Recently, the Competition Commission of India, in Meru Travel Solutions Pvt. Ltd. v. Uber India Systems Pvt. Ltd. and others1, assessed the competition concerns in cab aggregators' market. Meru filed an information against Uber, alleging contravention of the provisions of Section 3 and 4 of the Competition Act, 2002. The contentions state that Uber is dominant in the market for radio taxi services in Delhi-NCR and has abused its position by restoring to predatory pricing to drive out the competitors.
The Commission, after assessing the contentions of Meru and Uber, vide its order dated 10.02.2016, pronounced that the market is competitive and Uber is not dominant2. Aggrieved by the same, the Informant filed an appeal before the hon'ble COMPAT praying to set aside CCI's order. COMPAT, vide its order dated 07.12.2016, directed the Director General to investigate the matter and submit the report to the Commission3. Further, Uber challenged COMPAT's decision before the apex court. The hon'ble Supreme Court, vide its order dated 03.09.2019, upheld COMPAT's decision4. In compliance with Supreme Court's decision, the DG submitted the report on 28.02.20205. After five long years, the CCI has pronounced its judgment and the article shall analyse the same.
Grant of Confidentiality
Preliminarily, Meru argued that the grant if confidentiality, without hearing it is a grave violation of natural justice. The Commission stated that the purpose of confidentiality shall not sustain in the presence of other party. Moreover, the balance between confidentiality of sensitive information and affording right to defence has to be achieved. Considering the same, request for confidentiality by Uber has been allowed without hearing the Informant.
Abuse of Dominant Position
The main bone of contention in the present case is the violation of Section 3 and 4 of the act, by adopting below cost pricing. To assess the contentions, it was first necessary to determine the Relevant Market.
Relevant Market
The DG suggested that the relevant market is ‘market for radio taxi services in Delhi-NCR.' Relying upon the CUTS report, Uber has challenged the relevant market by contending that the radio taxis compete with traditional taxis and thus, the relevant market should be ‘market for transportation services for riders.' Pointing out the differences between the two on the basis of ease of payment, GPS tracking, well-trained drivers and feedback facility, the Commission disagreed with Uber. Based on the discussion, the CCI agreed with DG on the relevant market.
Dominant Position
To determine the dominant position of Uber, the DG assessed market shares, market structured, dynamics, fleet size and other allied factors. DG opined that Uber is not dominant in the relevant market due to other competitors and change in share from time to time.
The commission stated that for any player to be considered dominant, it should sustain in the market for a considerable period of time. But in this case, owing to the cut-throat competition between Ola and Uber, the durability of market share was not significant. Therefore, based on the aforesaid discussion, the commission did not find Uber dominant.
Collective Dominance
While, Meru primarily contended against Uber, it requested the commission to address the abusive conduct by both Ola and Uber. Despite denying considering Ola for the said matter, the CCI brought in Fast Track Call Cab Pvt. Ltd. and Meru Travel Solutions Pvt. Ltd. v. ANI Technologies Pvt. Ltd. Opposite Party6, which was a case against Ola. Herein, the CCI pronounced that Ola is not a dominant player because of Uber's presence.
Meru also submitted that Uber alone might not be that effective, but Ola and Uber, in a duopoly own 95% market share. However, CCI disagreed and upheld its previous decision in the above-mentioned cases.
Network effects
The main assessment carried on by the commission in the case was based on the role of network effects. Network effects depend upon the number of players on both supply and demand side. A network plays a pivotal role in determining the success of a company in digital market in a double-sided market. A cab-aggregator platform with a larger network will be able to allocate rides without wasting any time at lower prices.
On a holistic perspective, it can be observed that CCI took a progressive outlook by including the digital considerations while assessing the dominance of cab aggregators.
Predatory Pricing
Additionally, Meru alleged that Uber conducted abusive practices included offering unreasonable discounts to the customers leading to abysmally predatory prices merely to oust the competitors from the market. The DG opined that the question of abusive conduct would have only arisen if Uber was dominant in the market. Despite stating that, the DG analysed the financial data of both Ola and Uber and stated that both these competitors indulged in ‘below cost pricing' at nearly same time. Hence, the question of predatory pricing does not sustain.
The CCI also agreed with DG's findings and stated that discounts and incentives play a crucial role in the inception stage but the need reduces as the customer base increases. Moreover, the traditional approach cannot be used to determine predatory pricing in such a dynamic era.
Hence, the CCI observed that Uber is neither dominant in the relevant market nor a adopter of abusive practices like predatory pricing.
Conclusion
The Competition Commission of India has used a nuanced approach in determining the status of the Uber group in the relevant market, taking a departure from the traditional assessment tools. The cab aggregators use a different and dynamic business model, which is technology-inclusive, giving rise to a dynamic system. Given CCI's new approach, it can be said that the Indian system is moving towards development and progress.
Footnotes
1. Case no. 96 of 2015.
2. Id at 5.
3. Supra note 1 at 6.
4. Supra note 1 at 7.
5. Id.
6. [Case No. 06 and 74 of 2015]
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