CCI to probe Ola Cabs' pricing

A petition was filed against Ola alleging violation of provisions under the Competition Act, 2002

The Competition Commission of India (CCI) has directed its director general to conduct an investigation into the business practices of Ola Cabs for alleged predatory pricing and abuse of dominant position in the radio taxi services.

The CCI order was issued on a petition filed by Chennai-based Fast Track Call Cab Pvt Ltd.

The petition was filed against ANI Technologies Pvt Ltd, which runs Ola Cabs, alleging contravention of various provisions under sections of the Competition Act, 2002.

Considering the petition, the CCI said, "Accordingly, the Commission, as per the provisions of Section 26(1) of the Act, directs the director general to cause an investigation into the matter and to complete the investigation within a period of 60 days from receipt of this order."

During the course of the investigation, the competition watchdog shall also investigate the conduct of officials of ANI Technologies for fixing liability with respect to contravention of the Act in case the company was found to have violated the provisions of the Act, said the order.

Noting that under the Act, imposition of unfair price in purchase or sale (including predatory price) of goods or service as a violation of the provisions of the Act, the Commission observed the company of spending more money on discounts and incentives (apart from the variable costs it may be incurring) on customers and drivers, when compared with its revenues.

"It is also observed that, per trip, the opposite party (ANI Technologies) is spending around Rs 574, while earning an average revenue of Rs 344 leading to a direct loss of Rs 230 per trip. 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," it said.

In view of the allegations projected in the information and the observations made as detailed above, prima facie, the Commission is of the opinion the conduct of ANI Technologies amounts to abuse of dominant position within the meaning of Section 4 of the Act.

Fast Track Call Cab Pvt Ltd, a part of the Fast Track Group offering radio taxi services in Tamil Nadu, Karnataka, Andhra Pradesh, Kerala, Maharashtra and West Bengal, alleged ANI Technologies had received huge funding from various agencies and alleged the opposite party of predatory pricing to establish market monopoly and eliminate otherwise equally efficient competitors, who cannot indulge in such predatory pricing in the radio taxi services market.