The Supreme Court (SC) has ordered a probe into alleged anti-competitive practices by the taxi aggregator Uber India Systems after finding that the company is intentionally suffering losses while offering cheap rides to customers and heavy incentives to taxi drivers. It was a competing taxi service Meru Travels Solutions who raised alarm on Uber’s anti-competitive and anti-trust practices and had alleged that Uber has adopted many abusive practices with an objective to establish a monopoly and eliminate competition. It was alleged that Uber is willingly suffering a loss of as much as Rs 200 per trip in a bid to kill competition.
The SC found enough evidence to dismiss the appeal filed by Uber against the probe ordered by erstwhile Competition Appellate Tribunal (COMPAT) into the alleged abuse of dominance and anti-competitive practices by Uber. The SC while dismissing the appeal, ordered an investigation on the taxi aggregator who was intentionally suffering losses and has also requested the director-general to complete investigation within six months.
As per the complaint filed by Meru Travels Solutions, Uber allegedly resorted to many abusive practices with the sole intent to establish its monopoly and eliminate competitors from the market by way of discounts and incentives. It was alleged that Uber is spending about $885 million to generate a revenue of $415 million.
The Competition Commission of India (CCI) in February 2016 had rejected Meru’s complaint, saying the inability of the existing players to match the innovative technology of any player or the model created for operating in a particular industry cannot be said to be creating entry barriers in itself. Thereafter, the COMPAT had directed CCI’s probe unit director general to conduct a fresh probe into the allegations of abuse of dominance and anti-competitive practices by Uber.
The Supreme Court’s bench comprising Justice Rohinton Fali Nariman and Justice Surya Kant took note of the allegation that Uber was losing Rs.204 per trip in respect of every trip made by the cars, which doesn't make any economic sense and raises a suspicion of Uber's practices.