The Competition Commission today dismissed allegations of predatory pricing made against Ola cabs operator ANI Technologies after finding that the company is not a dominant player in the Bengaluru market.
In its 48-page order that also took into consideration the findings of a detailed probe into the case, the watchdog said it is hesitant to interfere in taxi services market, "which is yet to fully evolve".
The ruling has come on separate complaints, filed back in 2015, by rival taxi services providers -- Fast Track Call Cab and Meru Travel Solutions.
It was alleged that ANI Technologies was abusing its dominant position by offering heavy discounts to passengers as and incentives to the cab drivers, which the complainants said amounted to predatory pricing.
After finding prima-facie evidence of violations of competition norms, the regulator had ordered a detailed investigation into the two complaints in 2015 itself.
The order of Competition Commission of India (CCI) also comes against the backdrop of continuing apprehensions of possible unfair business practices in the highly competitive radio taxi services market.
For the latest matter, the CCI considered 'market for radio taxi services in Bengaluru' as the relevant one.
While rejecting the complaint after finding that ANI Technologies (Opposite Party) is not a dominant player in the relevant market, the watchdog has also delved into the pricing ways of taxi services providers.
"Without going into the legitimacy of OP's pricing strategy, suffice to say that besides statutory compulsion of non-intervention in the present case, as OP is not dominant in the relevant market, the Commission is hesitant to interfere in a market, which is yet to fully evolve.
"Any interference at this stage will not only disturb the market dynamics, but also pose a risk of prescribing sub- optimal solution to a nascent market situation," the CCI said.
Further, the regulator said at this stage, it is difficult to determine with certainty the long-term impact of this pricing strategy as the "market is yet to mature".
The regulator noted that it does not fully disagree with Fast Track Call Cab and Meru Travel Solutions "that the low prices of OP are not because of cost efficiency, but because of the funding it has received from the private equity funds".
There is no evidence that the access to such funding was inequitable and that the market for financing was not competitive and had aberrations, the order said.
"Moreover, it was their penetrative pricing strategy that facilitated them to garner high market shares in short span of time as well as develop the networks to a size that could provide sufficient positive externalities to the participants of the network," the regulator added.
According to the CCI, the emergence of platform-based model, introduced by the OP in the relevant market, challenged the well-established asset-owned model in taxi services industry.
"Thus, to attract prospective consumers/ riders to experience the taxi services on this newly introduced model, it was necessary to make it attractively affordable to riders and profitable to drivers," it said.
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