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Indian Competition Authority Releases Its Market Study Findings On The Taxi And Cab Aggregator Industry – Antitrust, EU Competition

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Background and Methodology

On 9 September 2022, the Competition Commission of India
(Commission) released its findings pursuant to a market study on
the taxi and cab aggregator industry in its report with special
reference to surge pricing (Market Study).

The Market Study was commissioned with the aim to understand
the: (i) the existence of personalised pricing in the cab industry
and the necessity of regulatory intervention, (ii) perceptions of
drivers, riders and industry stakeholders on surge pricing, (iii)
concerns surrounding the opaque nature of pricing structure and
fare calculations by cab aggregators.

The observations of the Commission in the Market Study are
primarily based on: (i) data collected from four cities (two tier 1
cities viz. Mumbai and Delhi and two tier 2 cities viz. Jaipur and
Indore), (ii) controlled real time experiments, and (iii) existing

Stakeholder consultations included engaging with traditional
taxi operators, transport department officials, industry experts,
drivers, riders, and cab aggregators to understand regulatory gaps
and provide policy recommendations.

Key Observations and Findings

  • Personalised pricing

  • Cab aggregators were perceived to be
    and found to be (based on the controlled real time experiments)
    engaging in personalised pricing. Further, the possession of
    personalised data on the consumers (i.e., riders) facilitated
    personalised pricing by cab aggregators.

    • Ambiguity surrounding the calculation of ‘total
      fare’ payable
      : Pricing computed by cab aggregators
      takes into account several factors such as: (i) distance travelled,
      (ii) number of trips, (iii) type of ride, (iv) mode pf payment. (v)
      nature of mobile handset used.

    • Actual pricing methodology adopted by cab
      : There was no evidence to indicate that
      personalised pricing was practiced by the cab aggregators. The cab
      aggregators confirmed that while base fare could not be different
      for two individuals who book a cab (of the same category) at the
      same time, from the same location and for the same destination,
      total fare payable may be different from such individuals on
      account of discounts / promotions.

    • Impact of Personalised Pricing: Personalised
      pricing may not necessarily lead to an adverse impact on consumer
      welfare or raise any competition issues, and adverse effects of
      personalised pricing were dependent on several other parameters
      being fulfilled.

  • Recommendations:

  • The Commission recommended the need to
    promote transparency regarding total fare in general and all its
    different components amongst drivers and riders. A few
    self-regulatory measures outlined in the report include:

    • The cab aggregators to provide the various components of the
      total fare.

    • The surge component of the total fare (along with a break-up of
      the total fare).

    • Providing a transparent cancellation policy demarcating sharing
      of cancellation charges between the cab aggregator and the driver
      in the event a rider / consumer cancels the ride.

  • Surge Pricing

    • Rationale for surge-pricing: The cab
      aggregators explained that a surge is applicable typically on
      account of factors such as: (i) bad weather, (ii) festivals, (iii)
      end of concerts and shows, (iv) during weekends, (v) rush-hours,
      among others. The rationale for surge pricing is primarily to
      incentivise drivers to increase supply of their services.

    • Information asymmetry: A disconnect between the
      surge being charged to riders and the amount being displayed to
      drivers was observed, leading to an inference that a portion of the
      ‘surge’ was being retained by the cab aggregators

    • Surge Multiplier: The Commission also observed
      that there was significant ambiguity surrounding the precise surge
      multiplier being charged to the rider.

  • Recommendations

  • The Commission recommended that
    cab-aggregators undertake certain measures to ensure greater
    transparency in: (i) the surge being charged from riders, and (ii)
    the quantum of surge being passed on to drivers. A few measures are
    illustrated below:

    • Formulation of a clear and transparent policy on surge pricing
      to drivers and riders, providing for revenue split in times of
      surge between the drivers and the cab aggregators.

    • Cab aggregators to ensure that surge charged for each ride is
      reflected appropriately in the invoice.

  • Algorithmic Pricing

  • The Market Study revealed that there
    was significant ambiguity in: (i) rides being priced uniquely, (ii)
    differential fares being charged to riders, (iii) drivers’
    perception on the surge multiplier being charged to the riders and
    the final surge offered to a particular driver, (iv) calculation of
    the surge multiplier by algorithms, (v) drivers perception
    surrounding self-preferencing by cab aggregators. In this regard,
    the following observations of the Commission are noteworthy:

    • The Commission observed that the Motor Vehicle Guidelines 2020
      impose a requirement on the cab aggregators to ensure transparency
      in their operations on aspects such as: (i) functioning of the
      mobile application algorithm, (ii) incentives and proportion of
      fare payable to the drivers, (iii) incentives given to the driver,
      among others. However, these are model guidelines, and final
      implementation rests with the state governments.

    • Sensitization of technology experts about competitive law
      violations through internal training, conducting workshops etc.
      This would ensure that the technology experts are cautious whilst
      designing algorithms, thereby minimising inadvertent

  • Recommendations:

  • Highlighting the disparity between the
    actual business conduct of the cab aggregators and perceptions of
    the riders and drivers around the same, the Commission emphasised
    on the need to ensure greater transparency by the cab aggregators.
    In this regard, the Commission recommended that cab-aggregators
    undertake the following self-regulatory measures such as:

    • Institution of a clear and transparent policy on data
      collection, its usage, sharing of such data with third parties

    • Ensuring that the algorithms used by cab aggregators do not
      prefer cabs owned (directly or indirectly) by the cab aggregators
      while allocating rides.


The penchant of the Commission to study digital platform markets
is not new. In the past the Commission has instituted market
studies in e-commerce, telecom, pharmaceutical and healthcare
sectors, among others. The recommendations of the Commission once
again underscore the need for greater transparency in the cab
aggregator industry on aspects such as policies and pricing
strategies, much like the market study released by the Commission
on the e-commerce market in India.

Further, while the cab aggregation industry has been scrutinised
by the Commission in the past for predatory pricing, unfair terms,
algorithmic pricing etc. it remains to be seen whether the Market
Study findings will result in initiation of any fresh probes by the
Commission. In the interim, the industry participants may be
advised to integrate the recommendations contained in the Market
Study to avert any potential future competition law


1. Competition Commission of India, Market Study on
the Competition and Regulatory Issues Related to the Taxi and Cab
Aggregator Industry: With Special Reference to Surge Pricing in the
Indian Context – Key Findings and Recommendations
” dated
9 September 2022, available at:

Contributors: – Khaitan & Co Competition / Antitrust

The content of this document do not necessarily reflect the
views/position of Khaitan & Co but remain solely those of the
author(s). For any further queries or follow up please contact
Khaitan & Co at [email protected]

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