Malaysia proposes $28 million fine on Grab for abusive practices

The Malaysia Competition Commission ruled that Grab, which has major backing from Japan's Softbank Group, had abused its dominant position in the local market.
The Malaysia Competition Commission ruled that Grab, which has major backing from Japan's Softbank Group, had abused its dominant position in the local market.PHOTO: ST FILE

KUALA LUMPUR (REUTERS, THE STAR/ASIA NEWS NETWORK) - Malaysia's competition regulator on Thursday (Oct 3) proposed a fine of RM86 million (S$28.4 million) on ride-hailing firm Grab for violating the country's competition law by imposing restrictive clauses on its drivers.

The Malaysia Competition Commission (MyCC) ruled that Grab, which has major backing from Japan's Softbank Group, had abused its dominant position in the local market by preventing its drivers from promoting and providing advertising services for its competitors.

"MyCC further notes that the restrictive clauses had the effect of distorting competition in the relevant market that is premised on multi-sided platforms by creating barriers to entry and expansion for Grab’s existing and future competitors," MyCC chairman Iskandar Ismail told a news conference.

MyCC also imposed a daily penalty of RM15,000 beginning on Thursday for as long as Grab fails "to take remedial actions as directed by the commission in addressing the competition concerns".

Mr Iskandar said Grab have 30 working days to make their representations to the commission before a final decision will be made.

"We have just completed investigations. This is a proposed decision, not final," he said. "Grab will have the opportunity to present its defence and then we will decide if there are infringements or not."

Singapore-based ride-hailing Grab said it was surprised by the decision as they believed it was "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".

"We maintain our position that we have complied fully with the Competition Act 2010," a Grab spokeswoman told Reuters, adding that the firm would submit its written representations by Nov 27.

MyCC had said last year that it would monitor Grab for possible anti-competitive behaviour following its acquisition of Uber Technologies Inc's South-East Asian business in March 2018.

Grab responded by saying it had cooperated with MyCC and had not been informed of any breaches since buying its rival.

Uber's deal to take a 27.5 per cent stake in Grab in exchange had earlier raised a red flag with Singapore's competition watchdog, which, in September last year, fined both Grab and Uber a total of $13 million and imposed other measures to address competition concerns.

The Philippines also fined both companies 16 million pesos (S$425,000) last October, saying they had violated the conditions set by its competition regulator.

Under Malaysia’s Competition Act, a monopoly or dominant player in the market is not an infringement of the law, unless it abuses its position in the market.

"MyCC does not have mergers powers. We cannot unscramble the egg," Mr Iskandar said.