Cab aggregators Ola and Uber have been under a lot of criticism for manipulating fares and indulging in unfair trade practices. However, the companies got a clean chit from the country’s competition watchdog the Competition Commission of India (CCI). Delivering a 13-page order CCI has rejected allegations against them levelled by an individual, reports PTI.
The two main charges levelled against the ride-share taxi operators were that they were in collusion among themselves and the drivers and charged fares which amounted to price cartelization and that they were imposing a resale price maintenance system. CCI has rejected both these charges.
Explaining the mechanism adopted by Uber and Ola and justifying why it does not find it violating any competition law, the CCI’s order brings out many details.
Firstly, these cab-aggregators deploy a large set of data, that include the demand and supply, the time of the day and the traffic conditions and so on, in addition to certain personalized information to come out with the suggested fare for each trip. It is dynamic and not done through human intervention. There are algorithms built into the technology deployed by the companies that determine the fares. This, by itself rules out any complicity on the part of the drivers and the hail-taxi app owners in fixing the fares for each trip. The fact that the drivers of the vehicles have agreed to this algorithm-based fare fixation process does not amount to collusion, the CCI has declared. There is clearly the absence of any hub and spoke like arrangement in the case of Ola and Uber.
"There does not appear to be any such agreement between drivers inter-se to delegate this pricing power to the platform/ cab aggregators," PTI quotes the order as stating.
On the technical aspect of resale price maintenance, CCI has said there should be evidence of some kind of floor price being fixed and maintained by the service provider to be charged under the competition laws. The Commission did not find any such evidence in the case of Uber and Ola of any floor price being fixed; on the other hand, CCI has pointed out that on occasions the fares go down much below the normal rates any taxi driver would have charged for the same distance or trip.
In conclusion, the CCI’s order states that “existence of an agreement, understanding or arrangement that demonstrates meeting of minds, is a sine qua non for establishing a contravention under Section 3 of the Act” and that in its view, no such agreement exists and therefore, the charges stand rejected.