CCI conducts market study; reveals cab aggregators must provide transparent surge prices

CCI conducts market study; reveals cab aggregators must provide transparent surge prices

The Competition Commission of India has stated in a market study that the incentive structure provided by surge pricing is not transparent and there is, at times, suspicion on the part of the cab driver regarding the proportion of commission.

According to the study conducted by the CCI, "68% drivers perceive that there is a difference in the surge charged to the riders and that offered to the driver, indicating information asymmetries between cab aggregators, drivers and riders, as regards the surge multiplier/component."

Three key issues related to the cab aggregator industry were examined:

1. Whether personalized pricing in the cab industry exists and, if so, does it necessitate regulatory intervention?

2. What are consumers'/riders' perceptions about surge pricing?

3. Are there concerns related to transparency regarding their pricing structure and fare calculation?

It was found that there's a need for higher transparency to enable drivers with information about the various heads forming the basis of fare calculation. Cab aggregators have been advised to give a clear and transparent cancellation policy, including details on how cancellation charges are split between drivers and the aggregator.

In response to the question relation to the issue of surge pricing, it was concluded that it is not necessarily counterproductive. The concept encourages drivers to increase supply of their services and riders do not necessarily perceive surge as a deterrent to book a ride, the regulator said.

However, the study recommended that there is a need for greater transparency on the quantum of surge as well as sharing of such surge amounts between the aggregators and drivers.

The surge charged for each ride should be reflected in the invoice, the CCI has pointed out. The regulator has also urged the industry to adopt self-regulatory measures to inculcate best practices for ensuring a well-functioning ecosystem.