The Malaysia Competition Commission (MyCC) ruled that Singapore-based Grab is in violation of competition laws and is considering slapping them with a $20.5 million fine, Reuters reported on Wednesday (Oct. 2).
“MyCC further notes that [Grab’s] 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,” MyCC chairman Iskandar Ismail said at a news conference, according to Reuters.
MyCC decided that Grab used its marketplace position to thwart any competition. In addition to the fine, the regulator will charge Grab $3,500 daily until it rectifies the situation.
Grab must comply and come up with a plan within 30 business days, Iskandar said.
The ruling stunned Grab, which told Reuters it was “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.”
“We maintain our position that we have complied fully with the Competition Act 2010,” a Grab spokeswoman told the news outlet. She added Grab would “submit its written representations by Nov. 27.”
Watchdog officials started monitoring the Singapore-based Grab last year after it acquired the Southeast Asian operations of Uber, which had been its main competitor.
Singapore and the Philippines both levied penalties against Grab and Uber over competition concerns.
The ride-hailing app turned financial services ecosystem serves 650 million people living in Southeast Asia. Grab Founder Anthony Tan recognized the frictions associated with getting a taxi in his home country of Malaysia and set out to change the dynamics of that business. He did that, among other things, by offering mobile phones to taxi drivers and by creating a better business model.
Grab has moved, or plans to move, into such areas as food delivery, insurance, lending and digital payments via GrabPay and Grab Wallets – an effort similar to Uber Cash, part of Uber’s own payments and commerce ecosystem.