Competition Commission orders probe against Ola Cabs for ‘predatory’ pricing

Chennai-based Fast Track Call Cab has filed a complaint against ANI Technologies, the owners of Ola.

By: ENS Economic Bureau | Chennai | Published:May 7, 2015 2:23 am
Ola cabs, indian express, business news Accordingly, the Commission, as per provisions of Section 26(1) of the Act, directed the director-general to investigate the matter and complete it within 60 days.

The Competition Commission of India (CCI) has ordered a probe against app-based taxi service operator Ola for its alleged predatory pricing. A detailed investigation has been ordered after the regulator found prima facie evidence of Ola violating competition norms.

Chennai-based Fast Track Call Cab has filed a complaint against ANI Technologies, the owners of Ola, alleging contravention of provisions of Section 3 and 4 of the relevant Act. Accordingly, the Commission, as per provisions of Section 26(1) of the Act, directed the director-general to investigate the matter and complete it within 60 days. During the course of investigation, the DG will also investigate the conduct of officials of Ola for fixing liability with respect to contravention of the Act, in case Ola is found to have violated the provisions.

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The complainant is a rival operating under the Fast Track brand. The CCI, after looking into the allegations, said it was of the view that prima facie Ola’s conduct amounts to abuse of dominant position. “It is observed from the material placed on record that the opposite party is spending more money on discounts and incentives (apart from the variable costs it may be incurring) on customers and drivers compared to the revenue it is earning,” the regulator said.

Besides, it was observed that Ola was spending more per trip compared to the average revenue gain. “While the propriety of these figures is a subject matter of investigation, prima facie, the Commission is of the view that they indicate predatory pricing aimed to oust other players from the relevant market,” the order said.

According to Fast Track, Ola has incentivised drivers unrealistically by using the money it has got through foreign investments, including from Tiger Capital, which can never be matched by existing radio cab operators or potential indigenous enterprises desirous of starting such operations in India. FE

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