BRASILIA (Reuters) - Competition from Uber Technologies Inc [UBER.UL] reduced the number of rides on cab apps in Brazil by more than half, the country’s antitrust regulator said on Thursday, showing the U.S. ride-hailing service’s disruptive effect in one of its biggest markets.
The shift may be less pronounced as cab apps respond by offering discounts, according to a study by the economic department of the Cade regulator.
The study, based on private company data from 2014 to 2016, concluded that rides on cab-hailing apps fell by 56.8 percent on average in Brazilian cities where Uber operates.
A 1 percent increase in Uber rides drove an average 0.09 percent decline in rides on cab apps, the study estimated, in a sign that Uber was attracting new riders and poaching from taxis.
The results underscore Uber’s strength in recent years as it battled cab-based rivals in Brazil that have drawn foreign investors.
In January, Chinese ride-hailing application Didi Chuxing stepped up its global rivalry with Uber when it agreed to acquire control of Brazil’s 99, which started as a cab-hailing app and started adding other vehicles in late 2016.
The study found signs that Uber’s foothold may be smaller in deeper markets and gradually diminish over time.
“Initially, taxi cab apps did not compete on prices. They held them high and tried to take legal action against Uber,” Cade chief economist Guilherme Resende said in a telephone interview. “Over time, however, they began to offer discounts and cheaper options.”
He cited evidence showing the drop in cab app rides was more dramatic in regions that Uber had entered more recently.
Resende defended loosening regulations on cab-hailing apps, potentially allowing them to charge variable tariffs and not be subject to rules governing street cabs.
“It doesn’t make sense have different rules for different apps,” he said. “The discussion should not aim at a stricter regulation of Uber, but at looser regulations for cabs, beginning with apps.”
Brazil’s President Michel Temer last month signed a bill regulating car-hailing apps with loose requirements, in contrast with other countries where Uber faces strong legal restrictions.
Reporting by Bruno Federowski; Editing by Brad Haynes and Richard Chang