HO CHI MINH CITY (VIET NAM NEWS/ASIA NEWS NETWORK) - Vietnam's taxi operator Vinasun has initiated a lawsuit against the popular ride hailing service Grab on accusations of unfair business practices, with a court in Ho Chi Minh City looking into the matter on Tuesday (Feb 6) .
Vinasun, once a dominant player in taxi transport in southern Vietnam, has seen its market share gradually eaten away by Uber and Grab as these transport apps gain popularity with the rising number of smartphone users in the country.
Vinasun has claimed that the "illegal operations" of Grab in Vietnam were to blame for the company's falling revenues in 2016 and 2017.
Truong Dinh Quy, deputy director-general of Vinasun,ỷ alleged that Grab in recent times, had conducted "rampant" promotion deals and discounts, akin to the practice of "dumping" of manufactured goods.
He is basing the company's complaint on the trade law and government's Decree 37 issued in 2006, that the duration of total promotional deals in a year must not exceed 90 days and each promotion programme should not last beyond 40 days.
The decree also states that businesses that want to hold promotional events must register with the municipal or provincial commerce department.
Vinasun further aleged that it needs to observe 13 government regulations, while Grab only has to follow three, thus creating unfair competition.
"Industry 4.0 apps are an inevitable trend. However, being just an app-based ride hailing service, Grab has disrupted the taxi transport sector, causing several implications to State management activities in tax collection and ensuring social security for those work for Grab," Mr Quy said, as quoted by Vietnam News Agency.
"In addition, Grab drivers themselves are encountering difficulties when the company collects up to 25-28 per cent from the taxi drivers' earnings as commissions," he added.
Grab's lawyers contend that Vinasun's allegations are baseless and that its software solution has actually created a level ground for competition.
They also argued that Vinasun's evidence and methods of loss calculations are questionable. Grab is asking the People's Court to either suspend the suit or reject Vinasun's case entirely.
The trial on Tuesday morning attracted a crowd of taxi drivers from Vinasun and Mai Linh, another well-known taxi company.
This was the first time that the increasing tension between conventional taxi operators and their app-based counterparts ended up in a courtroom, even as Vietnamese lawmakers seek to enact legal tools to regulate ride-hailing services.
A new draft decree is in the works, which would require Grab and Uber offices in Vietnam to register for licences as an enterprise doing "electronic business", and for their transport vehicles to have easily identifiable logos on both the front and back windows.