Hyundai and Kia Motors’ $300 million investment plan in ride-hailing juggernaut Ola may not go smoothly as Competition Commission of India(CCI) has reportedly put a question mark on the nature of the deal.
According to a report, the antitrust watchdog had asked Ola’s parent, ANI Technologies, to define the company’s competitive landscape. However, the company failed to provide the necessary documentation over the competition front, and its application was rendered invalid.
After the rejection, Ola again applied earlier this month with a minor change in the agreement. Previously Hyundai and Kia Motors had proposed an investment worth $300 million for Ola. However, they later intended to invest $250 million in Ola while $50 million was reserved for Ola Electric Mobility.
Ola Electric had turned Unicorn with a $250 million Series B round from Softbank Vision Fund.
Citing sources, a Moneycontrol report said that CCI is concerned about the competitive impact of car companies investing in cab-hailing apps, which might create a monopolistic situation for one carmaker in the market.
While Ola tried to convince CCI on the pretext of investment in electric mobility, the competition watchdog highlighted the fact that Bhavish Aggarwal personally owns about 40% stake in the company’s electrica arm.
Further, Ola has provided a comprehensive picture of the competitive landscape in its latest application. While it’s not clear whether CCI will give green signal to Ola and Kia Motors or not, the report outlines that it may not materialise.
It’s worth noting that CCI hasn’t rejected any major deal in the past few years. Will the competition monitoring regulator take a tough stance in this particular matter? It’s likely not.