The head of the High-level People’s Procuracy in Ho Chi Minh City has rejected the law suit of local taxi firm Vinasun against ride-hailing firm Grab, citing no cause-effect link between the operation of Grab and Vinasun’s lost revenue, Tuoi Tre newspaper reported.

The decision was made in reference to the verdict of the People’s Court of Ho Chi Minh City on December 28, 2018, ordering Grab to pay VND4.8 billion (US$206,985) in compensation to Vinasun. 

Vinasun filed a lawsuit against Grab 18 months ago, accusing the latter of unfair business practices that had cost it US$1.76 million in lost profits. 

According to the Procuracy, a slump in Vinasun’s profit was due to the corporate governance of the enterprises, market conditions, fierce competition between multi modal transport businesses, and a change in passengers’ demands, among others. 

Vinasun’s request for compensation, therefore, proves to be baseless, stated the Procuracy. 

Both Grab and Vinasun’s main operation is passenger transportation, therefore, service quality and passenger’s preference would be major factors affecting the business result. 

Moreover, Grab did not violate Vietnamese regulation, as it was authorized by the Ministry of Transport to participate in the pilot program of applying technology in managing and connecting electronic contract-based passenger transportation. 

The government later agreed to extend the program until the issuance of new regulation in replacement of Decree No.86 setting out conditions for transportation business. 

This showed the government’s openness in facilitating new businesses based on digital economy and supporting new ideas that bring high-added value for both enterprises and citizens, said the statement of the Procuracy. 

The Procuracy stated the presence of Grab is in line with the development trend of Vietnam both in present and in long-term, offering passengers a new services with cheap transport fare and better service quality. 

Under this circumstance, Vinasun must adapt to the new situation to be able to compete with other competitors in a fair manner. 

In a statement published after the court’s hearing, Grab said it would appeal and seek a reversal of the court’s decision.

Grab and Uber arrived in Vietnam in 2014 and operate both car and motorbike hailing services. The two services started to run on a trial basis in early 2016, but have been caught up in a turf war with traditional taxi drivers, as the rise of these two firms have led traditional taxi firms on the downhill path.

Grab on March 26 confirmed its acquisition of Uber's Southeast Asia operation for an undisclosed sum, raising concern over its alleged monopoly status in the region's ride-hailing market. 

The Vietnam Competition Authority (VCA) under the Ministry of Industry and Trade on December 12 said in a statement that Grab’s acquisition of Uber’s Southeast Asia operation, including Vietnam’s market, has infringed competition law. 

The case would be referred to the Vietnam Competition Council (VCC) for further handling in accordance with the law on competition. 

Hanoitimes