Meru Cabs says Ola and Uber are using foreign funds to distort the market

Meru filed complaints with the Competition Commission of India, accusing the two rival firms of abusing their dominance by using vast sums of investor funds.

Indian taxi company Meru Cabs on Thursday said it has filed complaints with competition watchdog Competition Commission of India against rival taxi aggregators Ola and Uber, for allegedly abusing market dominance in four cities, PTI reported.

The head of Meru Cabs said the company has filed four new complaints, claiming that Uber and Ola are abusing their dominance in four different cities by burning vast sums of investor funds to distort the market.

The Competition Commission of India had earlier rejected similar allegations by Meru against Ola in the Bengaluru market, saying there was no dominance as rival Uber too was a significant player. The commission refused to interfere in the taxi services market that is yet to fully evolve.

But, Meru’s case this time could be strengthened by a move made by Japan’s SoftBank – already a major investor in Ola – to pour $10 billion into Uber along with other investors, Reuters reported.

“Ola and Uber have disrupted the dynamics of the business by pouring foreign funds in the market and selling services below cost and running into losses,” Meru Cabs CEO Nilesh Sangoi said. Although Ola and Uber were competing among themselves, they had created a monopoly-like situation, Sangoi said.

Ola operates in more than 100 Indian cities, and Uber in 30. Both firms have used millions of dollars to lure riders and drivers in a bid to outdo each other. Meru, which was the only major organised taxi aggregator until a few years ago, currently operates in 24 cities, according to the Reuters report. It is not directly backed by any large foreign investor.

Ola, Uber and SoftBank have not yet commented on the development.

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