Meru moves CCI to complain against Ola, Uber; alleges 'unified monopoly'

BT Online        Last Updated: October 12, 2017  | 14:17 IST
Meru moves CCI to complain against Ola, Uber; alleges 'unified monopoly'

Taxi service Meru Cabs has filed four new complaints with the country's antitrust watchdog Competition Commission of India (CCI) against taxi aggregators Ola and Uber for allegedly abusing market dominance in four cities. "We have filed four complaints against Ola and Uber in top four cities of operations. They have disrupted the dynamics of the business by pouring foreign funds in the market and selling services below cost and running into losses," said, Meru Cabs CEO Nilesh Sangoi.

"Due to the capital backing, they sell below cost, add more cars on the platform and when they add more cars customers get the benefit of less waiting time and this in turn attracts more drivers as they get more trips," Sangoi said adding that this time the case is very strong to check on their unfair business practices. 

"Even before there is any merger or alliance between the two through global investors, there is already a unified monopoly," Sangoi added. Domestic radio taxi service providers are fighting a bitter battle with ride-hailing apps which are funded by foreign investors.

Ride-hailing service Ola on Wednesday said it has raised $1.1 billion in funding led by Chinese internet major Tencent Holdings Limited. Japan's SoftBank, an existing investor in Ola, along with new US-based financial investors participated in this round. "Tencent Holdings will bring significant expertise to Ola as it furthers its leadership position across the mobility market in India. Ola is also in 'advanced talks' with other investors to close an additional $1 billion as part of the current financing round, concluding a total raise of over $2 billion," Ola said in a press statement.

The new funding round is likely to strengthen Ola's position against the US-based rival Uber Technologies. Cab-hailing companies Ola and Uber are locked in a bitter battle to expand their market share in India. Homegrown ride-sharing service Ola and the US-based Uber have spent millions of dollars in driver incentives and discounted rides for customers.

Sangoi alleged that huge subsidy to drivers, "impractical" discounts to customers offered by Ola and Uber have distorted the taxi service market. He contended that someone with no funding will have more price, less cars, less profits, more waiting time, and ultimately a decline in the number of customers.

The Indian taxi companies, including Meru, took big hits and saw a blip in their business due to the entry of Ola and Uber and the competitors allege that the rivals entice the drivers with lucrative schemes.

The Competition Commission of India (CCI) had earlier rejected similar allegations against Ola with regard to the Bengaluru market, saying there was no dominance as rival Uber too is a significant market player and denied interfering in the taxi services market that is yet to fully evolve.

With its latest round of funding, Ola will be making strategic investments in supply, technology, and innovations to build for the unique transportation needs. The company will make significant technology investments into Artificial Intelligence and Machine Learning capabilities to solve for India's unique mobility problems, Ola said.

"We are thrilled to have Tencent Holdings join us as new partners in our mission to build mobility for a billion Indians. The transportation and mobility industries are seeing huge changes globally. Our ambition is to build a globally competitive and futuristic transportation system in India that will support and accelerate a nation on the move," said Bhavish Aggarwal, Co-Founder and CEO of Ola.

"Ola's unique local offerings are tailored to India's burgeoning transportation needs. The strategic partnership with Ola makes it possible for Tencent to be part of the fast-growing ride-hailing space in the country. We look forward to helping Ola further develop India's transportation solutions," said Martin Lau, President of Tencent Holdings.

According to industry sources, who did not wish to be named as the discussions are private, the $1.1 billion came in over the last 4-6 months in tranches. The additional USD 1 billion funding is also likely to be closed in the next few weeks, they added.

ANI Technologies, which operates Ola, counts among its investors names like SoftBank Group, Tiger Global, Sequoia India and Accel Partners US.

While ANI Technologies is not a publicly-traded company, according to regulatory documents, its revenues registered a stellar growth at Rs 758.23 crore during 2015-16 compared to Rs 103.77 crore in the previous fiscal.

However, Ola suffered a consolidated loss of over Rs 2,311 crore -- about Rs 6 crore a day -- during that fiscal on account of heavy advertising and promotional expenses and other costs.

Indian tech companies have raised billions of dollars in funding this year. Japanese conglomerate SoftBank had pumped in $ 1.4 billion (over Rs 9,079 crore) in Indian digital payments platform, Paytm. Internet giant SoftBank, in what is seen as the biggest ever private investment in an Indian technology company, pumped in $2.5 billion in e-commerce major Flipkart.

with PTI inputs 

 

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