• Updated with Grab's response

Malaysia's competition regulator today proposed a fine of more than RM86 million on ride-hailing firm Grab for violating the country's competition law by imposing restrictive clauses on its drivers.

Reuters today reported that the Malaysia Competition Commission (MyCC) ruled that Singapore-based Grab, which has major backing from Japan's SoftBank Group Corp, had abused its dominant position in the local market by preventing its drivers from promoting and providing advertising services for its competitors.

"MyCC further notes 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," MyCC chairperson Iskandar Ismail reportedly said during a news conference.

MyCC also imposed a daily penalty of RM15,000, beginning today, for as long as Grab fails "to take remedial actions as directed by the commission in addressing the competition concerns".

According to Reuters further, Iskandar (photo) said Grab has 30 working days to make its representations to the commission before a final decision will be made.

The regulator said last year it would monitor Grab for possible anti-competitive behaviour after its acquisition of rival Uber Technologies Inc's Southeast Asian business in March 2018.

Malaysia would be the third country in the region to penalise Grab after the deal with Uber.

Last year, both firms were fined by anti-trust watchdogs in Singapore and the Philippines for their merger. Singapore said the deal had driven up prices, while the Philippines criticised the firms for completing the merger too soon and for a dip in quality of service.

However, Iskandar said the Malaysian regulator's investigations were based on complaints received against the ride-hailing firm, and not due to its near-monopoly of the market after the Uber deal.

Under Malaysia's Competition Act, a monopoly or dominant player in the market is not an infringement of the law, unless it abuses its position in the market.

"MyCC does not have merger powers. We cannot unscramble the egg," Iskandar said.

In response, Grab maintained that it fully complied with the Competition Act.

“We are surprised by the proposed decision that we received this morning.

“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,” a Grab spokesperson said in a separate statement.

The spokesperson added that Grab will be submitting its written representations to MyCC by Nov 27.