Unrealistic discounts, driver incentives: CCI probes Ola for predatory pricing

Fair trade watchdog Competition Commission of India (CCI) has ordered a probe against app-based radio taxi service operator Ola Cabs for alleged predatory pricing. A detailed investigation has been ordered by the regulator after it prima facie found evidence of Ola violating the competition norms. The CCI has been increasingly looking into alleged violation of fair trade norms by entities from the new-age sectors like e-commerce and internet. However, it recently let off as many as five online retailers including Flipkart and Snapdeal after it did not find any evidence of wrongdoing on their part. [caption id=“attachment_2231904” align=“alignleft” width=“380”]  The CCI has said prima facie the conduct of Ola amounts to abuse of dominant position[/caption] The latest probe follows a complaint filed by Chennai-based Fast Track Call Cab Pvt. Ltd. against ANI Technologies Pvt. Ltd., which provides radio taxi services under Ola brand. For this case, the CCI has taken ‘radio taxi services’ as the relevant market. After looking into the allegations, the Commission said it is of the view that prima facie the conduct of Ola amounts to abuse of dominant position. The Commission has directed its investigation arm — Director General (DG) — to probe the matter. During the course of the investigation, the DG would also look into the conduct of officials of Ola, CCI said in its order dated April 24, which was made public on Wednesday. “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 earning,” the regulator said. Besides, it was observed that Ola was spending more, per trip, as compared to its 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 as got through foreign investments, including from Tiger Capital, which can never be matched by the existing radio cab operators or potential indigenous enterprises desirous of starting such operations in India. PTI