Grab-Vinasun row accelerates

Grab Vietnam’s Jerry Lim expressed disappointment that the company is being dragged through the court for having a technological advantage

As previously reported in VIR, Grab and Vinasun have been going head-to-head at the Ho Chi Minh City People’s Court. The case once again sparked controversy as the municipal People’s Procuracy proposed Grab pay VND42 billion ($1.82 million) in compensation to Vinasun. The prosecutors also asked that the ride-hailing app firm be treated as a traditional taxi operator rather than a tech firm.

Lawyer Truong Thanh Duc, chairman of Vietnamese law firm Basico, stated that the court is not authorised to preside over the case. Vinasun accused Grab of violating the Ministry of Transport’s (MoT) Decision 24, which brings the case under the jurisdiction of the MoT. Furthermore, Vinasun should have submitted a petition to the Ministry of Industry and Trade (MoIT) to call attention to its allegation that Grab failed to abide by pricing and promotion rules.

On the same note, lawyer Nguyen Van Hau, chairman of the Ho Chi Minh City Bar Association, said that Grab is a member of the pilot programme under Decision 24. The Vietnamese government has also extended the pilot licence for e-hailing projects. If Grab commits any violations during the pilot programme, the MoT and the government would have already raised their voice. Therefore, the court has to seek guidance from the government and relevant ministries.

Likewise, Ngo Thanh Tung, managing partner of Vietnam International Law Firm (VILAF), said that the judges should weigh the benefits of Vinasun or a new business trend in Vietnam. A judge should weigh the interests of a few hundred Vinasun taxi drivers or millions of consumers and a few thousand Grab drivers.

Tung further raised three legal issues with the case. First, Grab’s business is a transportation service, as alleged by Vinasun. In the expert’s view, it is quite clear that it is not a transportation service, because Grab does not own cars but an IT platform which drivers can register to use. Grab provides a solution for freelance drivers to earn legitimate income.

Second, there are no provisions prohibiting Grab from providing these services. Indeed, Grab was authorised by the MoT to participate in the ride-hailing pilot programme.

Third, it remains questionable whether Grab illegally caused damage to Vinasun and if so, what actual damage was caused. In a similar vein to Grab and Vinasun, airlines can create some losses to inland transportation because they reduce the number of customers using inland transportation, but the idea that this damage is illegal has never occurred to any of the sides. It merely provides more choices for would-be customers and generate competition, which is good for society.

“Last but not the least, it is very difficult for Vinasun to prove or demonstrate a causal link that exists between the Grab’s [allegedly illegal] business and the loss of Vinasun, especially for a specific amount of VND42 billion ($1.82 million),” Tung said.

In addition, some experts fear that if Vinasun wins the lawsuit against Grab, it may adversely impact the business environment and Vietnam’s Industry 4.0 ambitions.

Luong Hoai Nam, an aviation and tourism expert, told VIR, “The case could also set a bad precedent for other traditional taxi operators to sue Grab until the ride-hailing firm pulls out of Vietnam. All online platforms could also be sued for eating up the market share of offline platforms.”

Echoing this view, lawyer Hau warned of the long-term effects of this potential bad precedent. In particular, new business models are bound to arrive in Vietnam in anticipation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and local firms might use the case to hinder newcomers and deter foreign investors. Hence, Hau emphasised that every effort should be made to ensure a fair and equitable business environment.

Following the hearing, Jerry Lim, country head of Grab Vietnam, expressed disappointment as it does not make sense for a tech company like Grab to be taken to court for having a technological advantage over traditional businesses, and that it is unjust to prosecute the firm which has been bringing about better livelihoods for the people of Vietnam.

He further noted that Grab’s operations could not be the sole and direct cause of Vinasun’s shrinking earnings. Vinasun is only delaying technology adoption in transport business as well as taking advantage of the lawsuit to drive policymakers towards protecting the traditional taxi sector.

“Even so, we continue to have faith in the first instance verdict which is slated to be delivered by the court on October 29. We believe that the court will protect the benefits of citizens rather than the benefits of one group striving to maintain traditional business modes without stimulating innovation in Industry 4.0. This is the first-ever lawsuit between a traditional taxi operator and a tech firm over loss-of-earnings,” he said.