Meru to again challenge Ola, Uber over alleged market abuse

12 Oct 2017


Indian radio taxi cab operator Meru Cabs has stepped up its legal challenge against taxi aggregators Ola and US-based Uber for allegedly abusing market dominance in four cities.

Meru said it has filed four different complaints with the Competition Commission of India alleging the firms are abusing their market position, disrupting the market by putting in huge sums of foreign investor money. It says planned investments in both by Japan's SoftBank underscore its view.

''Even before there is any merger or alliance between the two through global investors, there is already a unified monopoly,'' Meru's chief executive Nilesh Sangoi said.

Sangoi said that Uber and Ola have been altering driver incentives and passenger fares in tandem.

"We have filed four complaints against Ola and Uber in top four cities of operations. They have disrupted the dynamics of the business by pouring foreign funds in the market and selling services below cost and running into losses," said Sangoi.

He further said though Ola and Uber are two entities competing among themselves, they have created a monopoly-like situation.

Ola on Wednesday announced it is raising $1.1 billion in a new round of funding from China's Tencent Holdings Ltd and SoftBank Group, and is seeking to raise another $1 billion in the funding round. (See: Ola raises $1.1 bn from Tencent, SoftBank; seeks another $1 bn).

Though Meru lost an earlier antitrust suit against Ola, lawyers and industry sources told Reuters that moves by SoftBank - already a major investor in Ola - to pour some $10 billion into Uber along with other investors could strengthen the local cab service's case.

''Our existing cases get strengthened'' with the SoftBank investment, Sangoi said, but added the Japanese firm's plans weren't cited in the latest complaints.

Ola operates in over 100 Indian cities and Uber in about 30, and both firms have burnt millions of dollars to lure riders and drivers.

Sangoi alleged that huge subsidies to drivers and impractical discounts to customers offered by Ola and Uber have distorted the taxi service market. "Due to the capital backing, they sell below cost, add more cars on the platform and when they add more cars customers get the benefit of less waiting time and this in turn attracts more drivers as they get more trips," Sangoi said, adding that this time the case is very strong to check on their unfair business practices.

He further said someone with no funding will have more price, less cars, less profits, more waiting time, and ultimately decline in the number of customers.

Meru was the only major organized player until a few years ago and currently operates in 24 cities. But it has no direct backing of large foreign investors and it has previously filed anti-competitive cases against Uber and Ola.

In July, the Competition Case of India (CCI) ruled against Meru on its allegations that Ola was abusing its dominance in Bengaluru city's taxi market. It ruled Uber too was a significant market player and there was no concept in current law to establish collective dominance of companies.

Uber is already bogged down by anti-monopoly concerns in neighbouring China, where the commerce ministry last year began investigating its deal with Didi Chuxing that created a roughly $35 billion giant dominating the China car-hailing market.

SoftBank Vision Fund chief executive Rajeev Misra recently told The Economic Times he hopes ''to make peace'' between Uber and Ola in the country.

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