Grab’s acquisition of Uber may have broken law

Thursday, Dec 13, 2018 08:14

A person books a Grab taxi on their mobile phone. The Viet Nam Competition Authority on Wednesday ruled Grab’s purchase of Uber may have violated Viet Nam’s competition law. — VNS Photo Doan Tung

Grab’s acquisition of Uber may have violated the Competition Law, according to the Viet Nam Competition Authority (VCA).

The VCA on Wednesday said it had completed an investigation into the acquisition and transferred its conclusions to the Viet Nam Competition Council for consideration.

The investigation found that Grab did not notify its purchase of Uber to market regulators and the deal could make Vietnamese taxi companies vulnerable due to a smaller market shares and changes in customer habits.

The two violations are stated in sections 5 and 6 of Chapter 5 of the Competition Law.

The VCA added that within 30 days from receiving the documents, the council could make one of two decisions: returning the file for additional investigation (within 60 days) or suspending the case and open a hearing to issue a decision on the handling of the case.

Grab announced on March 26 it had purchased Uber’s operations in Southeast Asia, including Viet Nam.

Following the merger, Uber now holds a 27.5 per cent stake in Grab, while Uber’s CEO has joined Grab’s management board.

The VCA has sent a dispatch to Grab requesting information and documents related to the acquisition.

However, Grab claimed that since the combined market share of both Grab and Uber in Viet Nam was less than 30 per cent, it did not have to inform the competition authority before proceeding and completing this transaction in Viet Nam.

The VCA held a working session with Grab’s legal representative on April 6, but the firm failed to provide evidence proving its claim.

Grab is one of the most frequently used O2O (online-to-offline) mobile platforms across 195 cities in Southeast Asia. More than five million people use the combined platform daily.

If the concentrated share of parties accounted for 30 to 50 per cent of the market without informing the VCA before an acquisition, firms would be fined 10 per cent of their total revenue from the previous financial year. If the rate was more than 50 per cent, the transaction would be prohibited, the VCA added. — VNS

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