Uber, Ola Surge Pricing: SC Says All Is Well

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While the Indian Government is busy introducing rules to further tighten the noose around cab aggregators. Uber and Ola, in a recent court victory, had a momentary sigh of relief.

On Tuesday, Supreme Court, the country’s topmost judiciary body, ruled in favour of the app-based cab aggregators Uber and Ola in a case which raised questions about the ethicality of their fare practices.

Earlier, the same case was dismissed by India’s competition commission and the National Company Law Tribunal as well.

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The ride-hailing giants were challenged by Advocate Samir Agarwal who put forward a statement saying that Ola and Uber’s algorithms give no freedom whatsoever to their driver-partners when it comes to deciding the fare. Therefore, he sought to seek an answer for his appeal to the Supreme Court asking if it is ethical of the app-based aggregators to do so, to which Supreme Court ended up ruling in favour of the cab aggregators.

For Uber and Ola, both of whom are currently expanding aggressively in India are backed by SoftBank, this latest victory is preceded by similar wins before the antitrust regulator Competition Commission of India and the appellate body.

According to Advocate Agarwal, the ride-hailing giants, who have often been subjected to bad press for their pricing and driver rules, by deciding the fare for rides don’t leave any leeway for drivers or the rider to discuss the price and reach a fair value. And, this is why he first sought to inquire about the same under Section 26(2) of the Competition Act in November 2018.

In his appeal to the CCI, the advocate had said that both Uber and Ola “prevent drivers from competing on fares akin to a trade association that facilitates a cartel”.

However, the Supreme Court moved to strike it down by saying that neither of the two companies facilitates any anti-competitive practices or cartelization as drives act as independent individuals and are not directly employed by the cab aggregators.

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Agarwal’s inquiry faced dismissal from the CCI on similar grounds which said that the body didn’t find any substance in the allegations raised by the informant and therefore there’s nothing that could be done. Even after the case moved to NCLAT, it suffered the same fate.

Now, this isn’t the first time Uber or Ola have been subjected to legal allegations for their pricing. Including India, they have been challenged by many throughout the world about their algorithm being the core decision-maker of final fare and surge pricing but every time, both Ola and Uber seem to have navigated through them rather well and come out unharmed. 

But, that being said, the GOI is slowly moving in to end the free rides in the cab aggregation space of India. Quite recently, the Indian Government introduced many rules for motor vehicle aggregators which may not exactly to Ola and Uber’s liking.

Under the new guidelines, the surge pricing has been capped at 1.5x of the base fare, and the app-based cab aggregators have been directed to make sure their driver-partners receive 80% of the fair applicable on each ride. 

What are your thoughts about Ola and Uber’s fare control practices? Can they be rightly branded as ‘pricing cartels’ in the cab transportation space? Let us know in the comments down below. We will keep you updated on all future developments. Until then, stay tuned.

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