SC Allows Predatory Pricing Probe Against Uber

The Supreme Court recently dismissed an appeal filed by Uber India, thereby giving a green signal to Competition Appellate Tribunal to initiate an investigation into allegations of abuse of dominant power by Uber in the National Capital Region.

Timeline of the events:

In 2015, Meru – a radio taxi service business –approached the Competition Commission of India (CCI) alleging that Uber was engaging in predatory pricing. Meru’s complaint basically revolved around the fact that besides reduced tariffs, Uber was offering massive discounts to its customers and was also offering unreasonably high incentives to its fleet of drivers.

In the information provided by Meru, it detailed how Uber was losing Rs. 204 per trip, which according to Meru made no economic sense and only pointed towards Uber’s intention of eliminating competition in the market.

To demonstrate the dominant position held by Uber in the market, Meru relied upon the findings of a market research report conducted by New Age TechSci Research Pvt. Ltd. However, not only did CCI question the findings of New Age TechSci by comparing it with the findings of 6W research but also argued that the relevant geographical market was Delhi and not Delhi NCR, as contented by Meru. CCI observed that as far as Delhi is concerned, there exists stiff competition in the radio taxi service market and hence, Uber was not dominant in the relevant market.[1]

Subsequently, Meru filed an appeal under Section 53B of the Act before the Competition Appellate Tribunal (COMPAT). COMPAT observed that consumers are not concerned with political demarcations and hence, distinction between Delhi and Delhi-NCR made by the CCI was unnecessary. COMPAT further observed that the fact that the two reports showed contradictory findings was all the more reason to probe into the matter. COMPAT then directed the Director General to conduct an investigation into the allegations and submit report to the Commission.

Uber filed an appeal before the Supreme Court of India against the order of COMPAT.

Decision of the Supreme Court:

The Supreme Court found no reason to interfere with the investigation.  The fact that Uber was losing Rs. 204 per trip also caught the Court’s attention and solidified its view that it would be difficult to state that there is no prime facie case under Section 26(1) as to infringement of Section 4 of the Competition Act, 2002.

The Supreme Court relied on the definition of ‘Dominant position’, as laid down in Explanation (a) of Section 4, as a position of strength, enjoyed by an enterprise, in the relevant market, which

  1. enables it to operate independently of the competitive forces prevailing; or
  2. is something that would affect its competitors or the relevant market in its favour.

The Court also remarked that if a loss is made for the trips, Explanation (a)(ii) would prime facie be attracted, as this would affect Uber’s competitors in its favour or it would affect the relevant market in its favour.

The Hon’ble Court thus dismissed the appeals and decided to not interfere with COMPAT’s order.[2]

Impact of the decision:

The most interesting aspect of the Supreme Court’s decision is that the Court decided not to lay emphasis on Section 19(4), which lays down multiple factors to assess the dominance of the business. The decision is chiefly based on Uber’s pricing practices. Hence, dominant position of the business is analyzed mainly on its ability to offer incentives and discounts.

In any case, since the Supreme Court has directed the Director General to finish the probe within six months (from 3rd September 2019 – the date on which the judgment was passed) we will gain more clarity on the subject in the near future.


Author: Shubham Kshirsagar, BA. LL.B  from Indian Law Society (ILS), Pune , Intern at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at  <niharika@khuranaandkhurana.com>

References:

[1]https://www.cci.gov.in/sites/default/files/26%282%29_96%20of%202015.pdf

[2]https://sci.gov.in/supremecourt/2017/2103/2103_2017_5_2_16524_Judgement_03-Sep-2019.pdf

Tagged

advertising, Uber,

Leave a Reply

Your email address will not be published. Required fields are marked *

two × 3 =

Archives

  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • September 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010