Why Vietnam bucked the trend on Grab-Uber deal

Last week’s ruling by Vietnam’s Competition Council came after similar deals were fined by antitrust watchdogs in the Philippines and Singapore.

Vietnam's main rationale for the ruling was that the deal did not take ownership of the exiting company.

The competition and customer protection authority under the Ministry of Industry and Trade said that GrabTaxi – the Vietnam operations of Grab Holdings – had a market share of 44.1 percent in Hanoi and 82.68 percent in Ho Chi Minh City after acquiring Uber Vietnam.

The country’s Competition Law states that if a company will gain a 50 percent market share after any merger or acquisition, it can only be carried out with official approval. The competition authority therefore concluded that the Grab-Uber deal violated the law.

But the Competition Council, which is independent of the trade ministry, ruled against this conclusion. It said that the acquisition, signed in March last year, was not of equity shares.

GrabTaxi, in which Grab Holdings own a 49 percent stake, did not have voting rights in Uber Vietnam after the transaction, the council said, adding that Uber B.V. continued to operate the Uber app after the deal, not GrabTaxi.

"Since it is not a share acquisition that leads to Grab’s control of Uber’s equity interest, there are not enough elements, as defined by law, to constitute an economic concentration," it said in a statement issued after the hearing on June 11.

"And since the case did not constitute concentration, the council has decided that identifying the relevant market and aggregated market share is not necessary."

Uber Vietnam doesn’t operate any ride-hailing services. Its business registration doesn’t include ride-hailing, and the company says it only provided market research and marketing services to its parent company Uber B.V. based in Netherlands.

"Uber International B.V. could acquire these services from other companies other than Uber Vietnam. The trade ministry’s competition department has taken aim at the wrong target in its investigation," a representative of Uber Vietnam said.

Citing these reasons, the Competition Council said that the Grab-Uber deal did not violate antitrust laws.

Furthermore, the trade ministry’s competition department needs to pay case fees of VND100 million ($4,322), the Competition Council said.

But the Grab-Uber deal didn’t win in other Asian countries. The Philippines’ competition watchdog had earlier fined the two companies a cumulative 16 million pesos ($296,900), saying they had completed the deal too soon and that the quality of service had dipped.

The Singaporean competition authority fined them a total of S$13 million ($9.5 million) and announced other measures to address competition concerns arising from the merger.