Officials are still deliberating over the next step to address Grab’s potential market monopoly.
Earlier this week, authorities denounced Grab’s controversial merger with competitor Uber as illegal, according to Dan Tri.
The statement comes after a 30-day investigation by the Vietnam Competition Authority (VCA), who found that Grab’s market share would exceed 50%. VCA reportedly came to the decision after organizing working sessions with both Grab and Uber, as well as external state agencies.
At the time of the acquisition, Grab officials had seemed unfazed by any potential legal backlash, opting not to notify authorities before completing the transaction. In a letter to the department, Grab said its stake in the market would be less than 30%, according to the Saigon Times, and expressed little outward concern. Reportedly, however, they were unable to demonstrate that claim in working sessions with officials.
The company is now waiting for a second official investigation, needed to "clarify" the violation, the news source shares. The results of that second investigation will be sent to the Vietnam Competition Council (VCC) for a final decision. The VCA is still considering whether it wants to conduct a similar investigation.
According to Vietnam's Law on Competition issued in 2004, as quoted by Zing, should a company end up with 30-50% of market share after a merger without informing authorities, it will be fined up to 10% of its revenue in the previous year. If the post-merger market share exceeds 50%, the firm might even be banned from operating in the country.
Pending the VCC’s decision, Grab is liable to pay up to 10% of their 2017 revenue and may even be banned from operating in the country. The company was valued at US$6 billion by Forbes in January of this year.
Grab’s announcement in late March that it would buy Uber's Southeast Asia operations led to one of the biggest transactions of its kind in the region. Grab merged both Uber’s ridesharing and food delivery businesses into its own. Uber, meanwhile, took a 27.5% stake in Grab, with Uber's CEO, Dara Khosrowshahi, joining the Grab's board. When Uber officially shuttered its operations in April, it left Grab a US$2.3 million tax debt in Vietnam that Grab has refused to pay.
[Photo via NY Daily News]
