Grab faces biggest antitrust fine yet from Malaysian competition regulator

3 October 2019 7:56pm
driver for ride hail company

3 October 2019. By Jet Damazo-Santos.

Ride-hailing firm Grab may have escaped Malaysian scrutiny over its controversial merger with rival Uber last year, but it is now facing the biggest antitrust fine yet in that country for alleged abuse of dominance practices.

The Malaysia Competition Commission, or MyCC, today announced that it has issued a proposed decision to fine Grab 86.8 million ringgit ($20.7 million) for imposing restrictive clauses on its drivers, which it said prevented the drivers from promoting and providing advertising services for Grabs’ competitors, creating barriers to entry in the e-hailing market for taxis.

“It is important that barriers to entry for new players remain low and for existing players to have the ability to grow and compete on merits to ensure that competition can remain healthy in the e-hailing market and other related markets,” MyCC chief executive officer Iskandar Ismail said in a statement.

The final fine could end up even higher, because MyCC is also proposing to add a daily penalty of 15,000 ringgit ($3,581) from the date of service of the proposed decision, if Grab fails to take remedial actions as directed by the commission.

In a statement sent to MLex, a Grab spokesperson said they would submit their written representations to MyCC by Nov. 27.

“We maintain our position that we have complied fully with the Competition Act 2010,” the spokesperson said, adding that the announcement came as a surprise.

“We are surprised by the proposed decision that we received this morning. While our legal counsels are now studying the proposed decision, we believe that it is common practice for businesses to decide upon the availability and type of third-party advertising on their respective platforms, tailored according to consumers’ needs and feedback.”

Grab became the dominant ride-hailing player across Southeast Asia, including in Malaysia, after merging with Uber’s Southeast Asia operations in March 2018. The controversial deal received intense antitrust scrutiny in Singapore, the Philippines and Vietnam, but not in Malaysia, which does not have a merger control regime.

Earlier this year, Iskandar said the Grab-Uber deal gave rise to the most number of complaints the regulator had ever received, and made the need for merger review rules more urgent.

In Singapore, the competition regulator last year imposed a total of S$13 million ($9.5 million) in penalties on both Grab and Uber for their "anticompetitive merger." Uber is appealing that decision.

In the Philippines, Grab and Uber were fined a total of 16 million pesos ($297,000) for violating key provisions in interim measures issued in April 2018 following their merger. Another penalty of 6.5 million pesos ($123,000) was imposed in January on Grab for violations of some of the conditions of its merger clearance.

In Vietnam, Grab won a rare victory last June after the country’s competition council rejected the Vietnam Competition and Consumer Protection Authority's request to impose sanctions on the two companies for violating merger rules. That decisions is being appealed by the antitrust authority.

In Indonesia, Grab is also facing potential antitrust fines over alleged discriminatory practices. Indonesia’s antirust commission has accused Grab of favoring drivers who lease cars from a partner company, Teknologi Pengangkutan Indonesia, or TPI, giving them special treatment in terms of passenger bookings and driver incentives. Hearings on that case began last week.