TOURISM: HANOI- Vietnam court orders Grab to compensate money-losing rival

HANOI: A court in Vietnam has ordered the ride-hailing app Grab to pay a taxi company more than US$200,000 for losses incurred due to competition — a judgement Grab called “a giant step backwards” for the country’s tech community.

The Singapore-based company, which launched its service in Vietnam in 2013, has been embroiled in a lawsuit with Vinasun, a major taxi provider in the south of the country, since May 2017.

Vinasun blamed losses amounting to $1.8 million on its rival’s entry into the market.

A court in Ho Chi Minh City ruled on Friday that Grab must compensate Vinasun $206,000 in damages for “having seriously violated the law on transport business”, a court clerk told AFP.

The ruling found that Grab violated Vietnamese regulations because it operates as a taxi company, and not just as a technology firm, the Tuoi Tre newspaper reported.

A local news outlet, which serves as a mouthpiece for the city’s department of justice, said Grab’s “activities caused losses to Vinasun”.

But since there was a lack of concrete evidence to prove that Grab was the sole reason for the Vietnamese company’s losses, the judge said there were no grounds to demand the full $1.8 million, according to the news outlet.

Grab is Southeast Asia’s most dominant ride-hailing company, operating in eight countries in a fast-growing sector with increasing competition.

The judgement sets a “bad precedent”, said Jerry Lim, the head of Grab in Vietnam. It could be seen as allowing traditional companies to sue competitors “instead of constantly innovating through technology to remain relevant” in the country’s vibrant tech industry.

“This is a defeat and giant step backwards for Vietnam’s hard-working entrepreneurs and tech talents,” he said in a statement.

“It is unfortunate that Vinasun’s anti-competitive tactics as a reaction to their declining business profits have somehow prevailed.”

He added that Grab was “intrigued” by the verdict, given the lack of “direct causal relationship” between Vinasun’s losses and Grab’s business activities.

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Grab will appeal to seek a reversal of the court’s decision, and is also preparing to launch a defamation lawsuit against Vinasun “if there is no retraction of the baseless allegations made”.

Vinasun could not be reached for comment on Friday.

Grab’s ambitious ascent has not been without issues. Earlier this year the Competition and Consumer Commission in Singapore fined Grab and Uber a total of $9.5 million for merging — a move it said substantially reduced competition in the city-state.

The region’s ride-hailing market is expected to be worth $20 billion by 2025, according to research by Google and the Singapore state investment firm Temasek.