The proposed merger of two ride-hailing firms Ola and Uber may not go smoothly as the Competition Commission of India (CCI), could play a party pooper for the SoftBank funded companies.
The statutory body must be looking into the recent controversy of Uber-Grab merger, where Competition Commission of Singapore (CCS) raised the issue of the monopoly created by the two in South East Asian region.
Singapore’s competition watchdog has already asked both players to maintain their pre-transaction independent pricing.
A week ago, Ola-Uber merger surfaced again with many speculations including who will control the merged entity as SoftBank is going to play a crucial role in being a common investor.
Besides, both contribute over 95 per cent of cab market in India, which in future could create a parallel situation raised by Singapore’s CCS.
Additionally, Ola has the upper edge in the country as it operates in over 110 cities, which is 3X than the Seattle-based cab hailing major. In terms of driver partners, the Bengaluru-based firm has 2X network of driver partners than Uber (it has 4.5 lakh drivers).
According to a report by Kalagato, Ola has witnessed a rise in marketshare from 53 per cent in July 2017 to 56.2 per cent in December last year. Meanwhile, Uber marketshare decreased by about 2.4 per cent from 42 to 39.6 per cent during the same period.
Softbank Vision Group owns around 33 per cent stake in Ola while it acquired about 15 per cent stake in Uber for about $7-8 billion in January this year.
Vinod Dhall, who is an expert on competition policy, and former head of the CCI said that the Ola-Uber merger will have to go through CCI scanner. If it needs some modifications, both have to follow the rules.
The development was reported by Business Standard.