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Meru seeks CCI interference again vs Ola and Uber, will CCI dismiss it again?

Mumbai-based cab service provider Meru Cabs has again filed complaints against Ola and Uber, alleging that the cab aggregators are misusing their position in the market and prompting anti-competitive practices, said Meru Cabs’ CEO Nilesh Sangoi, while speaking to MediaNama.

Sangoi confirmed to MediaNama that the company has filed four complaints with the Competition Commission of India (CCI), claiming that Uber and Ola are abusing their dominance in four different cities by burning vast sums of investor funds to distort the market. CCI is a regulatory body responsible for enforcing The Competition Act, 2002 and preventing practices that have an adverse effect on competition in India. The move was first reported by Reuters.

Meru’s concerns

In its complaints, Meru Cabs has raised concerns about Japan’s Softbank being a common investors for both Ola and Uber, and that investors plans to consolidate these two dominant players in the cab aggregator segment in the country, according to Reuter’s report.

SoftBank plans to invest up to $10 billion in Uber. Also, SoftBank Vision Fund CEO Rajeev Misra recently told Times of India that SoftBank hopes to make peace between Uber and Ola in the country.

The global agency also quotes Sangoi saying that even before there is any merger or alliance between the two through global investors, “there is already a unified monopoly.”

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Sangoi told Reuters that Uber and Ola have been altering driver incentives and passenger fares in tandem. However, the $10 billion Softbank-Uber deal is not part of the fresh complaint made to CCI, as Sangoi told the agency. He also added that this deal strengthens Meru’s case.

Note that the development comes at the time when Ola announced that it has raised $1.1 billion from Tencent, SoftBank and others, and said that it will raise $1 billion again soon.

Why Meru lost to Ola earlier

This is the second complaint by Meru: it had lost the previous case against Ola two months ago. The complaints filed by Meru and Fast Track Call Cab, both radio taxi services, were essentially that Ola is providing radio taxi services, and it has abused its dominant position in the Bangalore market by offering heavy discounts to passengers and incentives to cab drivers which “amounts to predatory pricing” and has “affected other competitors in the market who cannot offer similar discounts/incentives to commuters/drivers.”

But CCI & its Director General said that total fleet size and active fleet size for different players ”were not appropriate indicators for assessment of market shares. The DG also said that for a player to have a dominant position in the relevant market, it should be able to hold its market share for a reasonable period of time. Ola’s marketshare started declining “as Uber entered the relevant market almost three years after Ola’s entry.” Thus, it can’t be said whether Ola “would be in a position to hold on to its market share for a sustainable period for assessment of dominance in the relevant market.”

Why Meru lost to Uber earlier

In December, CCI had dismissed Meru’s complaint accusing Uber of predatory pricing. CCI was of the view that Uber does not hold a dominant position in the relevant market, and there is no need to go into the examination of its conduct in such relevant market.

Also, Meru had pointed out Uber’s issues. In a blog post (June 2016), accused Uber India to be a law breaker and said that the US-based cab aggregator uses billions of dollars of funding to kill the competition through unrealistic and predatory pricing to consumers and massive incentives to drivers – then if regulators react to any violation of laws, create huge social media campaigns using the consumer base created though subsidized pricing to put pressure on regulators to change the laws. It had also pointed several laws that Uber India is breaking in the country. However, drivers’s incentive structures have been falling drastically. Read our detailed report about it here.

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What are the chances now?

  • CCI dismissed earlier cases with multiple reasons, including both Ola and Uber not having dominant marker share, or wrong assessment of market share. According to a data published by research firm KalaGato Pte in June, US-based online cab aggregrator Uber’s market share From January to June (2017) stood at 50%, Ola Cabs had a share of 44.2%, and Meru Cabs at just 1.3%. So basically, Ola and Uber combined has more than 90% market share in the country.
  • In its ruling, CCI also said that access to finance plays an important role, where there is a level playing field. Ola so far has raised a total of $3 billion including fresh round, and Uber has total funds of $ 11 billion, according to Crunchbase data. In May this year, Uber infused Rs 51.64 crore into its India operations. Meru last raised Rs 150 crore (~$25 million) in June 2016, from Times of India Group’s (BCCL) Brand Capital.
  • At the time of ruling, CCI had said that it’s difficult to determine the long term impact of this pricing strategy since the market is yet to mature. But now, when players like Mahindra and Mahindra, and Reliance Jio are eyeing this segment. Will CCI consider interfering in the market considering it a ‘matured market’ now?

Written By

Writes about e-commerce, social media, tech and Internet ecosystem.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.



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