The complainant had alleged that Rapido was able to circumvent costs associated with commercial vehicle permits to offer below-market rates while abusing its dominant position
The regulator held that the allegations against Rapido didn’t fall under its regulatory purview and instead regulated under the Motor Vehicles Act
It further noted that the complainant’s allegations regarding levying of commission and taxes fall beyond the scope of competition law and therefore need not be examined by the regulator
The Competition Commission of India (CCI) has quashed a complaint filed against ride-hailing major Quick for allegedly abusing its dominant position after the regulator found that the case was unsubstantiated.
The complainant, who operates on-demand transportation aggregation service HitoHit Solutions in Uttarakhand, alleged that Rapido was using its platform to allow private two-wheeler vehicles to ply as bike-taxis in the state. The complainant also alleged that Rapido was able to offer rates below the minimum set by the state government by avoiding the higher costs associated with commercial vehicle permits, insurance, and taxes.
He further stated that the unicorn was able to gain market traction by offering services at much lower rate than others, while also collecting “invaluable geo-location, traffic, and consumer demand data at a massive scale, which it then leverages to launch and dominate subsequent segments like autorickshaws”.
However, the CCI, in an order dated May 22, said that some of the grievances raised by the complainant fell under the purview of the transport regulation, licensing requirements and compliance issues under the Motor Vehicles Act, 1988, and therefore did not fall within the scope of competition law.
It further noted that the complainant’s allegations regarding levying of commission and taxes fall beyond the scope of competition law and therefore need not be examined by the regulator. The complainant had alleged that Rapido’s zero-commission model, which allows drivers to retain 100% of the fare in the auto-rickshaw segment, led to the company circumventing tax obligations.
“The Informant has alleged that by not collecting GST and State Transport Authority taxes from auto riders, and not charging the driver any commission or subscription fee, the mechanism through which the OP remits GST and STA taxes to the government is opaque,” CCI’s order stated, adding that the complainant called this a “gross abuse” of the tax regime which allows Rapido to suppress its costs and offer lower fares, thus killing the ability of newer entrants to effectively compete in the same segments.
The complainant had also requested a probe into whether Rapido was remitting the GST collected from bike-taxi riders or it is merely charging a subscription fee to drivers and paying GST only on that amount.
Notably, the CCI also held that the fares charged by Rapido didn’t appear to be predatory or anti-competitive in nature as they fell under the maximum fares for contract carriage services set by the Uttarakhand Transport Commissioner.
“The Commission is of the view that no prima facie case of contravention under Section 4 of the Act has been made out …and that the present Information be closed forthwith under Section 26(2) of the Act,” the CCI said in the order.
Rapido is one of India’s largest bike-taxi aggregators and ride-hailing platforms. It was founded in 2015 by Aravind Sanka, Pavan Guntupalli, and Rishikesh SR. Earlier this month, the startup secured $240 Mn in a funding round led by Prosus. Rapido plans to use the capital to expand into new markets, deepen its presence in existing markets, grow its driver network, and invest in technology and hiring.
Overall, Rapido, which competes with the likes of Uber, Ola Cabs, among others, has raised a total funding of $1.5 Bn to date from investors like Accel, WestBridge Capital, and Nexus Venture Partners.
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