The crux of the matter is this. Does Uber have a majority share in the cab market in Delhi, NCR? Has it used its majority position to offer predatory pricing and distorted the competitive level playing field? And as a result, has it kicked Meru in the gut?
If you were to ask Meru; and they have gone to town with their answer, Yes. They even drew a flowchart explaining how.
Uber? No. From its point of view, there isn’t an iota of truth to Meru’s claims.
At the heart of the matter is also a report from TechSci Research, published in October 2015, titled ‘Delhi NCR Radio Taxi Service Market Analysis’. TechSci is a research agency, and its report is based on publicly available information on players. The data compiled from a survey conducted by TechSci was until September 2015. According to this report, at the time, Uber’s market share was as follows:
Fleet size: 44.42%
Active fleet size: 41.38%
Number of trips: 50.1%
Meru’s contention is that the average price of radio taxis in Delhi NCR before Uber was in the range of Rs 23 per km. Uber launched its service in December 2013 at Rs 20 per km and thereafter successively brought down its per kilometre price to Rs 7 per km, Rs 12 per km and Rs 9 per km for different categories of services.
Uber, of course, offers incentives to first-time customers and various other discounts. Plus, Uber incentivises its drivers as well, over and above the fare received from passengers. All put together, this results in a per trip net loss of Rs 204 to Uber.
Meru also produced a purported communication from Uber to its drivers in August 2015, explaining how much they would earn per trip. Rs 403 for a trip for which the customer pays Rs 160.
As of September 2015, Uber was doing 33,000 trips per day in Delhi NCR alone with an active fleet of 6,000 vehicles.
What does that disruption look like?
The total fleet size in Delhi has grown from 10,020 in December 2013 to 13,755 in September 2015. Let’s put this in perspective with data from the TechSci report:
All of this, where did it leave Meru? The company says, thanks to the predatory pricing and loss of market share, Meru lost Rs 107 crore between December 2013 to September 2015.
The COMPAT took this data into account and passed an order on 7 December 2016, asking the Director General to investigate the matter. Before COMPAT, Uber in its defence questioned the credibility of this market share data but curiously didn’t furnish any of its own. To quote from the order:
“It may further be observed that the data presented in the Tech Sci report has simply been denied by Uber in the preliminary conference but nothing in writing or by way of material has been presented by Uber to assist the Commission in making an assessment about the share and size of the market. They have not controverted the figures factually. If they did not believe the Tech Sci figures, they had the option of giving their own figures. They offered to do so under confidentiality but perhaps the matters ended there itself.”
Needless to say, Uber was not happy with the COMPAT’s order. And it has brought in Shardul S Shroff and moved the Supreme Court of India. The company has taken both the CCI and Meru to court.
A case of sour grapes
Uber’s contention is that Meru is a company that got disrupted and can’t seem to digest the fact. It started operations in India in 2007 with a fleet of self-owned vehicles. In 2012, it adopted an aggregator model but primarily its business came from self-owned vehicles. Because of its flawed business model, Meru hasn’t seen a single year of profit. And now that it is hurting, Meru has filed a frivolous case against Uber.
Then, comes the contention of the veracity of data. Uber contends that TechSci published a report titled ‘Delhi NCR Radio Taxi Service Market Analysis’ to the period up to 31 August 2015, where it reported that Ola Cabs (along with TaxiForSure) had the leading market share in Delhi NCR. In the subsequent month, of course, TechSci put out another report, which said that Uber has the highest market share. This August report was withheld by Meru from COMPAT. That Meru didn’t file the August report, material to the case, shows that the case has been filed in bad faith.