Grab says Uber deal ‘no breach of competition laws’

By Dat Nguyen   December 13, 2018 | 04:04 am PT
Grab says Uber deal ‘no breach of competition laws’
Grab said it did not breach Vietnam's competition law in its acquisition of Uber in March 2018. Photo by Reuters
Ride-hailing firm Grab has asserted that it did not breach Vietnam’s competition laws, contesting authorities’ definitions and interpretations.

The assertion was a response to the Ministry of Industry and Trade, which said Wednesday that it had evidence that Grab’s acquisition of Uber violated Vietnam’s Competition Law .

In a statement released Thursday, Jerry Lim, country head of Grab Vietnam, said that the transaction between Grab and Uber earlier this year was conducted "in the good faith belief that there is no breach of competition laws, after diligent consultation with legal counsels."

Lim explained that the issue has become contentious because of differences in the authorities’ and Grab’s definitions of relevant market and what constitutes a competitive playing field.

He said that the entrance of new ride-hailing companies into Vietnam shows that they believe there is a chance to succeed, with some of them claiming high market shares.

In June, Vietnam’s first ride-hailing services FastGo and Aber were launched. Go-Viet, an affiliate of Indonesia's Go-Jek, entered Vietnam in August, claiming to take 15 percent of the market share in Ho Chi Minh City within two weeks of launching.

Vietnam’s top taxi operator Mai Linh and second-ranked Vinasun have also invested in a ride-hailing service to compete with Grab.

Grab said that a ride-hailing app was just one of many options for customers. It cited a third-party survey, without revealing details, which said more than 59 percent of Vietnamese car ride-hailing users and 62 percent of motorbike ride-hailing users surveyed would switch to a different transport service other than ride-hailing if there was a 10 percent increase in prices.

Lim also said that Grab was not the only ride-hailing company in the market, as the Vietnamese government has granted ride-hailing pilot licenses to nine other companies, including established taxi companies, to operate services in five cities and provinces.

Both customers and drivers can respectively decide to switch to other forms of transport and join other companies if prevailing conditions such as pricing and income are not favorable to them.

"The power of choice remains in the hands of customers," Lim said.

He said Grab has fully cooperated with the Vietnamese authorities for the purpose of a fair investigation and recommendation. "We fully understand that all governments seek to protect the best interests of consumers. Grab truly shares the same goals."

Lim said he hopes that the final verdict of the Vietnam Competition Committee will take into account the "vibrancy and contestability of the current Vietnamese market landscape and support the competitive business environment brought about by technology application and innovation."

Singapore-based Grab acquired Uber in Southeast Asia in return for a 27.5 percent stake in the U.S. company, with Uber CEO Dara Khosrowshahi joining Grab’s board.

The 2004 Competition Law requires any merger or acquisition that results in a company gaining a 30 percent market share to be reported to competition authorities.

If a company gains a 50 percent market share from the deal, it can only be implemented with express permission from the authorities.

Preliminary investigations by Vietnamese authorities have found that Grab’s market share in Vietnam was in excess of 50 percent after Uber quit the market last April.

But Grab has countered this, saying that since its combined market share with Uber in Vietnam was less than 30 percent, it did not have to "inform the competition authority before proceeding and completing this transaction in the country."

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