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Cade warns against project that reduces rate of apps like Uber and iFood

by Ace Damon
Cade warns against project that reduces rate of apps like Uber and iFood

The Administrative Council for Economic Defense (Cade) expressed concern about the proposal to reduce rates for transport and delivery applications during the new coronavirus pandemic. The change is present in the bill 1179/2020, which is awaiting sanction from President Jair Bolsonaro, and could affect platforms such as Uber, 99, Cabify, iFood, Uber Eats and Rappi.

By means of a technical note from its Department of Economic Studies (DEE), Cade stated that the requirement to reduce fees charged for services may have negative economic and competitive effects. The agency says that, if it becomes law, the rule can reduce profits or increase losses for these companies.

Cade states that this would lead to a reduction in the quantity and quality of services available, in addition to a drop in investment in innovation by transport and delivery platforms. With less competition, prices for consumers would be higher, which would also make platforms less attractive to drivers and delivery personnel.

The bill prohibits the increase in travel prices while the pandemic lasts, but Cade says services may find other ways to balance their accounts. "It is possible for companies to seek to recover this loss by increasing prices based on other factors, such as, for example, increases in operating costs that previously could have been absorbed by the company (without passing on prices) due to competitive pressure from competitors", indicates the technical note.

Already approved in Congress, the proposal provides for a reduction of at least 15% in the fees charged for services such as Uber, 99, iFood and Rappi until October 30. In Cade's assessment, a single reduction for all companies may punish those that already had a lower profit margin before the pandemic. The measure would also make it difficult for new competitors to enter the market.

"The application of discounts on the retention rates of transport services and other related applications negatively impacts the performance of companies and artificially changes the conditions of competition in the affected markets", summarizes Cade. The agency claims that the sector can adjust itself through “typical mechanisms of free competition, such as, for example, free negotiation between the parties”.

With information: Where is it.

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