MoIT orders Grab to report on acquisition of Uber

Thursday, Mar 29, 2018 08:55

Grab was asked to make an announcement to VCA on its acquisition of Uber. — Photo

The Ministry of Industry and Trade (MoIT) on Tuesday asked Grab Taxi Company Limited to report on its acquisition of Uber in the Southeast Asian market, including Viet Nam.

MoIT sent a document to Grab stating its order and asking it to submit the report before April 3.

Trinh Anh Tuan, deputy head of the ministry’s Viet Nam Competition Authority (VCA), said yesterday that VCA had also asked Grab to provide information and documents related to the acquisition as well as the acquisition contract.

Tuan said this requirement was based on the State management function on competition stipulated in Clause 2, Article 7, of the Law on Competition. Accordingly, MoIT is responsible for controlling economic concentration activities in the market.

He emphasised that the Law on Competition clearly stipulated that merger and acquisition (M&A) activities that could have major impacts on market competition would be limited.

According to the law, Grab was required to make an announcement to VCA on the acquisition for consideration of its effects on competition in the market before and after the deal.

If VCA concluded that the deal would not have any major impact or have minor effect on the market, Grab could go ahead with the deal.

Moreover, Grab and Uber are required to ask for permission from all competition authorities in the Southeast Asian countries that are required to complete the deal, Tuan said.

Article 22 of the law states that within 45 working days of receiving enough documents, VCA is liable to answer to businesses in written about the deal.

Violations of the Law on Competition for M&A transactions invite strict punishment. The maximum penalty is up to 10 per cent of the total revenue of the violated firms in the previous financial year.

In some other situations, VCA can apply supplementary penalties in addition to the monetary penalty, such as revoking business licence,ordering the separation of merged and acquired businesses or selling merged and acquired companies.

Worry over monopoly

According to Grab’s announcement to acquire Uber’s Southeast Asia operations on Monday, Grab will integrate Uber’s ridesharing and food delivery business in the region into Grab’s existing platform. Accordingly, all of Uber’s motorcycle and taxi drivers in Viet Nam will have the opportunity to work for Grab from April 8.As part of the acquisition, Uber will take a 27.5 per cent stake in Grab, and Uber CEO Dara Khosrowshahi will join Grab’s management board.

Grab’s announcement worried both Uber’s taxi drivers and customers about their benefits as well as a possible increase in travel cost.

Nguyen Trang Anh in Linh Dam Urban Area, Hoang Mai District, who has been regularly using Uber since its entry into Viet Nam, fearsthat the acquisition will not bring benefits to customers as promotion programmes may be reduced, while the ridesharing market will lose its competition because of the monopoly of Grab.

“Uber drivers have the same worry as their income will certainly be affected when many drivers would use both Grab and Uber. Some had even borrowed bank loans to buy a car to become a full-time Uber driver. They can lose their job if their accounts at Grab are locked due to violations of regulations,” said a Uber driver.

Grab’s representative in Viet Nam told online newspaper vietnamplus that its open technology would ensure a smooth transfer from Uber to Grab and that drivers and customers would find it easy to integrate to the Grab app.

“From April 8, all Uber driver can join Grab. Drivers can download and install the Grab app on their mobilephones. However, the account information of Uber drivers will be transferred to Grab only if they agree. Customers are required to register for the Grab app for first use,” he said.

He told the newspaper that tariffs for customers’ trips would be based on the travel itinerary and flexible fees depending on transport demand and number of available cars. This could ensure benefits to both customers and drivers, he said.

NguyenVan Thanh, chairman of the Viet Nam Automobile Transportation Association, said traditional taxi firms such as Mai Linh, Vinasun and ThanhCong had built apps to compete with Grab to avoid monopoly in the market. — VNS

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