CCI dismisses complaint against Uber regarding abuse of dominance
The Competition Commission of India (CCI) has dismissed a complaint of alleged abuse of dominance against Uber. The complainant in the case was Meru Travel Solutions Pvt Ltd, which filed the complaint against Uber India Systems Pvt Ltd, Uber BV, Uber International Holding BV, Uber International BV, and Uber Technologies Inc.
Allegations against Uber
Meru Travels alleged that Uber abused its dominant position by resorting to predatory pricing with an intention to drive out its equally efficient competitors like Meru.
Meru initially filed a complaint in 2016 and alleged that before the entry of Uber average market price of radio taxis in Delhi and NCR was Rs. 23/km. However, Uber has offered prices at a much lower rate despite facing huge losses. The complaint further alleged that the main aim for keeping such low prices was to capture a large market share and ultimately establish its monopoly.
CCI dismissed this complaint. After this Meru had approached the appellate tribunal. Following this, even Uber approached the Supreme Court which dismissed the complaint and asked the Director-General of CCI to complete the probe into the allegations against Uber India Systems Pvt Ltd within six months.
Findings of the investigation
Director-General collected information based on trip size and included Ola as well- Uber’s biggest competitor. According to the total number of trips per day, Meru had a market share of 55-60%, whereas Ola had a market share of 15-20% in 2014.
Uber comparatively had a low number of trips per day, with 5-10% as market share in 2014. However, the market share of Meru subsequently decreased to 10-15% in 2015 and further to 0-5% in 2016, but that of Ola and Uber increased manifold. The market share of Uber in 2015 was 55-60% which was stable till 2016 but it reduced to 45-50% in 2017. The market share of Ola, however, increased to 30-35% in 2015 and increased further to 40-45% in 2016 and then to 50-55% in 2017. This cannot be considered a monopoly, because market share kept on fluctuating.
The investigation concluded that:
Uber is not in a position of strength to behave, to an appreciable extent, independently of its competitors and customers, in the relevant market. Thus, Uber is not found to be dominant in the relevant market in the present case.”
In addition, the CCI pointed out, “In light of facts and evidence, there is no merit in Meru’s argument that the incentives and rating mechanism adopted by Uber for its driver-partners has led to any appreciable adverse effect on competition in the market.”
Effect of Pandemic on business
Cab aggregators also suffered huge losses during a pandemic because of less demand. Taxi giants like Ola and Uber have been negatively impacted. According to one large second-hand car retailer, banks and NBFCs have impounded 30,000-35,000 cabs belonging to both Ola and Uber after drivers defaulted on the vehicle loans, Inc42 reported.
According to a report by Redseer, Ola and Uber have recovered 60% of their business post unlocking, but cab aggregators are once again facing a reduction in demand due to the high possibility of the 3rd wave of Covid-19. This could further complicate their revenue for yet another fiscal year.
You can read the order here.
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