Supreme Court Issues Notice On Meru Cab's Plea Alleging Anti-Competitive Practices By Ola

While issuing notice, a Bench comprising Justices L. Nageswara Rao and B.R. Gavai took note of the concurrent findings by the Director General, CCI and NCLAT.

On the last date of hearing, Justice PS Narasimha recused from hearing the appeal citing his appearance for cab service provide earlier in another case as a lawyer.

Meru had contended before the CCI that Ola had abused its dominant position by indulging in predatory pricing and by entering into anti-competitive agreements with its drivers. Since the Commission prima facie found the allegation of abuse of dominant position to have some merit, it ordered the Director General (DG) to investigate the matter. Based on the investigation report, in 2017, CCI concluded that Ola did not abuse its dominant position. On 07.02.2022, the NCLAT also held that Ola has not indulged in predatory pricing or abused its dominant position.

Senior Advocate, Mr. P. Chidambaram appearing on behalf of Meru Cabs submitted before the Bench, that the law regarding the abuse of dominant position in such cases have been laid down by the Apex Court in Uber India Systems Pvt. Ltd. v. CCI And Ors. (2019) 8 SCC 697. He argued that in an 'unusual' manner the NCLAT had interpreted the Apex Court judgment to be applicable only at 'prima facie' stage, but not during the stage of final adjudication. He submitted -

"The Tribunal says that the interpretation of the law made by SC applied only at prima facie stage and not final stage. This is an unusual argument. The Section is very clear."

He referred to Section 4(2) of the Competition Act, 2002 which deals with abuse of dominant position and reads as under -

(2) There shall be an abuse of dominant position under sub-section (1), if an enterprise or a group.—-

(a) directly or indirectly, imposes unfair or discriminatory—

(i) condition in purchase or sale of goods or service; or

(ii) price in purchase or sale (including predatory price) of goods or service.

Explanation.— For the purposes of this clause, the unfair or discriminatory condition in purchase or sale of goods or service referred to in sub-clause (i) and unfair or discriminatory price in purchase or sale of goods (including predatory price) or service referred to in sub-clause (ii) shall not include such discriminatory condition or price which may be adopted to meet the competition; or

Explanation.—For the purposes of this section, the expression—

(a) "dominant position" means a position of strength, enjoyed by an enterprise,

in the relevant market, in India, which enables it to—

(i) operate independently of competitive forces prevailing in the relevant market; or

(b) "predatory price" means the sale of goods or provision of services, at a price which is below the cost, as may be determined by regulations, of production of the goods or provision of services, with a view to reduce com-petition or eliminate the competitors.

He placed reliance on the interpretation of dominant position in Uber India Systems Pvt. Ltd. v. CCI And Ors. as under -

"'Dominant position' as defined in Explanation (a) refers to a position of strength, enjoyed by an enterprise, in the relevant market, which, in this case is the National Capital Region (NCR), 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.

Given the allegation made, as extracted above, it is clear that if, in fact, a loss is made for trips made, Explanation (a)(ii) would prima facie be attracted inasmuch as this would certainly affect the appellant's competitors in the appellant's favour or the relevant market in its favour. Insofar as 'abuse' of dominant position is concerned, under Section 4(2)(a), so long as this dominant position, whether directly or indirectly, imposes an unfair price in purchase or sale including predatory price of services, abuse of dominant position also gets attracted. Explanation (b) which defines 'predatory price' means sale of services at a price which is below cost."

Mr. Chidambaram averred that the Director General had, in fact, found Ola to be operating below the cost, incurring Rs 340 loss per trip. He submitted -

"Below cost price is in my favour, entire competition wiped out is in my favour."

Justice Rao remarked,

"Otherwise on both the points the finding is against you."

Senior Advocate, Mr. Abhishek Singhvi appearing on behalf of Ola, contended that as per the statutory provision, first dominant position is to be established, then abuse of that dominance is to be demonstrated and finally it is to be shown that the abuse has anti-competitive effect. He highlighted that all the three forums had found in favour of Ola in respect to the allegation of abuse of dominant position.

Referring to the case-law relied upon by Mr. Chidambaram, he contended that even in that matter, Uber was not found to be abusing a dominant position and the appeal challenging the same is pending adjudication.

Case Title : Meru Travels Solutions Pvt Ltd versus Competition Commission of India | Civil Appeal No.2843-2844/2022

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