On September 9, 2022, the Competition Commission of India (CCI) published its market study on competition and regulatory issues in the taxi and cab aggregator industry with a focus on surge pricing (Study). A summary of findings and recommendations of the Study and the self-regulatory measures advised by the CCI are set out below.
Objectives & Methodology
Lack of transparency and information asymmetry
Key Recommendations and CCI’s Proposed Self-Regulatory Measures
The Study has certain recommendations and has also proposed self-regulatory measures:
Description and Calculation of Fares
Constituents of base fare and other components are not clear to riders and the Study underscores the need to promote transparency.
Aberrations in surge pricing must be corrected through regulation, as has already been done by some state transport authorities. There must be transparency in surge pricing, including sharing the amount of increase in revenue on account of surge pricing between drivers and CAs.
Transparency and Self-preferencing
There is a need for transparency and clear communication of business practices to riders and users.
Previously, the CCI has examined issues relating to discounts, algorithmic pricing, and incentives to drivers, in the cab aggregator industry. Ultimately, the CAs were not found to be dominant in the identified markets and therefore, there was no finding of any anti-competitive conduct. This Study focuses on the need for transparency with respect to policies and pricing strategies. The CCI’s thrust on transparency is not new as it emphasized on the need for transparency even in its study on the e-commerce segment. Therefore, platform owners across various industry sectors would be well-advised to formulate and disseminate policies clearly and unambiguously. It remains to be seen if the Study will result in the CCI launching a formal investigation, as at least on one occasion the CCI initiated investigation immediately following release of its market study.
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