This article first appeared in The Edge Financial Daily on October 4, 2019

KUALA LUMPUR: Insisting that it has fully complied with the law, Grab Holdings Inc yesterday expressed surprise at the Malaysia Competition Commission’s (MyCC) proposed decision to fine the company RM86.77 million for abusing its dominant position by imposing restrictive clauses on its drivers.

“We maintain our position that we have complied fully with the Competition Act 2010,” said the ride-hailing firm. “We are surprised by the proposed decision.”

MyCC had earlier in the day accused Grab of imposing clauses restricting its drivers from using their vehicles to promote and advertise other e-hailing platforms, which it said would distort the market and create barriers to entry for other existing and future competitors of the dominant player.

The competition watchdog’s chief executive officer, Iskandar Ismail, said the investigation into Grab — which includes GrabCar Sdn Bhd and MyTeksi Sdn Bhd — was prompted by numerous complaints made against the company.

“The drivers are not their employees. They merely use the Grab app [to find passengers]. The drivers own their own car, so they should be able to do whatever they want with their own car.

“This restriction from promoting others will distort the market, as it creates barriers to entry and expansion of Grab’s existing and future competitors,” Iskandar told a press conference.

He said the restrictive clauses only became an issue after the merger between Grab and Uber’s Southeast Asian operations in late March last year, which turned the e-hailing company into a dominant player in the market.

The RM86.77 million fine comes with a penalty of RM15,000 per day starting yesterday, for as long as Grab fails to take remedial actions to address competition concerns.

Grab said it is working with its lawyers and will file its written representations to MyCC by Nov 27.

“Whilst our legal counsels are now studying the proposed decision, we believe that it is common practice for businesses to decide upon the availability and type of third-party advertising on their respective platforms, tailored according to consumers’ needs and feedback,” the company said in a statement.

It is understood that this is the largest fine issued by MyCC against a single company to date.

Iskandar, however, emphasised that this is a proposed decision and that Grab has 30 working days to present their defence.

Other countries in the region also took action against Grab last year.

Last year, the Competition and Consumer Commission of Singapore imposed a S$6.42 million (RM19.45 million) fine against Grab and a S$6.58 million fine against Uber over the merger, as the commission said the deal had significantly reduced competition in the market. It was also found that ride fares were increased following the merger.

Meanwhile, the Philippine Competition Commission fined Grab eight million pesos (RM646,600) for its failure to maintain pricing policies, rider promotions, driver incentives and service quality following the merger.

Asked if Malaysia was slow in taking action against Grab, Iskandar pointed out that the law in Malaysia currently does not provide MyCC powers over mergers, so it cannot “unscramble the egg”.

“Singapore and the Philippines took action earlier because they have merger powers, as provided by their laws. MyCC can only investigate the situation post-merger, so we investigated Grab after the merger.

“We have plans to amend the law to include merger powers. I think the time is right for us to have merger powers so we can respond efficiently to similar cases in the future,” he said.

Iskandar also said that MyCC has received complaints on other issues besides third-party advertising, but declined to comment further.