India's competition regulator finds Uber, Ola ‘not guilty’ of charging higher prices

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  • Competition Commission of India brushed off all the price allegations on the cab aggregators Ola and Uber stating that the fares are algorithmically calculated.

  • The CCI rolled out a 13-page order discarding the allegation on the cab drivers for setting a floor price on resale and the alleged price discrimination.

  • The cab aggregators furnished a model that shows prices are determined algorithmically and dependant on various factors such as the time of the day and the destination points.
India’s largest cab aggregators Ola and Uber were under fire for their pricing strategies, but the Competition Commision of India (CCI) has ruled that there was no incidence of wrong doing.

The complaint was filed against ANI Technologies (Ola’s parent company), Uber India Systems, Uber BV (Based in the Netherlands) and Uber Technologies, the holding company of Uber Group.

The complaint included Uber BV since it establishes the contract between taxi owners and does the payments and incentive to drivers, said the CCI report.

However, the fair trade regulator, CCI turned down the allegations against the cab aggregators on Tuesday in its 13-page order saying that the drivers charging algorithmically calculated fares doesn’t imply that they were in collusion among themselves.

Also, complaints that Ola and Uber are imposing a resale price maintenance system (setting a price higher than the price determined originally by the market forces) on drivers and the alleged price discrimination were brushed off.

The cab aggregators have been criticized a lot lately due to the manipulation in fares. In clarification to the claimed price allegation, Ola and Uber have published their model that provides insight into how the price is calculated to the CCI.

The model shows that the estimation is done based on large data sets deploying respective algorithms. Further, fares of rides also vary as per the traffic conditions in the area and the time of the day, leading to higher price value during the peak hours.

As a result, the prices determined differ specific to each rider by the end of the trip.

While the drivers may have quoted fares higher than what is calculated algorithmically, which was the case with the current allegations, but that doesn’t necessarily amount to collusion within the drivers.

The CCI reported that the fares are dynamic in nature so there did not seem to be any floor price maintained by the drivers.

The dynamic prices also hold some advantage to the regular customers because this might also lead you to a lower price than usual for a certain places as compared to the ones charged by the individual taxi drivers, which saves you a good deal of money.

The order stated that there doesn’t appear to be any such agreement or alignment between the cab aggregators and their respective drivers or drivers mutually.
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