Competition Commission of India (CCI) has ordered a probe against a leading taxi aggregator company in India for alleged indulging in predatory pricing,i.e, heavily cutting prices to curb competition from the market.
The name of the company has not been disclosed but the complaint has reportedly been received from Bangalore. Investigation would be carried out by the investigation arm of CCI, Director General (DG) and if found guilty, the company can be penalised upto 10% of its three year annual average turnover.
“The point of determination for commission will be whether the party has dominance in the market. And if their pricing is below cost there will be a case under the Competition Act”, said CCI Chairman Ashok Chawla at the Indian Women’s Press Corps in Delhi, adding that aviation industry is also under its radar which has reportedly led to exorbitantly high airfares. The online cab/taxi booking services in India are already facing a lot of regulatory issues ranging from the use of particular vehicles and license issues to driver verification and safety concerns.
However, a major area of concern for these services is the vehement opposition of traditional taxi owners and drivers because of the hefty discounts being provided by these services to the people as well as lucrative incentive options to drivers.
And it is no surprise that services like Ola and Uber are able to provide such discounts and incentives as they are heavily backed up by investor money and are actually operating under heavy losses in order to capture the market share. This is not possible and affordable by small, indigenous taxi services and according to some, it is literally killing the traditional radio taxi business in India.
Ola has already come under scrutiny for predatory pricing by CCI earlier this year in May when it ordered a probe against Ola Cabs. With the entry of many new startups based on technology which are disrupting the traditional ways of doing business in India, the role of CCI has become even more crucial in past few years and it has increasingly become active to watch out for unfair trade practices being carried out by companies.
It also carried out an investigation against 5 online retailers in the past including giants such as Snapdeal, Flipkart but had to let them go as it did not find any evidence of wrongdoing on their part.