KUALA LUMPUR (Reuters) - Malaysia’s competition regulator on Thursday proposed a fine of over 86 million ringgit ($20.5 million) on ride-hailing firm Grab for violating competition law by imposing restrictive clauses on its drivers.

FILE PHOTO: A Grab logo is pictured at the Money 20/20 Asia Fintech Trade Show in Singapore March 21, 2019. REUTERS/Anshuman Daga/File Photo

The Malaysia Competition Commission (MyCC) ruled that Singapore-based Grab, which has backing from Japan’s SoftBank Group Corp, had abused its dominant position in the 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 Chairman Iskandar Ismail told a news conference.

MyCC also imposed a daily penalty of 15,000 ringgit beginning on Thursday for as long as Grab fails to address the concerns.

Iskandar said Grab had 30 working days to make their representations to the commission before a final decision would be made.

Grab said it was surprised by the decision as they believed 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 Reuters, adding that the firm would submit its written representations by Nov. 27.

The regulator said last year it would monitor Grab for possible anti-competitive behavior 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 penalize 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 criticized the firms for completing the merger too soon and for a dip in service quality.

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 mergers powers. We cannot unscramble the egg,” Iskandar said.