An Indian taxi
company has stepped up its legal challenge against local
competitor Ola and U.S. rival Uber, alleging the firms are
abusing their market position, and believes that planned
investments in both by Japan’s SoftBank underscore its
view.

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

“Even before there is any merger or alliance between the two
through global investors, there is already a unified monopoly,”
Meru’s CEO Nilesh Sangoi said.

Though Meru lost an earlier antitrust suit versus Ola,
lawyers and industry sources said that moves by SoftBank –
already a major investor in Ola – to pour some $10 billion into
Uber along with other investors could strengthen the local cab
service’s case.

Sangoi told Reuters that Uber and Ola have been altering
driver incentives and passenger fares in tandem.

“Our existing cases get strengthened” with the SoftBank
investment, he said, but added the Japanese firm’s plans weren’t
cited in the latest complaints.

Ola, Uber and SoftBank declined to comment for this article.
The new Meru complaints have not previously been reported.

Ola on Wednesday said it has raised $1.1 billion from
investors led by China’s Tencent Holdings and
SoftBank.

Ola operates in over 100 Indian cities and Uber in about 30,
and both firms have burnt millions of dollars to lure riders and
drivers in a bid to outdo each other.

DOMINANCE TEST

Meru was the only major organized player until a few years
ago and currently operates in 24 cities. But it has no direct
backing of large foreign investors and it has previously filed
anti-competitive cases against Uber and Ola.

In July, the CCI ruled against Meru on its allegations that
Ola was abusing its dominance in Bengaluru city’s taxi market.
It ruled Uber too was a significant market player and there was
no concept in current law to establish collective dominance of
companies.

A Meru source said a SoftBank investment in both Uber and
Ola may change that scenario.

Not everyone agrees, however.

Mohit Saraf, a senior partner at Indian law firm Luthra &
Luthra, said while SoftBank’s Uber investment would spark
antitrust issues in India, the CCI would need to assess whether
Uber and Ola dominate the overall taxi market which is replete
with local operators of yellow-and-black coloured cabs.

Another source aware of the legal challenges said the CCI
would need to delve into how much control SoftBank has at Ola
and Uber, if the deal goes through, and the extent to which the
Japanese firm has a say in their operations.

The antitrust cases in India, nevertheless, are set to
further intensify the showdown between ride-hailing firms and
local players in India’s $12 billion taxi market.

Uber is already bogged down by anti-monopoly concerns in
neighbouring China, where the commerce ministry last year began
investigating its deal with Didi Chuxing that created a roughly
$35 billion giant dominating the China car-hailing market.

Chinese media in July said the probe was ongoing.

SOFTBANK’S RIDE-HAILING PLANS

SoftBank is poised to take two board seats at Uber should
plans succeed to buy up shares from both existing investors and
current and former employees in the coming weeks.

People close to the firm are divided on whether SoftBank
wants to consolidate rivals or simply cross-pollinate lessons
among the group. SoftBank aims to do one or the other, said an
Uber investor who has held discussions with SoftBank.

SoftBank has previously failed to consolidate investments in
India with its attempt to fold Snapdeal into Flipkart earlier
this year falling apart in July.

SoftBank Vision Fund CEO Rajeev Misra recently told India’s
Economic Times he hopes “to make peace” between Uber and Ola in
the country.

A Singapore-based banker said SoftBank was playing a “high
risk strategy” which could turn out to be very profitable if it
works out.

“The losers will be the old-style cab companies.”
– Reuters