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Abstract

The cab-aggregator industry in India has recently come under the scrutiny of the competition watchdog due to the alleged violations being committed in this burgeoning market. One such reason is the imposition of surge prices by cab aggregators, which despite being a longstanding practice in economics has off late shown several anti-competitive tendencies. In response to these concerns, the Competition Commission of India on 9th September 2022 released a “Market Study on Cab-aggregator Industry with Special Emphasis on Surge Pricing”. This study was perceived as an effort to address the unresolved anti-competitive issues that were not thoroughly examined in the case of Meru Travel Solutions Pvt. Ltd. v ANI Technologies Pvt. Ltd. due to the prima facie dismissal of the allegations. Nevertheless, the study's outcome proved ineffectual as the Commission failed to undertake a comprehensive competitive assessment of surge pricing by not identifying different kinds of anti-competitive practices the cab aggregators may employ, or proposing any effective counter-measures. In this regard, the authors of the paper question whether the CCI has: (i) defaulted in framing clear objectives and undertaking controlled experiments, and (ii) inadequately contemplated the anti-competitive implications of surge pricing. Firstly, the paper aims to deliberate upon the parameters that could have been relied on by the Commission to constitute surge pricing as an anti-competitive practice. Secondly, the paper identifies permanent and temporary parameters from the perspective of the consumers and the drivers to infer as to when surge pricing may be considered anti-competitive. Thirdly, the paper has proposed three models whose adaptation would ensure that the CAs are refrained from exercising anti-competitive parameters: Decentralized Negotiation- Consumer discretion and driver discretion model, and Centralized Negotiation- Driver discretion model, taking a cue from the Uber Flex model to limit, if not entirely counter, the charging of surge prices based on anti-competitive parameters and the Subscription Model. It is recommended that these models would have become a crucial part of the advisory to the Ministry for drafting Rules under the Motor Vehicles Act 2019.

Digital Object Identifier (DOI)

https://doi.org/10.55496/HIFY4304

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