CCI Directs Cab Aggregators To Frame Transparent Policies On Surge Pricing, Data Collection

The competition commission of India (CCI) has directed cab aggregators such as Uber and Ola to adopt self-regulatory measures to address concerns around surge pricing. In an advisory, the CCI also called for formulating a clear and transparent policy on sharing of surge pricing revenue between drivers and ride-hailing apps.

“Formulate clear and transparent policy on surge pricing and dissemination of the same to both riders and drivers, including adequate transparency with respect to the sharing of revenue on account of surge between the drivers and the CAs. Any change in policy be communicated, in a timely manner”, noted CCI in an advisory. 

The competition watchdog also warned the companies of ‘enforcement action’ for indulging in any anti-competitive conduct. 

The advisory came on the back of a report titled ‘Market Study on Competition and Regulatory Issues Related to the Taxi and Cab Aggregator Industry: With Special Reference to Surge Pricing in the Indian Context’, which made a slew of observations on the current cab aggregator market in India. 

The CCI has directed all major players to ensure that the total break up of the total fare is clearly visible on the apps and to reflect the surge component in the invoice clearly.

As per guidelines issued in November 2020, the centre has capped surge pricing by cab aggregators at a maximum of 1.5X of the base fare.

The commission has also ordered the cab aggregators to put in place a clear cancellation policy and transparently reflect the division of cancellation charges between the driver and the company to the driver.

The CCI also issued a diktat to the cab aggregators directing them to specify the scope and extent of data collected on the platform. It also called for conveying all potential and actual data sharing by aggregators with third parties to the users. 

The guidelines also warned ride-hailing platforms against preferential treatment to the cabs owned by the aggregators in question. 

“Algorithm, while allocating rides amongst various available cabs, should not give preference to the vehicle owned, directly or indirectly, by the said cab aggregator platform,” noted the advisory. 

This follows a string of crackdowns on ride-hailing platforms by the centre. In May, the central consumer protection authority (CCPA) had pulled up cab aggregators for failing to address rising consumer complaints. Officials had also slammed the ride-hailing companies for their alleged unfair trade practices and had warned them of strict action for non-compliance. 

The Indian four-wheeler ride-hailing segment is dominated by Ola, Uber and Meru. According to a report, the Indian online taxi services market was pegged at INR 2,975 Cr in FY19 and was projected to soar to INR 6,159 Cr by 2024 at a compound annual growth rate (CAGR) of 16.60%.