Fast Track Ready To Withdraw CCI Complaint Against Ola, Demands Written Commitment To Stop Discounting & Driver Incentivisation

In a move that could bring a sigh of relief for Cab hailing app Ola, Chennai-based radio cab company, Fast Track has said that it is ready to withdraw a complaint registered with the Competition Commission of India (CCI) against Ola, if it receives a commitment that it will stop discounting and hold down driver incentivisation.

It is to be noted that earlier in this month, Fast Track filed a complaint  against ANI Technologies, the parent company of Ola, alleging contravention of provisions of section 3 and 4 of the relevant Act. Following which, the commission directed the Director-General to investigate the matter and complete it within 2 months.

Fast Track had also said its revenue per month has come down to INR 9.5 lakh from INR 23 lakh, and it is fast losing drivers to a layered daily and monthly incentive system from Ola. The company said that it has found it a task maintaining driver count after the entry of Ola in Chennai.

The firm further alleged that heavy inflow of venture money has helped Ola cut prices and reward drivers. In its submissions to CCI, the company said that Ola loses INR 230 a trip after earning INR 344 for what is a service priced in the market at INR 574.

Speaking on this matter, Redsun C Ambigapathy, Founder & Managing Director, Fast Track said, “If Ola would give us a written submission on stopping these practices, the board will consider pulling the case out.” However, Ola refused to comment on this development.

“Ola’s app focus cuts cost in order booking, which is a large money guzzler through staff costs. It is focussed more on ploughing its revenue back into the ecosystem by incentivising drivers and investing in creating new drivers through bank tie-ups,” said an industry expert.

On this development, M S Sahoo, Member, Competition Commission said, “They may reach a settlement. But once the information is with us, we will decide on anti-competitive practices based on merits of the case. A case withdrawal also does not have any impact on a likely penalty on an opposite party.”

Ola was founded in 2011 by IIT Bombay graduates Bhavish Aggarwal and Ankit Bhat. Last year, Ola had received $210 Mn funding led by Steadview Capital and VC firm Sequoia Capital, with its existing investors Matrix Partners India and Tiger Global also participating.

Prior to this, it had raised $41.8 Mn in Series C, about $20 Mn in Series B and over $3.2 Mn in Series A. Recently, it closed Series E round of funding of $400 Mn led by DST Global with participation from GIC, Falcon Edge Capital and existing investors and has also acquired TaxiForSure for $200 Mn.

The company has over 100,000 drivers on its platform across 85+ cities and competes with Meru, Uber, Taxipixi among others. It’s revenue stems for a 20% commission from every ride streamed into through its app. Ola last stated public statistic on orders was upwards of two lakh each day in January, growing at 35% month-on-month basis.

However, Investors in Ola are confident about the company maintaining its edge through its technology platform. ”Traditional cab companies handled bookings on a round robin basis, since their economic model required them to evenly distribute bookings across all drivers,” said Tarun Davda, Director at Matrix Partners India.