2019 (9) TMI 520 - SC - Indian Laws

Uber s discount and incentive policy - Abuse of Dominant Position - Infringement of Section 4 of the Competition Act, 2002 - HELD THAT - Dominant position as defined in Explanation (a) 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, it is clear that if, in fact, a loss is made for trips made, 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. Explanation (b) which defines predatory price means sale of services at a price which is below cost. There is no case to interfere with the order made by the Appellate Tribunal - appeal dismissed.

Summary

Issues: Alleged abuse of dominant position by a company in the market under Section 4 of the Competition Act, 2002.

Analysis:

1. Alleged Abuse of Dominant Position:
The judgment revolves around the alleged abuse of dominant position by a company in the market, as per Section 4 of the Competition Act, 2002. The court considered a statement indicating that the company was offering unreasonably high incentives to drivers, resulting in a loss per trip. This raised concerns about the intent to eliminate competition in the market. The court highlighted that the abuse of dominant position involves two key elements: the dominant position itself and its abuse. The dominant position, as defined, refers to a position of strength in the relevant market that enables the company to operate independently or affect competitors or the market in its favor. The court found that if a loss is incurred per trip, it could prima facie affect competitors in the company's favor, attracting the provision of unfair pricing under Section 4(2)(a).

2. Legal Provisions:
The judgment extensively cited Section 4 of the Competition Act, 2002, which prohibits the abuse of dominant position by any enterprise or group. The section outlines various forms of abuse, including imposing unfair conditions or prices, limiting production or market access, and engaging in practices detrimental to consumers. The court particularly focused on the definition of 'predatory price,' which involves selling goods or services below cost to reduce competition. The court emphasized that if a dominant company engages in such practices, it amounts to an abuse of its dominant position under the Act.

3. Decision and Direction:
After analyzing the information presented and the legal provisions, the court concluded that there was a prima facie case of infringement of Section 4 of the Competition Act, 2002. Consequently, the court dismissed the appeals and directed the Director General to complete an investigation within six months. The decision not to interfere with the order was based on the grounds of the alleged abuse of dominant position by the company, as evidenced by the provided statement. No costs were awarded in the judgment.

In summary, the judgment delves into the intricacies of competition law, specifically addressing the abuse of dominant position by a company in the market. By examining the evidence presented and applying the relevant legal provisions, the court made a decision based on the potential infringement of the Competition Act, 2002, highlighting the importance of fair competition practices and market dynamics.