SUPREME COURT HELD OLA AND UBER NOT GUILTY OF COMMITTING ANTI-COMPETITIVE PRACTICES

The Supreme Court has in a recent case of Samir Agrawal vs Competition Commission of India and Others passed a Judgment dated 15-12-2020 and held #Ola and #Uber #Cab Aggregator Companies not guilty of facilitating #cartelization or anti-competitive practices.

In this case, the Appellant, Mr. Samir Agrawal, had sought the Competition Commission of India (CCI) to inquire 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. (Uber). He alleged that both Ola and Uber have entered into price-fixing agreements in contravention of Section 3 of the Competition Act 2002 (the Act). Further, that Ola and Uber Apps are designed in a manner that the rider and the driver do not have the discretion to negotiate on the pre-calculated fares. Thus, the pricing algorithm fixed in the Apps takes away the freedom of the rider and the driver to choose the best price based on competition. Therefore, Ola and Uber have a greater bargaining power than the rider, which enables them to implement price discrimination and charge less or more based on rider’s willingness to pay. Thus, this conduct shows that that the Ola and Uber Apps function like a trade association, thereby facilitating the operation of a cartel.

As per Section 2 of the Act, “cartel” includes an association of producers, sellers, distributors, traders or service providers who, by agreement amongst themselves, limit, control or attempt to control the production, distribution, sale or price of, or, trade in goods or provision of services.

As per Section 3 (1) of the Act, no enterprise or association of enterprises or person or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India.

As per Section 3 (3) (a), any agreement entered into between enterprises or associations of enterprises or persons or associations of persons or between any person and enterprise or practice carried on, or decision taken by, any association of enterprises or association of persons, including cartels, engaged in identical or similar trade of goods or provision of services, which— (a) directly or indirectly determines purchase or sale prices, such agreement shall be presumed to have an appreciable adverse effect on competition.

The CCI conducted an inquiry under Section 26 of the Act and passed an Order dated 06-11-2018. The CCI held that existence of an agreement or arrangement or meeting of minds, is a pre-essential condition for establishing anti-competitive practices under Section 3 of the Act. But in this case, there is no such agreement between the drivers inter-se or between the Cab Aggregators and the drivers, to set prices on the platform. When a rider books a ride, an anonymous driver available in the nearest location accepts the ride and thus, there is no opportunity to the driver to collude with other drivers. Hence, such an activity cannot amount to cartelisation.

Being aggrieved by the CCI Order dated 06-11-2018, the Appellant herein filed an appeal before the National Company Law Appellate Tribunal (NCLAT), which passed a Judgment dated 29-05-2020. In the said Judgment, the NCLAT held that there is no exchange of information between Ola and Uber and their drivers or their drivers inter-se about commuters, their earnings, etc. Further, the rider and the driver have the choice to accept a ride based on price and other factors or choose alternative mode of transport. Therefore, it is established that the Cab Aggregators do not function as an association of its driver partners. Thus, the NCLAT held that there cannot be any collusion between the drivers inter-se or between the Companies in this case. Aggrieved by the NCLAT Judgment dated 29-05-2020, the Appellant herein filed an appeal before the Supreme Court.

The Apex Court held that Ola and Uber are distinct entities operating independently of each other. The drivers also act independently of each other. There is no agreement or evidence to show that they have colluded for price-fixing. Thus, the Supreme Court passed a Judgment dated 15-12-2020 and upheld the decisions of CCI and the NCLAT to the extent that Ola and Uber do not facilitate cartelization or anti-competitive practices between themselves or between drivers inter-se.

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer