VCA opens investigation on deal between Uber and Grab

Deal between Uber and Grab to be investigated

According to newswire Vnexpress, on April 13, the Vietnam Competition Authority (VCA) under the Ministry of Industry and Trade issued the decision to investigate the deal. The authority’s move came after it joined a working session with Uber and Grab. Accordingly, the investigation will last for 30 days after the decision was issued.

Previously, in a document submitted to VCA, Grab Vietnam affirmed that after the merger, the market share of Grab will remain below 30 per cent, which is not a monopoly in Vietnam. However, at the working session with the authority, the representative of Grab failed to provide evidence to support this claim.

According to Vietnam's Competition Law, if enterprises participating in economic concentration have a combined market share of 30-50 per cent of the relevant market, their lawful representatives must notify the competition-managing agency before implementing the concentration, otherwise they will have to pay a fine of 10 per cent of the revenue of the fiscal year previous to the date the deal was completed (if the deal is completed in 2017, the fine is equal 10 per cent of the revenue of the 2016 fiscal year). In case the combined market shares exceed 50 per cent of the relevant market, the economic concentration will be prohibited.

In late March, Grab announced that it acquired Uber’s Southeast Asian operations. Grab will integrate Uber’s ridesharing and food delivery business in the region into its existing multi-modal transportation and fintech platform.

Following the deal, Grab will take over Uber’s operations and assets in Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. 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 board.

Grab’s purchase of Uber in Southeast Asia raised concerns about a potential monopoly in the region.

Accordingly, the Competition and Consumer Commission of Singapore (CCCS) asked Grab and Uber to postpone the merger so that the authority can have more time to review the merger plan.

CCCS asked the companies to maintain pre-transaction conditions, such as independent pricing and service options, as well as not to take any action that might lead to business integration in Singapore until the commission completes its review of the matter.

Grab and Uber agreed to postpone the merger of their ride-hailing apps in the city-state for seven days, until April 15.

In another movement, the Philippines ordered Uber to keep its local service active while antitrust investigators review the merger.