JAKARTA -- Indonesia's anti-monopoly watchdog has decided to fine Singapore-based Grab's local unit after the ride-hailing startup was deemed to have provided preferential treatment to some drivers over others on its platform.
Grab Indonesia said on Friday it will appeal the decision.
The Business Competition Supervisory Commission (KPPU) fined Grab Indonesia a total of 30 billion rupiah ($2 million) and its business partner PT Teknologi Pengangkutan Indonesia (TPI) -- a car rental company -- a total of 19 billion rupiah for breaching the country's anti-competitive law. The anti-monopoly agency "considered that there had been a practice of discrimination" carried out by both companies against individual drivers compared to drivers using cars from TPI. The disciminatory practices included allotment of priority orders.
"This practice has resulted in monopolistic practices and unfair business competition for non TPI partners and individual partners," KPPU said in a statement released on late Thursday.
The case had been in the media since early last year, when independent drivers in the city of Medan, the capital of North Sumatra province, began alleging discriminatory practice from Grab. KPPU launched an official investigation in May last year, finding that such practices were seen in other places including the Greater Jakarta area, Indonesia's second largest city Surabaya, and Makassar, capital of South Sulawesi province.
Hotman Paris Hutapea, the lawyer representing Grab Indonesia and TPI, lambasted the move, saying both companies will "immediately take legal action" and submit an objection to the district court.
"The decision of KPPU is a bad precedent for the image of the Indonesian business world in the eyes of the international (scene)," he said in a stadtement on Friday.
"While President Joko Widodo was working hard to persuade foreign investors to invest in Indonesia, the KPPU punished foreign investors (Grab and TPI) who had invested heavily in Indonesia and had opened up very large (number of) jobs, with incompatible considerations with the facts of the trial," he added.
Meanwhile a spokesperson for Grab Indonesia denied the company had given any preferential treatment to drivers with TPI.
"We have always believed in equal economic opportunities for all our driver-partners. Our booking system is fair and purely based on performance and merit," said the spokesperson. "If Grab driver-partners registered with TPI consistently provide quality service to passengers, naturally they are entitled to the same benefits programs as all other driver-partners."
Grab is engaged in a bitter battle with its Indonesia rival Gojek to become Southeast Asia's dominant "superapp" -- drawing users onto their platforms by offering combinations of services such as ride hailing and payment. The battle is at its fiercest in Indonesia, the biggest market in the region with a population of 260 million and an internet economy that is slated to reach $133 billion in 2025 from $40 billion in 2019.