MoIT: Grab's acquisition of Uber may violate Competition Law
Updated at Wednesday, 16 May 2018, 16:28
The Hanoitimes - Preliminary investigation result showed that combined market share from economic concentration between Grab and Uber in Vietnam is over 50%, thus violating the Law on Competition, said the Ministry of Industry & Trade (MoIT).
Following the result, Vietnam Competition Authority (VCA) of the MoIT is considering of launching an official investigation over Grab's acquisition of Uber on the basis of the Competition Law, according to the VCA's Decision No.45 recently released.
Grab on March 26 confirmed that it has acquired Uber's South-east Asia operations for an undisclosed sum, but described as worth "several billion dollars" by Uber CEO Dara Khosrowshahi in an email sent to employees, putting an end to recent speculation about the merger between the two ride-hailing giants.
Grab's acquisition of Uber may violate Competition Law.
Uber would take a 27.5% stake in Grab, a figure which Grab described as "reflective of the companies' respective market shares", while Khosrowshahi will join the Grab board, Grab confirmed.
On March 27, the VCA requested Grab to report over the deal, with a view to determine whether the deal is in conformity with the Competition Law.
For the lack of information in Grab's response, the MoIT urged Grab to provide more evidences and calculate accurately the exact combined market share of Grab and Uber in Vietnam, so that the company can comply with the Law on Competition.
According to the Law, if the enterprises participating in the economic concentration, in this case, an acquisition of enterprise in the market, have a combined share in the relevant market from 30 - 50%, the legal representatives of such enterprises must notify the administrative body for competition prior to carrying out the economic concentration.
Failure to do so may result in imposing a fine of up to 10% of total turnover of the organization or individual in breach in the financial year preceding the year in which the prohibited practice took place.
If the combined market share in the relevant market of more than 50%, the deal may even be prohibited.
Grab and Uber arrived in Vietnam in 2014 and operate both car and motorbike taxi services. The two services have been running on a trial basis since early 2016, but have been caught up in a turf war with traditional taxi drivers.
Vinasun, a local taxi company took Grab to court accusing the firm of violating tax obligations. Last September, Hanoi Taxi Association said Uber and Grab had been transferring around $150 million overseas every year to evade taxes. Grab denied the accusation.