Cab aggregators need to set transparent policy on surge price revenue sharing: CCI

Both Uber and Ola are currently facing the ire of customers in India for random surge pricing. (Image source: Reuters/Representative)

Indian cab aggregators (CAs) like Ola, Uber and Meru will now have to formulate clear and transparent policies with respect to the sharing of revenue on account of surge pricing between the drivers and the CAs, the Competition Commission of India (CCI) said on September 9.

This comes on the heels of several consumer and driver complaints of unfair trade practices by these platforms. Surge pricing is a dynamic pricing method where prices are temporarily increased as a reaction to increased demand and mostly limited supply.

CCI has issued a set of self-regulatory measures to ensure fair competition and an overall well-functioning ecosystem. However, these are self-regulation guidelines and not orders.
“While any anti-competitive conduct of CAs may attract enforcement action, the CAs are advised to adopt self-regulatory measures,” a report titled ‘Market Study on Competition and Regulatory Issues Related to the Taxi and Cab Aggregator Industry: With Special Reference to Surge Pricing in the Indian Context’ stated.

Formulate a clear and transparent policy on surge pricing and dissemination of the same to both riders and drivers, including adequate transparency with respect to the sharing of revenue on account of surge between the drivers and the CAs. Any change in policy be communicated, in a timely manner, the CCI’s report said.

The government of India issued a new set of guidelines for cab aggregators in November 2020 wherein it recommended that the surge pricing at busy times can be a maximum of 1.5 times the base fare.

On description and calculation of fares, CCI has recommended that companies publish the break-up of total fares so as to appropriately reflect the surge component in the invoice generated on the App and sent to the riders and drivers.
“Set out a clear and transparent cancellation policy. In the event of cancellation of ride by the rider, the sharing of the cancellation charge between driver and CAs be reflected in a transparent manner to the drivers,” CCI said.

In May 2022, Consumer Affairs Secretary Rohit Kumar Singh called a meeting of cab aggregators to discuss their policies related to fare calculation, surge pricing, ride cancellations, and measures taken by them for the data protection of customers.

The ministry also discussed whether these ride-hailing apps have taken adequate measures to safeguard consumer data on their platforms.

In the new recommendation, CCI said that CAs have to set out a clear and transparent policy on data that is collected on the platform. “The use of such data by the platform and also the potential and actual sharing of such data with third parties or related entities,” it said.

The report further added that the algorithm while allocating rides amongst various available cabs, should not give preference to the vehicle owned, directly or indirectly, by the said CA platform.