Competition Authority investigating Uber for predatory tactics

Competition Authority investigating Uber for predatory tactics

The Competition Authority of Kenya (CAK) has begun investigations on whether the move by taxi hailing firm Uber to lower prices breached competition laws.

Of concern to the regulator is the fact that Uber may have employed predatory tactics in its quest to lure customers to its service and look out competition.

CAK Director General Wang’ombe Kariuki said on Tuesday that the watchdog had received a formal complaint by one of the players in the industry and was currently reviewing the pricing structure.

“The competition authority of Kenya would be concerned about pricing when any dominant firm prices below average variable costs or what we call predatory practice. As it it stands now we have received a complaints from one of the competitors of Uber and what the authority is doing is gathering data on whether they have been pricing is below the average variable cost,” Mr Wang’ombe said in an interview with Citizen Digital.

In 2016, Uber slashed its prices by 35 percent.

This saw the firm charge Sh35 per kilometer down from Sh60, cut the charges per minute Sh3 andd set the base fare at Sh200.

This has caused a storm more so with its drivers who have for the last three weeks staged protests and even take their petition to the National Assembly.

Mr Wang’ombe said that of concern to the authority would be whether the pricing mechanism was geared at locking out other players.

“Why we are concerned about the average variable cost is because it might be short lived and the dominant firm might want to just price below the market rate and drive the other competitors out of the market,” he said.

The competition watchdog said that should Uber be found to have employed underhand tactics it would be penalized.

“If at all its predatory Uber will be liable to be fined at 10 percent of their turnover during that period they had priced that way and also they will be forced to go back to the market rate,” Mr Wang’ombe said.

Uber has increasingly found itself on the edge even from other taxi hailing companies.

Appearing before the Parliamentary committee on transport, Pewin cabs chief executive officer Justus Kirigua said other taxi providers cannot match the pricing with their competitor uber.

Mr Kirigwa argued that they should be put on a level playing field with Uber.

Mondo Ride also argued to be unique than Uber, with Little App saying the new law should make sure businesses are enabling.

Parliamentary Transport and public works committee chairman Maina Kamanda said there is unfair competition subjected to other taxi providers arguing that all taxi providers should charge the same rate.

“Don’t force the country to gang and come to regulate you,” Mr Kamanda said.

Answering the committee Uber country lead Kagure Wamuyu said Uber is ready to make an announcement once the case against Uber is withdrawn.

“We are recently aware that some drivers have expressed concerns over earnings. We did this to encourage people to take more trips. If anything we will reassess the prices,” Ms Wamuyu said.

Tags:

kenya CAK uber Competition Authority of Kenya Little Taxify taxi Wang'ombe Kariuki cabs Kagure Wamuyu lure customers Maina Kamanda Mondo Ride parliamentary committee on transport Pewin Cabs predatory tactics pricing under cutting the market

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