REGULATION OF ONLINE CAB

AGGREGATORS - Issues & Challenges

Sudarshana Basu
Semester IX
2014126
 INTRODUCTION
Till 2003, the point-to-point taxi market in India was unorganised.
2010 – ANI Technologies started OlaCabs from Mumbai
2011 – Serendipity Infolabs Pvt. Ltd. began TaxiForSure
2013 – Uber Technolgies Inc. began its operations from Bangalore

These cabs are online cab aggregators – “person who owns, manages a web-
based application which allows service providers to connect with consumers
and provide services under its brand name.”

Different from Radio Cab Operators (asset owned model)

Recent ECJ Judgement – Elite Taxis v. Uber (2017)

 Classified it as transport service provider & not an e-commerce company
 Need for a Different Regime?

Surge
Pricing?
No clarity – Liability of
Whether Uber Companies for
drivers are fault of the
employees or drivers? (2015
not? Delhi Rape Case)
ISSUES

Different
Competition Licensing
Law Regimes in
concerns? Different
States?
 OBJECTIVE RESEARCH QUESTIONS

Holistic view on Whether the current regime is adequate?

regulation Whether shared economy model gives rise
Comparative analysis to competition concerns?
Competition law & Tax Whether there is any jurisprudence
concerns underlying the issues pertaining to
Policy aggregators?
recommendations

RESEARCH DESIGN
HYPOTHESIS
Part I - Present Regulatory Framework
& Policy Initiatives Current framework is
Part II - Impact on Market inadequate
Part III - Interface b/w Competition No clarity – competition
Law & Aggregators law & tax concerns
Part IV - Developmental Issues (Case
Studies)
 Regulatory Framework
Motor Vehicles Act, 1988 - no specific provisions
License - driver or agent/servant of owner of vehicle
Section 2(7) - contract carriage - prohibits car pooling, accountability rests
with the licensee
Section 66 - owner of taxi is responsible (no intermediary)
Fixing of taxi fare, no price variation - State Government (Section 67)
State Transport Authorities empowered to regulate conditions (fuel,
insurance, no. of passengers, etc.)

NEW INITIATIVES

 The National Regulation for Cab Aggregators (2016)

Motor Vehicles (Amendment) Bill, 2016 - New Bill, 2017 passed by Lok Sabha
Taxi Policy Guidelines, 2016
- public convenience, safe environment, unhindered grant of permits, App
Validation from MEITY, etc.
 Impact on Market
 Lowered entry barriers
Transaction costs reduced
Matching - Increase in Demand Increase in Supply Lowers Price Increase in
Demand
Exploding offers - fast supply
Avoids poor operators/troublesome passengers

PROBLEMS

Instability
Clogging
 Lack of effective background checks - Rape Case in Delhi (2015)
Dissatisfied drivers - undercutting of cab fares
Inadequate safety standards
Aggregators deny liability
 Competition Law Perspective
 P2P platform and sharing economy model - beneficial to consumers?
M/s. Fast Track Call Cabs Pvt. Ltd. v. ANI Technologies
Section 3 & 4 violations - Predatory Pricing
Relevant Market - Radio Taxi operators in Bengaluru
Aggregators resort to predatory pricing BECAUSE they intend to eliminate competition

Meru Travel Solutions Pvt. Limited v. UBER

UBER not dominant
Overruled in COMPAT
Relevant Market - not to be fragmented (nature of permit - beyond municipal limits)
Implications of 2016 Amendment - nature of permit to differ?

CCI needs to shift its focus from conventional parameters of market definition
and adopt a dynamic approach
Correlation b/s surge pricing predatory pricing
Contradiction b/w surge pricing and predatory pricing justifications
 Case Studies
 Shiv Kumar Yadav v. State (Govt. of NCT), Delhi
 Safety Concerns
Uber India Systems v. J.C.I.T.
avoidance of payment of income tax?
Satish N. & Ors. v. State of Karnataka
Constitutional Validity of Karnataka On-Demand Transportation Technology
Aggregator Rules, 2016
Stringent Rules for aggregators (valid, separate class)
Ali Razak v. Uber Technologies
Not an employee
No fiduciary relationship
Test - control of manner of work, terms of agreement, performance skills,
payment patterns, right to terminate employment
UBERBLACK - flexibility of working hours, location, therefore they are
independent contractors
Uber BV v. Aslam
drivers are employees, subject to labour legislations
 Conclusion
• Legal definition of all the existing business models operating under sharing
economy concept
• Regulations must not discourage innovations in business models and
encourage competition
• Surge Pricing can be allowed, subject to restrictions
• Accountability of aggregators for driver’s deeds
• Clarity with respect to employee status - applicability of labour legislations
THANK YOU