Mar 30, 2020

CCI Dismisses Complaint against PayU Alleging Abuse of Dominance

On January 29, 2020, CCI dismissed an allegation of abuse of dominant position under Section 4 of the Act, against PayU Payments Private Limited (‘PayU’) and Enstage Software Private Limited (‘Wibmo’)[1].

PayU is a financial technology company providing technology solutions to online merchants and holds a Non-Banking Financial Company (‘NBFC’) license in India. Wibmo is a leading technology and service provider for the financial services industry that provides a host of services like mobile payments, fraud and risk management, and prepaid solutions. The informant, Mr. Satyen Narendra Bajaj (‘Mr. Bajaj’), alleged that PayU is dominant in the relevant market for ‘e-payments gateway in India’ and Wibmo is dominant in the downstream market of ‘risk-based authentication and payment security services in the e-payments gateway in India’, and that after the acquisition of Wibmo by PayU in April 2019, PayU’s market power would enhance in the market of e-payment processing gateway services in India, for completion of e-payments.

It was further alleged that high market power is likely to result in unfair and discriminatory conditions in availing payment gateway services for both consumers and the competitors of PayU and Wibmo. Further, PayU had foreclosed competition and created barriers to entry for new players by not allowing competitors, access to Wibmo, which restricts them from using an authentication and payment security services by Wibmo for an e-payment transaction. Mr. Bajaj also alleged that as a result of Wibmo’s acquisition, PayU has details of accounts of buyer and sellers along with commission charged by other payment gateways that used Wibmo’s services. This ready access to customer database could be used by PayU to onboard any merchant by offering lower commission.

 CCI observed that Mr. Bajaj’s allegations were premised only upon the fact that the combined entity has become dominant in the market leading to both exclusionary as well as exploitative effects in the relevant market. CCI held that, unlike the Monopolies and Restrictive Trade Practices Act, mere existence of a dominant position, without prima facie evidence of its abuse, is not recognised as an anticompetitive conduct under the Act. The Act provides for a departure from its predecessor and CCI reiterated the settled position that the existence of prima facie abusive conduct under Section 4(2) of the Act is a pre requisite to order an investigation. CCI dismissed the complaint because Mr. Bajaj had not furnished any evidence in relation to the abuse of dominant position by PayU.

[1] Case No. 23 of 2019, order delivered on February 5, 2020.




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