India: Competition Commission Of India Dismisses Mega Cabs' Allegation Against OLA For Abuse Of Dominant Position

Last Updated: 2 March 2016
Article by Lucy Rana
Most Read Contributor in India, September 2018

In a recent order dated February 09, 2016, the Competition Commission of India (CCI) has rendered its decision in a case between M/s Mega Cabs Pvt. Ltd. and M/s ANI Technologies Pvt. Ltd. relating to alleged abuse of its dominant position and entering into anti-competitive agreements with its taxi drivers by OLA in the Delhi-NCR region, India. Rejecting the allegations forwarded by Mega Cabs, the CCI ruled in OLA's favour holding that it did not abuse its dominant position or enter into anti-competitive agreements with the drivers in its network.

Brief Facts of the Case

Mega Cabs Pvt. Ltd. (hereinafter referred to as "Mega Cabs"), the Informant in the Complaint under discussion, filed a complaint against ANI Technologies Pvt. Ltd. (hereinafter referred to as "OLA") accusing it of entering into anti-competitive agreements and of abusing its dominant position in the Delhi-NCR market. Both Mega Cabs and OLA are engaged in the business of radio taxi services, in the Delhi-NCR region, India.

Contentions by the Informant, Mega Cabs

  • That OLA is dominant in the Delhi-NCR market and is abusing its dominant position in terms of Section 4 of the Competition Act, 2002.
  • That OLA has also indulged in anti-competitive agreements with the taxi drivers registered on its network which has adversely affected the competition in the market within the meaning of Section 3 of the said Act.
  • That OLA has managed to raise huge investments by way of multiple rounds of venture funding to acquire a position of dominance in Delhi-NCR region, and has engaged itself in abusive tactics like predatory pricing, offering periodical discounts to consumers and incentivising driver with the sole intention to eliminate competition from the market.
  • Further, OLA's recent acquisition of its competitor 'Taxi for Sure', has strengthened its market position tremendously enabling it further to indulge in abusive tactics.
  • As per a market report for radio taxis in the Delhi-NCR region titled "Delhi/NCR Radio Taxi Market Analysis (2015)' prepared by market research and consulting firm named '6Wresearch' (hereinafter, "6Wresearch report"), OLA along with its recently acquired Taxi For Sure holds a dominant position in the radio taxi services market in Delhi-NCR on the basis of fleet size (52.9%), monthly revenue (52.3%) and number of trips per day (57.5%).
  • That for every cab trip, OLA receives 15% of the actual billing and remaining 85% is remitted to service providers as revenue. Further, over and above the 85% share, OLA provides rebates and incentives to its drivers.
  • That OLA also suffers a loss of INR 15.80 per trip but engages in below-cost pricing to oust other players from the market.
  • That OLA provides many rebates and discounts to customers like free rides, cash back schemes, recharge schemes, reduction in minimum fares, special bonuses, special prizes etc. leads to discrimination of pricing.
  • That due to actions of OLA, the radio taxi services market is becoming distorted and the Informant is losing its revenues and radio taxis on its network as its bookings have reduced by 29% since April 2013, bookings have gone down by 31% during 2013-2015 and the average number of trips per day has also gone down by 31% during the said period.
  • That the pricing strategy of OLA is predatory which is impossible to be matched by other competitors in market.

Reply by the Opposite Party, OLA

  • That Mega Cabs has wrongly relied on financial statements of OLA for the year 2012-13 and 2013-14 when OLA was not even present in the Delhi-NCR market, as it had entered the said market only in 2014. Thus, the reduction in Mega Cabs' booking by 29% since April 2013 cannot be contributed to OLA.
  • That the 6Wresearch report, which has been relied upon by Mega Cabs in the complaint to prove OLA's dominance in the market, is unreliable, reflects the poor performance of Mega Cabs and cannot be used as a basis to prove OLA's dominance.
  • That Mega Cabs operates on own-assets model wherein all taxis in its fleet size are owned by it as opposed to OLA which operates on aggregators' model wherein it does not own taxis, rather taxis are attached to its network by taxi owners. Hence, the connotation of 'active fleet size' cannot be applied to Mega Cabs which has full control over its taxi fleet.
  • That Mega Cabs has 650 taxis in its fleet out of which 400 are active and 250 are inactive. Further, daily trips of each radio taxi of OLA are 6 whereas for Mega Cabs it is only 4, thereby showing its inefficiency.
  • That while Mega Cabs is complaining of OLA's losses and linking it to predatory pricing, Mega Cabs is also suffering losses for 6-7 years after entering the market.
  • That giving discounts and rebates is very natural in every market and essential in the competition process, especially for new players trying to gain a presence in the market.
  • That being an aggregator, OLA needs to ensure that the taxi drivers attached to its network stay motivated, and therefore it needs to provide incentives to drivers.
  • That OLA is an efficient and innovative player in radio taxi services market and its strategies aim at meeting the competition and establishing a presence.

The Competition Commission of India's Observations and Holding

  • Relevant Product Market

The features of radio taxis like convenience of time saving point-to-point pick and drop, pre-booking facilities, round the clock availability, predictability in expected waiting/journey time etc. makes them different from other modes of transport like auto-rickshaws, buses, private taxis etc. A dedicated category of commuters would only use radio taxes irrespective of costs. Thus, similar relevant product market definition would be appropriate due to dependence of commuters on radio taxis.

  • Relevant Geographic Market

That having regard to transport being a state subject, radio taxi services being regulated by State Transport Authorities and demarcation of Delhi and NCR in apps (applications), the relevant geographic market in the present case would be 'Delhi'.

In view of the above, the relevant market would be market for 'services offered by radio taxis in Delhi'.

  • OLA's Dominant Position in the Relevant Market

The CCI observed that the veracity of the 6Wresearch report relied upon by Mega Cabs in the case was highly doubtful as the same was commissioned on instructions of a particular anonymous client and most of the data used in the report is silent as to specific source from where the data is taken. Thus, it remains questionable as to whether radio taxi operators were interviewed or not and if the data was reliable. Thus, conclusions based on incomplete information were not found to be reliable. Hence, OLA's dominance in the relevant market based on the 6Wresearch report could not be proved.

Held

In view of the aforesaid observations and data, the CCI held that OLA does not hold a dominant position in the relevant market and there are other players with significant presence in the market. Hence there was no need to go into the examination of OLA's conduct in such relevant market.

Also, allegations raised by Mega Cabs are opposed to basic tenets of competition law, and inability of existing players to match innovative technology by any player or the model created for operating in a particular industry cannot be said to be creating entry barriers in itself.

Further, option of venture funding, used by OLA to bear costs of giving incentives to drivers and discounts to customers are not exclusively available to OLA alone and can be accessed by any existing player in the market. Thus, Mega Cabs' contentions appear to be misplaced and liable to rejection.

Conclusion

On account of heavy discounts and attractive offers, radio taxi services offered by start-ups and companies like OLA, Uber, Taxi For Sure etc. have gained immense prominence and consumers are heavily relying on this mode of transportation. Thus, there is exists fierce competition and frequent adoption of predation in this segment of business. Therefore, it is not surprising that there is a sudden rise in disputes of such nature before the CCI. We had earlier covered a similar dispute between Meru Cabs and Uber in context of the relevant market 'services offered by radio taxis and yellow taxis in Kolkata' in our Issue No. 1 dated January 04, 2016, available here. Interestingly, Meru had recently made a similar complaint against Uber with regard to the relevant market of 'services offered by radio taxis in Delhi-NCR', based on a report prepared by TechSci, where the CCI again observed that the NCR region was distinct from Delhi, hence the relevant market was 'services offered by radio taxis in Delhi' and held that Uber does not have a dominant position.

Thus, it can be observed that largely due to procedural lapses like alleged incomplete or conflicting reports of market research and consulting firms like TechSci and 6Wresearch, complaints by older players in the said market against new and seemingly more dynamic entrants regarding predatory pricing and abuse of dominance are not able to hold ground. However, this realm of disputes is relatively new in the industry, and how the scenario shapes out in the future is yet to be seen.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Lucy Rana
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions