Vinasun to take Grab to court over ‘unhealthy competition’

Vinasun is suing GrabTaxi Vietnam under the country's competition law, a representative told VnExpress.

The company said it has documents, photos and videos to prove that Grab has violated the law by dumping its service on the local market.

One of the most convincing charges is that GrabTaxi Vietnam ran promotions for more than 90 days in a year, which is against the law.

A man is about to get on a Vinasun cab in Ho Chi Minh City. Photo by VnExpress/Phuong Dong

In a letter sent to the Prime Minister last year, Vinasun said ride hailing firms, including Uber from the US and Grab, repeatedly ran promotions without gaining permission from authorities.

Other countries like Thailand, Indonesia and Japan have either banned or tightened their management of Uber and Grab after concluding that the two companies have been operating as “disguised taxi firms”, read the letter.

Vinasun has asked for an end to the unhealthy competition, and said ride hailing firms should be under the same umbrella as traditional taxi firms in Vietnam. This would mean Uber and Grab would have to limit the number of cars they operate and adhere to price controls.

In July last year, Vinasun said nearly 8,000 of its drivers had quit in the first half of 2017 due to harsh competition from ride-hailing firms.

Three months later, it reported losing 2,000 more drivers for the same reason, leaving the company with 7,000 employees.

The company earned VND4.25 trillion (US$187 million) in revenue and VND205 billion in net profit in 2017, down 10% and 34% respectively compared to 2016.

The same story applies to Mai Linh, another major local taxi firm.

Mai Linh lost 6,000 drivers in the first half of 2017, equivalent to 20% of its employees, according to a company report.

Its business results did not read much better during the period, with revenue falling more than 5% on-year to VND1.72 trillion (US$75.8 million).

Both Mai Linh and Vinasun have repeatedly blamed Uber and Grab for their losses, but the finger-pointing has received little support from the public, with many passengers saying they were already unhappy with the poor and unreliable services provided by the firms.

In its latest attempt to win back customers, Vinasun set up a Facebook booking service last year. The chatbot allows passengers to check the fare, preventing drivers from overcharging them, and is expected to reduce the 205,000 calls the company receives every month.

Earlier in January, the Ministry of Transport said Grab and Uber are to be officially authorized in Vietnam after completing trial runs, but the government has pledged to impose the stricter controls it currently imposes on local transport firms.

Ride-hailing services will have to register their businesses with investment authorities and the transport ministry and the tax authorities.

“Tax agencies will keep track of fares so management can be more transparent,” said Tran Bao Ngoc, director of the ministry's Transport Department.

Hanoi has also recently put up traffic signs banning Uber and Grab cars from operating along roads off-limits to traditional taxis.