File illustration picture showing the logo of car-sharing service app Uber on a smartphone next to the picture of an official German taxi sign in Frankfurt, September 15, 2014. A Frankfurt court earlier this month instituted a temporary injunction against Uber from offering car-sharing services across Germany. San Francisco-based Uber, which allows users to summon taxi-like services on their smartphones, offers two main services, Uber, its classic low-cost, limousine pick-up service, and Uberpop, a newer ride-sharing service, which connects private drivers to passengers - an established practice in Germany that nonetheless operates in a legal grey area of rules governing commercial transportation.    REUTERS/Kai Pfaffenbach/Files  (GERMANY - Tags: BUSINESS EMPLOYMENT CRIME LAW TRANSPORT)

Meru Is Alleging That Uber Is Using Low Prices To Kill Off Competition

Meru has once again stepped up its attacks on Uber over predatory pricing and abuse of dominance.

Late last year, Meru had approached the Competition Commission of India over Uber’s heavy discounts which had wrested market share from the Indian taxi operator. Meru had alleged that Uber used lower than standard pricing and operating at losses to kill the competition in India. The commission had then dismissed the case citing that since Uber is not the only player, it doesn’t have control over prices.

uber meru cci

Meru has now approached the Competition Appellate Tribunal, which has ordered CCI to investigate the claims afresh.

Uber had entered the Indian market around three years ago, and had offered much cheaper fares than existing taxi companies. Thanks to its low prices, it had quickly gained market share. Meru says that these low prices are meant to kill off competition, only to raise prices later when Uber’s the dominant player in the market. The Competition Appellate Tribunal seems to agree. “The size of discounts shows there are either phenomenal efficiency improvements which are replacing existing business models with the new business models or there could be an anti-competitive stance to it,” it said. “In our view, there is a good enough reason  for the Director General to investigate this matter. It will also help in settling an issue which has agitated business discourse for quite some time.”

Uber is allegedly spending $885 million to generate revenues of $415 million in India. These economics are clearly unsustainable, and it is expected that the company might eventually raise prices once it has a dominant position in the market. And there are signs that it has already begun – a few months ago, both Uber and Ola had slashed driver incentives, and had also raised fares for customers on rides longe than 20km for customers in certain markets.

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OfficeChai Team

Dotting the i's, crossing the t's.