CCI dismisses allegations of antitrust violations against Uber

By: |
July 15, 2021 2:14 PM

The Competition Commission of India (CCI) has rejected the allegations of antitrust violations made against Uber by cab aggregator Meru.

Uber has justified that the discounts and incentives offered by the company are a part of the overall network expansion strategy.

The Competition Commission of India (CCI) has rejected the allegations of antitrust violations made against Uber by cab aggregator Meru. According to the recent order issued by the competition regulator, Meru had alleged that Uber was offering low priced rides to customers along with high incentives to its drivers and the move was aimed at eliminating competition. Apart from this, Meru alleged that Uber also entered into an exclusive agreement with its drivers that prevented them from working with any other taxi operators. “The Informant (Meru) alleged that owing to its dominant position, Uber Group adopted certain abusive practices,” read the order by CCI.

However, considering Uber’s statements during investigations, CCI decided to reject the allegations made by Meru.

The Commission said it has deliberated at length on the relevance of network effects along with the role of incentives and discount within the market. As Meru alleged that Uber and Ola operate at below-cost pricing strategy and their pricing strategies are not on the basis of efficiencies, Uber has justified that the discounts and incentives offered by the company are a part of the overall network expansion strategy. “Given that a cab aggregator competes in the relevant market on the network, and its operational efficiency is directly proportional to the network strength it has, it may be counterproductive for an antitrust regulator to intervene in such an instance,” CCI said.

Uber further said that the idea behind giving incentives to its driver partners was aimed at getting a minimum viable scale that will ensure that the drivers are available on the company’s network and are accepting the rides. The company also submitted the acceptance rating system which is applicable at the time while a driver-partner is online. This, according to Uber, ensures that the system of accepting rides is efficient and any customer does not have to suffer because of repeated cancellations. The competition regulator has found merit in the statements and documentation submitted by Uber on its rating mechanism.

Apart from this, CCI said that Ola has grown in the market with a share which is almost equivalent to Uber. Therefore, any competitive constraints that Ola and Uber pose, will outweigh each other. Also, incentives that Uber offered did not meet “the legal test” of an exclusionary agreement that “would cause an appreciable adverse effect on competition.”

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