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Uber intentionally losing Rs 200 a ride? SC orders probe into predatory pricing allegations

Dipak Mondal     September 6, 2019

Radio-taxi aggregator Uber might be intentionally losing Rs 200 a ride, a business policy that suggests predatory pricing and anti-competitive behaviour. This has not gone down well with the Supreme Court (SC) of India, which has now ordered an investigation into the allegations that global taxi aggregator indulged in anti-competitive behaviour.

The Supreme Court on September 3 dismissed Uber's appeal against an investigation order by competition appellate tribunal as the apex court found 'sufficient material for allegations of Uber intentionally losing as much as Rs 200 per ride, offering cheap rides to customers and heavy incentives to drivers, to order an investigation against Uber'.

The case pertains to a complaint filed by Meru Cabs, a competitor of Uber, in 2015 in which the former had alleged that Uber was intentionally suffering losses on the rides on its application, pricing them below cost, to gain customers (predatory pricing) and directly or indirectly forcing cab drivers to remain exclusively on its platform.

The allegation against Uber were dismissed by the Competition Commission of India (CCI) in 2016 on grounds that there wasn't sufficient evidence to show the market strength of Uber was such as to hold it to be a predator. Meru Cab appealed against the CCI decision in appellate tribunal, which found sufficient reasons to overturn the CCI order and order an investigation.

Now with the SC upholding the appellate tribunal's order, the director general (DG), investigating arm of CCI, would investigate Uber's practices and evaluate their impact on the market.

"The DG will be expected to answer whether in competition law economics Uber can be termed as a dominant player or not, either in the market for radio taxis in Delhi or in Delhi-NCR. He will also have to answer if indeed there was predatory pricing that was neutralising competitors or whether exclusivity arrangements with drivers - directly or indirectly - were preventing them from accessing other platforms," says Charanya Lakshmikumaran, partner, Lakshmikumaran & Sridharan.

Any adverse observations by the DG against Uber and its acceptance by the CCI could mean significant penalties being imposed on the radio taxi aggregator.

"More importantly, this could result in a drastic alteration of Uber's business practices, meaning that customers should not take the service as it exists today for granted," says Charanya Lakshmikumaran.

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