2020 (12) TMI 621 - SC - Law of Competition

Court Confirms Ola & Uber Not Guilty of Anti-Competitive Practices, Broadens Informant Definition.

The Supreme Court affirmed the findings of the Competition Commission of India (CCI) and the National Company Law Appellate Tribunal (NCLAT) that Ola and ... Anti-competitive conduct - resale price maintenance - anti-competitive practices between drivers Ola and Uber - allegation that they entered into price-fixing agreements in contravention of section 3(1) read with section 3(3)(a) of the Act, and engaged in resale price maintenance in contravention of section 3(1) read with section 3(4)(e) of the Act - HELD THAT:- Given the context of the Act in which the CCI and the NCLAT deal with practices which have an adverse effect on competition in derogation of the interest of consumers, it is clear that the Act vests powers in the CCI and enables it to act in rem, in public interest. This would make it clear that a “person aggrieved” must, in the context of the Act, be understood widely and not be constructed narrowly, as was done in Adi Pherozshah Gandhi [1970 (8) TMI 86 - SUPREME COURT]. Further, it is not without significance that the expressions used in sections 53B and 53T of the Act are “any person”, thereby signifying that all persons who bring to the CCI information of practices that are contrary to the provisions of the Act, could be said to be aggrieved by an adverse order of the CCI in case it refuses to act upon the information supplied. By way of contrast, section 53N(3) speaks of making payment to an applicant as compensation for the loss or damage caused to the applicant as a result of any contravention of the provisions of Chapter II of the Act, having been committed by an enterprise. When the CCI performs inquisitorial, as opposed to adjudicatory functions, the doors of approaching the CCI and the appellate authority, i.e., the NCLAT, must be kept wide open in public interest, so as to subserve the high public purpose of the Act. Coming now to the merits, we have already set out the concurrent findings of fact of the CCI and the NCLAT, wherein it has been found that Ola and Uber do not facilitate cartelization or anti-competitive practices between drivers, who are independent individuals, who act independently of each other, so as to attract the application of section 3 of the Act, as has been held by both the CCI and the NCLAT. Appeal dismissed. Issues Involved:1. Alleged anti-competitive conduct and price-fixing agreements by Ola and Uber.2. Resale price maintenance by Ola and Uber.3. Locus standi of the Informant to file the complaint.4. Alleged price discrimination by Ola and Uber.5. Abuse of dominant position by Ola and Uber.Detailed Analysis:1. Alleged Anti-Competitive Conduct and Price-Fixing Agreements by Ola and Uber:The Informant accused Ola and Uber of using algorithms to fix prices, preventing riders and drivers from negotiating fares, thus violating Section 3(1) read with Section 3(3)(a) of the Competition Act, 2002. The CCI, however, found that the algorithmically determined pricing did not constitute a 'hub and spoke' arrangement as there was no collusion between drivers or between the cab aggregators. The NCLAT upheld this, stating that the business model of Ola and Uber did not support the allegation of price-fixing as drivers operated independently without inter se connectivity or exchange of information.2. Resale Price Maintenance by Ola and Uber:The Informant also alleged resale price maintenance under Section 3(1) read with Section 3(4)(e) of the Act. The CCI dismissed this claim, stating that dynamic pricing often resulted in fares lower than those charged by independent taxi drivers, and there was no fixed floor price set by the aggregators. The NCLAT did not address this issue as it was not pressed before it.3. Locus Standi of the Informant to File the Complaint:The NCLAT questioned the Informant's locus standi, stating that the Informant, being an independent law practitioner, did not show any personal legal injury or invasion of rights. The Supreme Court, however, clarified that under Section 19 of the Act, any person could provide information to the CCI, and the term 'person' included individuals and artificial juridical persons. The Court emphasized that proceedings under the Act affect public interest and are in rem, thus broadening the scope for who can be an informant. The Supreme Court set aside the NCLAT's narrow interpretation of locus standi.4. Alleged Price Discrimination by Ola and Uber:The CCI found no evidence of price discrimination, noting that price discrimination could be scrutinized under Section 4 of the Act, which deals with the abuse of dominant position. Since neither Ola nor Uber was alleged to be dominant in the market, the claim of price discrimination was dismissed. The NCLAT concurred, stating that the Informant's allegations did not support the claim of price discrimination.5. Abuse of Dominant Position by Ola and Uber:The CCI observed that the market featured multiple players, and neither Ola nor Uber held a dominant position. The Act does not recognize collective dominance, and no evidence suggested that either company independently held a dominant position. The NCLAT upheld this finding, rejecting the claim of abuse of dominant position.Conclusion:The Supreme Court upheld the CCI and NCLAT's findings that Ola and Uber did not facilitate anti-competitive practices or cartelization among drivers. It also clarified that any person could provide information to the CCI, broadening the scope of who could be considered an informant. The appeal was disposed of in terms of this judgment, affirming the dismissal of the Informant's allegations.