uber dispute | Bonum lex

Price Discrimination must Uber ‘GO’

The Supreme Court of India had summoned Meru on Uber Plea. Uber has approached the Supreme Court of India challenging the order of the Competition Appellate Tribunal in a suit filed against the CAT by Meru.

Earlier the Competition Appellate Tribunal (CAT) overruled the CCI’s decision and ordered an investigation by the Director General (DG) into the charges of predatory pricing by the taxi aggregator (aggregator is an electronic commerce business model where an entity, that does not produce any item collects information on goods and services from several competing sources at its website).

The Competition Commission of India (CCI) has witnessed many issues relating to competition pertaining to aggregator based radio taxi business across different states in India. Most of the issues pertain to various anti-competitive practices in relation to predatory pricing, unfair policies etc. The CCI refused to interfere with the matter, saying that there was no prima facie case made out against Uber. The issue which came up for the Competition Appellate Tribunal’s consideration was about the scope of market as CCI had ruled that the relevant market was Delhi alone and not Delhi-NCR.

The matter “Meru Travels Solutions Private Limited, Competition Commission of India & Ors came into the limelight, when Uber was indulging in anti- competitive trade practices by giving discounts to its user, leading to lower fare for customers. Meru stated that before the commencement of Uber’s operations, the prevailing market price for radio taxis in Delhi NCR was approximately INR 23 per km ($0.33). Subsequently, Uber launched its services from INR 20 per km ($0.29) and progressively reduced it further to INR 7/12 per km ($0.10/$0.17) depending upon the services availed by customers such as carpool. The former radio taxi drivers prior to the Uber launch would get benefit of substantial discounted price during the scheduled ride. Whereas the latter drivers would get paid by the passengers and, in addition, get a bonus from Uber upon attaining certain targets. Such practices led to an increase in the market share of Uber to almost 50% per trip basis, thereby declining Meru’s market share from 18% in December 2013 to 11% in September 2015. It was further alleged by Meru that incentives offered to Uber drivers, partners, customers and the losses incurred by it out of every trip was done to create a “network effect” thereby eliminating competition from the market.

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