September 10, 2019

Supreme Court Orders Investigation Into Cab Aggregator Uber's Alleged Abuse Of Its Market Dominance In India

[ By Bobby Anthony ]


The Supreme Court has given its nod to investigate cab aggregator Uber’s alleged anti-competitive practices and abuse of market dominance in India.

The development comes after Meru Travel Solutions Pvt Ltd complained to anti-trust body Competition Commission of India (CCI) against Uber in 2015, that Uber deliberately priced its rides lower than they are supposed to be in order to eliminate competition which is supposed to be an abuse of its market dominance.

Meru had claimed that Uber loses Rs 204 on every ride and alleged that Uber spends nearly USD 885 million in order to generate revenues worth USD 415 million, which does not make economic sense.

The recent Supreme Court order by Justice R F Nariman and Justice Surya Kant stated that if Uber is indeed incurring losses on trips, there seem to be only two explanations. The first explanation could be that Uber affects competition in its favor. The second explanation could be that Uber probably abuses its dominant position.

The Supreme Court stated that if Uber indirectly or directly imposes an unfair price, then it is indeed a case of abusing its dominance.

Accordingly, the Supreme Court stated that it will not interfere with an earlier order by the Competition Appellate Tribunal (COMPAT) against Uber and directed its Director General to complete the investigation into Uber’s practices.

Earlier, Meru’s 2015 complaint against Uber filed with the Competition Commission of India (CCI) had been dismissed by the anti-trust body after which Meru had approached the Competition Appellate Tribunal (COMPAT). In December 2016, COMPAT ordered the Competition Commission of India (CCI) to probe Uber’s alleged abuse of market dominance.

COMPAT saw enough reason for the Competition Commission of India’s (CCI) Director General to investigate the matter.

Uber then appealed to the Supreme Court against the COMPACT order in 2017, but the Supreme Court dismissed Uber’s appeal, upholding COMPAT’s order to investigate Uber’s practices.

Consequently, the Competition Commission of India’s (CCI) Director General (DG) will now investigate the matter taking into account the size and nature of the market, as well as whether or not Uber is in a dominant position on the basis of its fleet size, customer base and funding. The probe will look at incentives and probable anti-competitive agreements Uber had with its drivers.

Incidentally, this is not the only instance when Meru filed complaints against Uber. In 2017, Meru had filed four complaints against Ola and Uber for allegedly abusing their market dominance.

It may also be noted that Meru used to be a major organized player in India until Ola and Uber launched their services in the country, after which Meru was relegated a market share of less than 1%.

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