Uber to be probed for alleged abuse of dominant position and predatory pricing, Supreme Court

Shruti Mahajan

The Supreme Court has declined to interfere in the order passed by the Competition Appellate Tribunal which had directed a probe against Uber for predatory pricing and abuse of dominant position.

Meru Taxi Services had approached the Competition Commission of India (CCI) alleging that Uber is indulging in predatory pricing and misuse of its dominant position in the market. While the CCI had rejected the complaint, the Competition Appellate Tribunal, on appeal, had directed the Director-General of the CCI’s investigation department to conduct a probe into the complaint.

Uber had appealed to the Supreme Court against this order.

A Bench of Justices Rohinton Nariman and Surya Kant of the Supreme Court has now dismissed the same giving a green signal for the investigation. The Supreme Court has, in fact, directed that the probe be completed within a period of six months.

The Court arrived at this conclusion after perusing the data regarding Uber’s pricing provided by the complainant in the original complaint. According to the data, Uber’s rides were being priced lower than they were supposed to. This practice was done to eliminate competition, according to the complaint.

Uber was intentionally losing Rs. 204 per trip “in respect of every trip made by cars of fleet owners”, the figures presented to the Supreme Court showed. The complainant added that this made no economic sense “other than pointing to Uber’s intent to eliminate competition in the market.”

Uber Per Trip Net Loss
Uber Per Trip Net Loss

The Court, after looking at these figures observed that it would be difficult to conclude that no prima facie case under Section 26(1) of the Competition Act, 2002 is made out.

Based on this information alone, the Court said that it was of the view that it would be very difficult to say that there is no prima facie case under Section 26(1) as to infringement of Section 4 of the Competition Act, 2002.

Section 4 of the Act pertains to abuse of dominant position. The Court stated that ‘Dominant position’ as defined in Explanation (a) of Section 4  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, the Court held that it was clear that if, in fact, a loss is made for trips, 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.

The Court, therefore, deemed it fit to refuse from interfering with the order of the Appellate Tribunal and directed that the probe be completed within the stipulated time.

The complainant, Meru, was represented by Senior Advocates Raju Ramchandran and Udayan Jain with Advocates Sonal Jain, Kamal Sharma, Heena Sharma, Ishkaran Singh, and Abir Roy. 

Uber was represented by Senior Advocate Dhruv Mehta.

[Read Judgment]

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