Surge pricing: Ola, Uber to come under CCI lens

A surge in taxi fares earlier led Maharashtra govt to set up committee to recommend prices for these players

After investigating the alleged unfair practices adopted by private health care providers and the pharmaceutical sector, the Competition Commission of India (CCI) is set to bring cab aggregators under its scanner over surge pricing.

Taxi-hailing apps like Ola and Uber introduced surge pricing to adjust the prices of rides to match driver supply to rider demand at any given time.

Officials from the Ministry of Corporate Affairs told Business Standard a study was being planned on surge pricing in the cab aggregator industry.

The government felt there were serious competition issues on pricing by these cab aggregators, the officials said, adding that India’s two major cab operators might be abusing their dominant position.

Insiders said the focus of the competition watchdog was now sectors that directly dealt with the common man - cab aggregators and the health care sector being just two of them. Competition lawyers said the hotel segment would also be looked into.

Cases are being filed with the CCI by rival cab aggregators, which feel the two leaders in the sector are distorting the market.

One recent complaint by Meru alleged that Ola and Uber were disrupting the market by bringing in foreign investors.

The commission had earlier rejected a complaint by Meru against its rivals.

A surge in taxi fares had earlier led the Maharashtra government to set up a committee to recommend prices for these players.

The committee had suggested that the basic fare between 8.1 km and 12 km be reduced by 15 per cent, and for distances beyond that, by 20 per cent.

The committee had also recommended setting up the floor and ceiling prices.

Apart from cab aggregators taking on each other on pricing issues, there have been complaints by NGOs in courts on overcharging.

When the commission undertook a study on the health care sector, it found that the Max Hospital had margins of over 500 per cent on certain items like syringes.

It showed how hospitals made super normal profits on certain devices.

With these studies, the CCI is trying to get in-depth knowledge before coming to any conclusion on action.

Many orders of the commission have been overturned over the fact that natural justice has not been done and that procedure has not been followed.

Also, there has not been enough evidence in a number of cases to prove that there is a contravention of the Competition Act.

A recent Vidhi report argues that the CCI needs to follow the principles of natural justice while writing orders so that they are not quashed by the appellate body.