Charging the Singaporean ride-share app with "having seriously violated the law on transport business," a Vietnam court agreed with Vinasun's claims that its rival's illegal actions cut into their profits.
The verdict comes after an 18-month legal battle that finally ruled that Grab broke regulations by acting as a taxi company, not merely a technology provider for private transportation as they claim. Vietnam Sun Group, or Vinasun, originally sought US$1.8 million in damages, but the judge contended that not all of the taxi company's losses could be contributed to competition from the app, and the taxi firm couldn't provide sufficient evidence to back it up.
Nonetheless, last Friday the court ordered Grab Vietnam to pay VND4.8 billion (US$206,000) to Vinasun to compensate for the latter's losses due to unfair competition by Grab.
Since its arrival in 2016, Grab has added over 22,000 cars in Saigon which has drawn business away from traditional taxis. In addition to lost fares, Vinasun claims the competition has resulted in abandoned and unused cars which increase their inventory and maintenance costs. The company's market share has fallen by VND81 billion (US$3.49 million) during that time.
The court also upheld an October ruling that Grab illegally implemented predatory pricing via promotions and prices that fluctuate throughout the day. They were also found to be acting as a taxi company despite not being licensed as such and not following that industry's requirements for ensuring service quality, paying taxes or providing labor contracts, traffic safety or social security to drivers. A new government draft will require Grab and similar ride-sharing apps register as taxi companies and comply with all associated laws.
Hoang Ngoc Giao, director of the Institute for Policy, Law and Development Studies in Hanoi, condemned last week's ruling, saying: "The decision will set a precedent that hinders the development of a digital economy in Vietnam, and will discourage the development of several companies."
Head of Grab's Vietnam Operations Jerry Lim said the judgment sets a "bad precedent" that will ultimately stunt the innovation and competitiveness of Vietnamese companies. Grab is planning to appeal the verdict and launch a defamation suit against Vinasun.
Grab has experienced numerous legal setbacks recently. Earlier last year, Singapore's Competition and Consumer Commission fined Grab and Uber US$9.5 million for what they found to be an illegal merger. The Vietnam Competition and Consumer Protection Authority came to a similar conclusion last month saying the company failed to notify the government with specific economic figures, breaking a law that forbids mergers that result in 50% or more of a market.
