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Vietnam court orders Grab to pay Vinasun $208,000

By Hai Duyen, Ky Hoa   December 28, 2018 | 05:48 am PT
Vietnam court orders Grab to pay Vinasun $208,000
A Grab taxi drives on a street in Hanoi, Vietnam. Photo by Reuters/Kham
Grab should pay Vinasun VND4.8 billion ($208,000) for damage it has caused the top taxi firm, a court ruled Friday.

The People’s Court of Ho Chi Minh City said in its verdict that Grab had committed many mistakes in its operations in Vietnam, tantamount to unfair competition, which damaged Vinasun’s business.

Before 2016, Grab had registered almost 300 contract cars in Ho Chi Minh City, which increased to 23,000 by the end of last year. This led to a decrease in the number of active Vinasun cars, causing damage worth VND4.8 billion, the court found.

By June 2017, Vinasun had provided 1.1 million trips to its customers, while Grab had over 2 million. This shows that the number of Grab cars has continuously increased causing many Vinasun cars to stay unused in parking lots, the court said.

Grab’s entrance into the Vietnamese market has also lowered Vinasun’s market share, a damage of VND81 billion ($3.49 million).

Although its entrance has negatively affected Vinasun, the taxi firm could not prove that Grab was the only company to cause this damage, the court said.

For this reason, the court only required Grab to pay Vinasun the sum of VND4.8 billion for unused cars.

Change Grab’s status

The court also proposed that Vietnamese authorities start defining Grab as a transport business.

Grab has said in many documents to Vietnamese authorities that it is only a technology company and not a transport company. It has also said it only provides electronic transactions and free technology for customers via electronic receipts, which has been approved by the Ministry of Transport.

But the electronic contracts that Grab mentioned did not confirm to definitions under Vietnam’s Law of Electronic Transactions, the court said.

It noted that Grab’s contracts did not say who the parties to them were and there were no dispute resolution terms.

"Grab claims to be a company which provides technology and does not conduct a taxi business nor manage the drivers. But in fact, Grab does manage the drivers and charges transport fees," the verdict said.

"When customers order a ride, they transfer their money to Grab or pay via the driver a sum from which Grab takes a percentage. Grab also determines the bonus and punishment for drivers," it added.

Furthermore, Grab’s business activities do not follow the law, which requires an automobile transportation business to ensure the number of vehicles and service quality, the court said. The law also requires the business to provide employees with labor contracts, traffic safety training and social security.

Grab does not follow these regulations and does not pay the taxes it should as a transport business, the court said.

Since 2016, the Inspectorate of the HCMC Department of Transportation has listed 29 violations committed by Grab concerning not having a business registration certificate, list of transport contracts, and taxi signs, the court said.

Grab has also ignored twice the Ministry of Transport’s documents asking the company to stop its service with contracted vehicles, it said.

The ride hailing firm has also violated the law in how it gives out promotions and increase and decrease transport fees multiple times a day, the court added.

Vinasun had filed the suit against Grab in June last year. It said Grab's illegal activities were responsible for nearly VND42 billion ($1.8 million) of the VND76 billion ($3.25 million) in losses it had suffered in 2016 and the first half of 2017.

The trial began in February, but was adjourned a month later to allow for more evidence to be gathered. Grab had protested the valuation of Vinasun's losses.

Last October, prosecutors asked the court to accept Vinasun’s petition for compensation of nearly VND42 billion, rejecting Grab’s claim it was a tech firm and not a taxi company.

Grab responded by writing to Prime Minister Nguyen Xuan Phuc, saying that identifying it as a taxi firm would be "a step backward from Industry 4.0."

The latest draft of a Ministry of Transport decree requires firms offering taxi services to register as taxi firms before they can apply ride-hailing technology.

This means that Grab and other ride-hailing firms have to register afresh as taxi businesses and comply with legal requirements related to operating licenses, drivers’ profiles and taxes.

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