• Sakshar Law Associates

Analysis the landmark judgment Meru Travel Solutions Pvt Ltd v. Uber India Systems Pvt Ltd

Updated: Sep 1


By

Sakshi Shairwal

Avnip Sharma


I. Brief Facts


Meru Travels Solutions Pvt. Ltd. (Informant) operates a radio taxi service in 21 major cities in India. In the year 2008, it entered the Delhi-NCR market. In 2016, Meru filed a complaint with the Competition Commission of India (CCI) under Section 19(1)(a), insinuating that Uber engaged in anti-competitive practices such as predatory pricing and abuse of dominant position, in violation of Sections 3 and 4 of the Competition Act, 2002, in establishing its monopoly in the market and eliminate existing competitors.


Uber, according to Meru, offered its clients reduced fares and huge discounts. Meru further claims that Uber has engaged in exclusive contracts with taxi owners in order to prevent them from partnering with any other radio taxi operators in the market, in violation of Sections 3(1), 3(2), and 3(4) of the Act. The Informant said that as a result of Uber's actions, the Informant began to lose money.


Meru (Informant) then used a market research paper titled "Delhi-NCR Radio Taxi Service Market Analysis" to illustrate Uber's dominance. It was revealed that Uber had a market share of 50.1 percent in the relevant market, particularly Delhi NCR. Meru (Informant) further claimed that Uber was losing an average of Rs. 204 per trip as a result of the deal with the drivers, which included deep discounts and other monetary perks for clients. As a result, Uber was accused of abusing its leading position and engaging in predatory pricing in violation of Sections 4(2)(b)(i), 4(2)(c), and 4(2)(a)(ii), respectively. [1]


II. Competition Commission of India


The CCI carefully listened to both sides and examined the evidence before reaching the following prima facie conclusion:


i.) That the nature of Meru Travels Pvt. Ltd.'s report was untrustworthy. Uber called the TechSci report's reliability into question, and the Commission agreed that it couldn't be trusted. This was attributable to the fact that Uber was not interrogated during research, and the research results would not be in conformance with some other report published by another research and consultancy-based company.


ii.) It was determined that the relevant market was "Radio Taxi Services in Delhi," not "Radio Taxi Services in the Delhi NCR region." The CCI justified the change in the pertinent geographic market by stating that the regulatory environment for taxi services and the use of compressed natural gas (CNG) in public transportation in both regions were different.


iii.) Uber did not have a dominant position in the given industry. According to the CCI, Delhi has a thriving and dynamic radio taxi service sector, and Uber's dominance has yet to be established. As a result, the CCI found that there was no prima facie case against Uber.


III.) The decision of COMPAT, Competition Appellant Tribunal


The CCI order was appealed to COMPAT under section 53B of the Act. CCI's Uber order was overturned by the appellate authority. To begin with, the CCI designated Delhi NCR as the relevant geographic market. The COMPAT asserted that the CCI's distinction between relevant geographic markets is meaningless in a practical/legal sense. Customers are unaffected by political demarcations, according to the COMPAT, and such differentiation in Delhi NCR has no significant impact on consumers.


The COMPAT expressed a different viewpoint on the TechSci report, stating that in the earlier Fast Track case, CCI relied on the Tech Sci study[3]. It further stated that only the study's credibility was questioned and that the study was not disputed in its totality on substantive grounds. Further, if there are any discrepancies between the TechSci and 6Wresearch reports, an investigation could be ordered based on the findings. COMPAT also drew the CCI's attention to sub-clauses (b), (c), (d), and (e) of Section 19(4) of the Act, which provides a range of criteria to recognize when determining whether a company has a dominant position in a market.


As a result, the COMPAT directed the Director-General to launch an investigation into Meru cabs' complaints of Uber's market domination and unfair pricing and present a report to the commission within the timeframe specified.


IV.) Supreme Court Decision


Uber has filed an appeal with the Supreme Court against the COMPAT order. The Supreme Court stated that this would be impossible to say that there really is no prima facie case of abuse of dominance against Uber, and hence an investigation is required.


The Bench found that Uber was losing a substantial sum of money per journey, Rs. 204, and that providing such large discounts and monetary rewards to clients made no economic or business sense. Uber's goal, according to the report, was to remove competitors in the market. The Court went on to say that if a loss for trips is made, as in this case, Explanation (a)(ii) would be attracted, such a loss would undoubtedly damage existing competitors in the market and shift the relevant market in favor of the Appellant. The appeal was dismissed by the Supreme Court, which also refused to tamper with the previous COMPAT order.


References


1. https://lexforti.com/legal-news/abuse-of-dominance/



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