NCLAT Upholds CCI’s Order Rejecting Complaints of Anti-Competitive Conduct Against Cab Aggregation Companies

On May 29, 2020, the National Company Law Appellate Tribunal (‘NCLAT’) upheld CCI’s order in Case No. 37/2018 rejecting complaints of anti-competitive conduct against cab aggregation companies namely, ANI Technologies Private Limited (‘Ola’) and Uber India Systems Private Limited (‘Uber’, including its group companies i.e., Uber B.V. and Uber Technologies Inc.)[1].

CCI, through its order dated November 06, 2018 (‘Impugned Order’)[2], had rejected allegations that (i) driver partners active on the different cab aggregation applications of Ola and Uber respectively (‘Apps’), were using their pricing algorithms to facilitate price fixing among themselves, in violation of Section 3(3) of the Competition Act; (ii) by determining the prices to be charged by the driver partners from the passengers (through its Apps), Ola and Uber had implemented a resale price maintenance agreement in terms of Section 3(4)(e) of the Competition Act. Notably, this allegation was not raised by the appellant before the NCLAT; and (iii) Ola and Uber were charging discriminatory prices from the passengers in terms of Section 4(2)(a)(i) of the Competition Act.

The appellant (an independent legal practitioner) inter alia argued that CCI erred in concluding on the genuineness and legality of the pricing models of Ola and Uber respectively, and also did not refute that the Apps determined the prices which were being charged by the driver partners listed with the Apps. He also argued that CCI erred in holding that no agreement existed between the driver partners, and in treating the driver partners and the respective cab aggregators as single economic entities.

At the outset, the NCLAT clarified that the phrase ‘any person’ as used under Section 19(1)(a) of the Competition Act referred to ‘a person who has suffered invasion of his legal rights as a consumer or beneficiary of healthy competitive practices.’ Given that the appellant did not fall in any of the categories specified by it, the NCLAT observed that he did not have locus standi in the instant case. Nevertheless, the NCLAT scrutinized the allegations made by the appellant on merit and agreed with the findings of CCI. It noted that the appellant did not imply that Ola and Uber, being competitors, colluded on the prices of their services through the algorithms of their individual Apps. It further observed that absent any evidence to suggest that the driver partners being independent service providers, colluded to fix prices being charged to the passengers, the appellant’s allegations were rightly rejected by CCI. It further observed that based on distinct reasons provided by Ola and Uber, the theory of a hub and spoke cartel did not materialise. Under Ola’s business model, there was no inter se information sharing among the driver partners and ruled out scope of collusion among them. With respect to Uber’s model, NCLAT noted that while Uber’s App assisted them in finding a potential passenger and also recommended the fares to be charged, the driver partners were free to accept the ride and negotiate a lower fare with the passengers. NCLAT also upheld CCI’s observations that neither Ola nor Uber was dominant in the cab aggregation market. Further, since the two were neither acting as a joint venture nor belonged to the same group, they could not be considered collectively to determine their market position, under Section 4 of the Competition Act.

Lastly, the NCLAT also observed that the Impugned Order did not suffer from any infirmity as CCI dealt with the allegations while clearly identifying the issues and recording its opinion. Thus, nothing to the contrary could be demonstrated by the appellant to warrant any interference. Based on these observations, the NCLAT upheld the Impugned Order and dismissed the appeal filed by the appellant.

[1] Samir Agrawal v. Competition Commission of India & Ors., Competition Appeal (AT) No. 11 of 2019, order delivered on 29 May 2020.

[2] Samir Agrawal v. ANI Technologies & Ors., Case No. 37 of 2018, order delivered on 6 November 2018.

Published In:Inter Alia Special Edition - Competition Law - July 2020 [ English
Date: July 18, 2020