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Grab faces hefty fine for alleged violations in acquiring Uber Vietnam

Grab faces hefty fine for alleged violations in acquiring Uber Vietnam

Thursday, December 13, 2018, 15:00 GMT+7
Grab faces hefty fine for alleged violations in acquiring Uber Vietnam
Grab drivers on a street in Ho Chi Minh City. Photo: Tuoi Tre

An investigation has revealed that ride-hailing service Grab may have violated Vietnam’s competition law in the acquisition of rival Uber’s Southeast Asian operations in April, the Vietnam Competition Authority (VCA) announced on Wednesday.

VCA announced the official results of its investigation into the Grab-Uber deal on Wednesday, about one month after the investigation concluded.

Grab’s market share in Vietnam jumped to over 50 percent following the acquisition, making it a dominant player among companies offering similar services and bringing to light several signs of anticompetitive regulation breaches, VCA said in a statement.

Grab also failed to notify relevant authorities about the deal, which is required for any merger and acquisition where the combined market shares of the parties involved are greater than 30 percent.

“We had advised Grab to review their market share when acquiring Uber in order to apply for an exemption from regulations on economic concentration, but the company did not comply,” a VCA official told Tuoi Tre (Youth) newspaper on Wednesday.

VCA alleges that Grab is guilty of two violations – acquiring another company that results in a combined market share of over 50 percent, and failing to inform relevant authorities about the deal, the official said.

Case files for the Grab-Uber deal have been transferred to a Ministry of Industry and Trade competition committee responsible for reaching a final verdict on whether Grab is guilty of the alleged violations.

If Grab is found guilty it could face fines of up to ten percent of its revenue, the VCA official said.

Within 30 days of receiving investigation files, the competition committee must either suspend the case, request a further 60 days to continue their investigation, or hold a hearing.

Grab will be given an opportunity to defend itself before the committee at the hearing, after which committee members will cast their votes via secret ballot to determine whether the company is guilty of the alleged violations.

Grab can file an official complaint or lawsuit against the committee’s decision, the VCA official said.

Grab, in April, acquired Uber’s operations in Southeast Asia, including in Vietnam, in exchange for a 27.5 percent stake of the company.

The Singapore-based ride-hailing service insists the companies’ combined market shares did not exceed 30 percent at the time of acquisition, which is why it did not report the deal to Vietnamese authorities.

In May, VCA announced it had opened an investigation into the acquisition for suspected violations of regulations on economic concentration.

The investigation concluded in November.

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Tuan Son / Tuoi Tre News

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