Malaysian regulator proposes $20m fine on Grab on competition concerns

The Malaysia Competition Commission (MyCC) on Thursday proposed a fine of over 86 million ringgit ($20.5 million) on Singapore-based ride-hailing firm Grab for violating the competition law by imposing restrictive clauses on its drivers, according to a statement by the regulator.

The regulator ruled that the SoftBank-backed ride-hailing firm Grab abused its dominant position in the market by preventing its drivers from promoting and supplying advertising services for competitors.

MyCC Chairman Iskandar Ismail told a news conference 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.

A penalty of 15,000 ringgit per day starting October 3 will be imposed until as long as Grab fails to address the concerns. Iskandar said Grab had 30 working days to respond to the committee before a final decision was made.

In response to this decision, Grab said it complies with Competition Act 2010 and that it would submit its written representations by November 27.

Malaysia would be the third country in the region to penalise Grab after its acquisition of Uber’s Southeast Asia operations in March 2018. Last year, both firms were fined by anti-trust watchdogs in Singapore and the Philippines on account of the merger.

In a recent statement, Grab said that the ride-hailing startup has fully cooperated with the MyCC in its request for information, and that it is not aware of any breach of competition laws since the acquisition in March 2018.

The firm said the acquisition of Uber’s Southeast Asian operations was done in good faith and belief that the deal will “create more efficiencies and benefits for the public in the e-hailing sector”.

The ride-hailing firm was responding to a Bloomberg news report, which said MyCC is advancing an anti-monopoly investigation into Grab to bring greater competition to Malaysia’s economy.

Quoting Iskandar Ismail, the CEO of MyCC, the report said the anti-monopoly watchdog was stepping up a probe into Grab, although there were no details given on the specific steps the commission was taking.

Founded in 2012 by Malaysian entrepreneurs Anthony Tan and Hooi Ling Tan, Grab started its ride-hailing business in Kuala Lumpur before shifting its headquarters to Singapore and is now one of the most-valued unicorn startups in Southeast Asia.

Its Indonesian rival Gojek, on the other hand, has been ramping up its overseas operations – it is now in Vietnam, Singapore, and Thailand. The startup is also entering the Malaysian market soon.

Established in April 2011, MyCC is an independent body responsible for enforcing the Competition Act 2010, which was implemented to create healthy competition which would, in turn, stimulate productivity and innovation, thus creating wider choices of products for consumers with better quality and reasonable prices.