act will come into force. We have spelt this out to them," Nancy said, referring to a meeting with Grab representatives last Monday.

Uber and Grab announced the deal last Monday, marking the US company's second retreat from an Asian market. It earlier sold off its operations in China.

Nancy said Grab, which is valued at about US$6 billion, had offered assurances during their meeting last Monday that there would be no unfair pricing, nor would it increase its fares for now.

The minister said the merger, however, did not change the government's working relationship with Grab in converting over 67,000 conventional taxi drivers nationwide to e-hailing platforms.

Nearly 14,000 taxi drivers had now either partially or fully migrated to e-hailing platforms, and the government would continue working with Grab to convince more to do the same.

"This is in the interest of the taxi industry, which has been around for a long time. At the same time, Grab needs our support, and we are there to assist them as well," Nancy said. (bbn)

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