CCI Dismisses Yet another Allegation of Contravention of Section 3 of the Act against Cab Aggregators Ola and Uber

On November 6, 2018, CCI dismissed the information filed by Mr. Samir Agrawal against ANI Technologies Private Limited (‘Ola’), Uber India Systems Private Limited (‘Uber’), Uber B.V. Amsterdam, Netherlands (‘Uber B.V.’) and Uber Technologies Inc., San Francisco, U.S.A (‘Uber Technologies’).[1] The information alleged violation of Section 3 of the Act by Ola and Uber. The information had three allegations and they were considered and decided by CCI in the following manner:

(i)      It was alleged that Ola and Uber were acting as ‘hubs’ for their respective drivers (the ‘spokes’) and colluding on prices. More specifically, it was alleged that Ola and Uber were using their respective pricing algorithms to fix prices between their drivers thereby facilitating a cartel in contravention of Section 3 of the Act. It was contended that absent the pricing algorithm, drivers would compete on prices which, in turn, would prevent them from commanding high prices (as calculated by the algorithm). CCI dismissed these allegations and held that for a ‘hub and spoke cartel’ to exist: (i) the ‘spokes’ must use a third party platform (or, ‘the hub’) to exchange sensitive information, including information on prices which can facilitate price fixing; and (ii) there needs to be a conspiracy to fix prices, which requires existence of collusion. CCI then noted that although the drivers may have acceded to the algorithmically determined prices by the platform (Ola/Uber), it did not amount to collusion between the drivers. CCI also did not find any agreement between the drivers per se on the basis of which they delegated pricing decisions to the platform. Instead, ride prices were determined by algorithms using multiple factors for each rider (time of the day, traffic situation, special conditions/events, festival, weekday/weekend) to determine the demand/supply.

(ii)      It was also alleged that Ola/Uber and its drivers are in a vertical relationship. As per this relationship, Ola/Uber impose a floor price on drivers, creating a resale price mechanism (‘RPM’) in contravention of Section 3(4)(e) of the Act. Drivers have no liberty to reject prices calculated by Ola/Uber’s algorithm or offer their services at a price lower than the said price. CCI rejected this allegation on the grounds that Ola/Uber do not resell a service, which is an essential ingredient for an RPM allegation. There is an agency relationship and a single transaction takes place between a rider and Ola/Uber. In this single transaction, the drivers are paid for the ride after Ola/Uber deducts their commission. CCI also held that the centralized pricing mechanism adopted by Ola/Uber allows for adjustment and optimization of prices based on multiple factors. It held that this cannot be viewed as a vertical instrument employed to orchestrate price-fixing cartel amongst the drivers.

(iii)    It was alleged that the cab aggregators possess considerable personalized information about every rider and use it to price discriminate amongst riders. CCI dismissed this allegation and referred to its earlier decisions (Fast Track Call Cab and Meru v ANI Technologies[2] and Meru v ANI Technologies[3]), stating that Section 4 the Act (the only provision where a price discrimination allegation may be examined) does not recognize the concept of ‘joint or collective dominance’. CCI also noted that the information did not allege Ola/Uber to be in a dominant position in the market.

Additionally, CCI distinguished Ola/Uber applications from other platform applications like Airbnb, Trivago and Zomato etc., by observing that unlike these applications, riders on Ola/Uber have no material information or preference about drivers available in their area of demand. CCI relied on its earlier decision in Fast Track Call Cab and Meru v ANI Technologies[4] and ECJ’s decision in Asociación Profesional Élite Taxi v Uber Systems Spain SL[5], to hold that Ola/Uber were not pure platforms like Airbnb, Trivago and Zomato, but qualified as ‘radio taxi operators’ or ‘transport service companies’. CCI held that Ola/Uber were not limited to intermediating between drivers and also acted as service providers.

[1] Case No. 37 of 2018.
[2] Case Nos. 6 &74 of 2015.
[3] Case Nos. 25, 26, 27 & 28 of 2017.
[4] Case Nos. 6 &74 of 2015.
[5] Case C‑434/15

Published In:Inter Alia Special Edition Competition Law November 2018 [ English
Date: November 30, 2018