SC dismisses application alleging cartelization & anti-competitive practices by Uber & Ola

Samir Agarwal Vs Competition Commission of India & Ors (Supreme Court of India)

Conclusion: Ola and Uber did not facilitate cartelization or anti-competitive practices between drivers as the drivers were independent individuals who acted independently of each other, therefore, section 3 of the CCI Act would not apply.

Held:  Appellant sought that the Competition Commission of India [“CCI”] initiate an inquiry, under section 26(2) of the Competition Act, 2002 [“the Act”], into the alleged anti-competitive conduct of ANI Technologies Pvt. Ltd. [“Ola”], and Uber India Systems Pvt. Ltd., Uber B.V. and Uber Technologies Inc. [together referred to as “Uber”], alleging that they entered into price-fixing agreements in contravention of section 3(1) read with section 3(3)(a) and engaged in resale price maintenance in contravention of section 3(1) read with section 3(4)(e) of the Act. According to appellant, Uber and Ola provide radio taxi services and essentially operate as platforms through mobile applications [“apps”] which allow riders and drivers, that is, two sides of the platform, to interact. A trip’s fare is calculated by an algorithm based on many factors. Appellant alleged that due to algorithmic pricing, neither were riders able to negotiate fares with individual drivers for rides that were booked through the apps, nor were the drivers able to offer any discounts. As per the terms and conditions agreed upon between Ola and Uber with their respective drivers, despite the fact that the drivers were independent entities who were not employees or agents of Ola or Uber, the driver was bound to accept the trip fare reflected in the app at the end of the trip, without having any discretion insofar as the same was concerned. The drivers received their share of the fare only after the deduction of a commission by Ola and Uber for the services offered to the rider. Therefore, appellant alleged that the pricing algorithm used by Ola and Uber artificially manipulated supply and demand, guaranteeing higher fares to drivers who would otherwise compete against one and another.Ola and Uber apps function akin to a trade association, facilitating the operation of a cartel.  It was held that Ola and Uber were not an association of drivers, rather they act as separate entities from their respective drivers. In the present situation, a rider booked his/her ride at any given time which was accepted by an anonymous driver available in the area, and there was no opportunity for such driver to coordinate its action with other drivers. This could not be termed as a cartel activity/conduct through Ola/Uber’s platform.  Ola and Uber did not facilitate cartelization or anti-competitive practices between drivers, who were independent individuals, who acted 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.

FULL TEXT OF THE SUPREME COURT JUDGEMENT

1. The present appeal is at the instance of an Informant who describes himself as an independent practitioner of the law. The Appellant/Informant, by an Information filed on 13.08.2018 [“the Information”], sought that the Competition Commission of India [“CCI”] initiate an inquiry, under section 26(2) of the Competition Act, 2002 [“the Act”], into the alleged anti-competitive conduct of ANI Technologies Pvt. Ltd. [“Ola”], and Uber India Systems Pvt. Ltd., Uber B.V. and Uber Technologies Inc. [together referred to as “Uber”], alleging 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. According to the Informant, Uber and Ola provide radio taxi services and essentially operate as platforms through mobile applications [“apps”] which allow riders and drivers, that is, two sides of the platform, to interact. A trip’s fare is calculated by an algorithm based on many factors. The apps that are downloaded facilitate payment of the fare by various modes.

Please become a Premium member. If you are already a Premium member, login here to access the full content.