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TMI Blog2020 (5) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... pective algorithmic to facilitate price fixing between drivers. To put it in a different manner, the Informant alleged collusion on the part of drivers through the above named cab aggregators App who purportedly used algorithm to fix prices which the drivers were bound to accept. The Commission, after hearing the Informant, while observing that neither their appears to be any agreement, understanding or arrangement between the cab aggregators and their respective drivers nor between the drivers inter se qua price fixing, was of the view that there exists no prima facie case, closed the matter. Aggrieved thereof, the Informant has filed the instant appeal assailing the impugned order on various grounds to which reference shall be made as the narration proceeds. 2. To grasp the competition concern raised by the Informant, reference to the relevant factual matrix is inevitable. Respondent No.2 'ANI Technologies Pvt. Ltd.' (OP-1) is a domestic radio taxi service provider operating through a software application 'Ola' App. Respondent Nos. 3 to 5 respectively styled as 'Uber India Systems Pvt. Ltd.', 'Uber B.V.' and 'Uber Technologies Inc.' (OPs- 2 to 4), as a group, are engaged in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly determined pricing for each rider and each trip tends to be different owing to the interplay of large data sets. Such pricing does not appear to be similar to the 'hub and spoke' arrangement as understood in the traditional competition parlance. A hub and spoke arrangement generally requires the spokes to use a third party platform (hub) for exchange of sensitive information, including information on prices which can facilitate price fixing. For a cartel to operate as a hub and spoke, there needs to be a conspiracy to fix prices, which requires existence of collusion in the first place. In the present case, the drivers may have acceded to the algorithmically determined prices by the platform (Ola/Uber), this cannot be said to be amounting to collusion between the drivers. In the case of ride-sourcing and ride sharing services, a hub-and-spoke cartel would require an agreement between all drivers to set prices through the platform, or an agreement for the platform to coordinate prices between them. There does not appear to be any such agreement between drivers inter-se to delegate this pricing power to the platform/Cab Aggregators. Thus, the Commission finds no substance in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enterprise cannot be considered as competitive price for all of the drivers for taking that price, that the Commission has erred in treating drivers and the app providers as a single economic enterprise, that the Commission has erred in holding that there is no agreement amongst the drivers to fix prices where the app provider is acting as a hub and lastly that the Commission was not justified in ignoring the fact that Uber's business model was challenged in USA with identical allegations which was considered fit for investigation. 7. In its reply, OP-1 stated that there does not exist any anticompetitive behaviour in the business model of Ola. It is further stated that Ola merely acts as an intermediary which connects two ends of the supply chain i.e. taxi driver and the commuter. Ola and taxi drivers connected to Ola are not at the same level of supply chain. Existence of an agreement between enterprises at the same stage of service chain which are engaged in identical or similar trade of goods or provision of services is sine qua non to an offence under Section 3(3) of the Act. It is stated that the Informant has not been able to establish an agreement between Ola and Taxi dri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrol on the pricing. It is further submitted that each and every TSP is aware that it is signing the identical terms on pricing which implies there is meeting of minds between the TSPs. Thus, the offence of Section 3(3)(a) is committed at the time of signing the Uber Services Agreement alleging that there is 'hub and spoke' cartel as the hub (Uber) fixes/ restricts prices and the spokes (TSPs) merely accede to that fixed and restricted pricing. It is submitted that there is no requirement of an explicit agreement to restrict pricing as both Uber and TSPs knew that there is zero competition on pricing. It is further submitted that an App cannot fix/ restrict prices for the App users as the same violates law and the option with the TSPs to switch from one platform to the other does not in any manner negate the offence as such option is meaningless in the sense that it is switching to another cartel run in concert with Ola. On the issue of locus, it is submitted that the Informant falls within the definition of "any person" under Section 19(1)(a) of the Act which includes an individual who can file an information virtually like an F.I.R in a criminal case can be filed by anybody. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chnology service offered by Uber to its driver partners with riders having the choice to go for alternative modes of transport and driver partners having choice to undertake offline private or corporate transport duties. Further the driver partners are free to negotiate a lower fare than what is recommended. It is further submitted that Uber does not function as an association with its driver partners, as such it cannot facilitate a cartel between them as alleged. It is further submitted that there is no evidence of meeting of minds between Uber and its driver partners or the driver partners inter se. It is further submitted that there is no material on record to demonstrate horizontal collusion between all the driver partners to adopt Ubers platform in order to fix prices. Such driver partners are in thousands who can also operate on other taxi aggregating Apps or even privately. It is submitted that the Informant's comparison of the Cab Aggregators with Zomato and Airbnb is misplaced as the users have no material information about the drivers available in the area before booking the rides while the business model of Zomato and Airbnb is entirely different. As regards price discri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, consumer or their association or trade association; or (c) a reference made to it by the Central Government or a State Government or a statutory authority 15. On a plain reading of this provision, it is abundantly clear that the Commission is empowered to take cognizance of any allegation of alleged contravention of the aforestated provisions of the Act on its own motion or on the basis of the complaint or on the basis of reference made to it by the appropriate Government or statutory authority. Information into allegations of alleged contravention of such provision may be filed by any person, consumer or their association or trade association. The question that arises for consideration is whether a 'person' would mean any natural person irrespective of he being a consumer who has suffered invasion of his legal rights or a person whose legal rights have been or are likely to be jeopardised by the alleged anti-competitive agreement or abuse of dominant position. 16. It is true that the concept of locus standi has been diluted to some extent by allowing public interest litigation, class action and actions initiated at the hands of consumer and trade associations. Even the whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of each other. It is also not disputed that besides Ola and Uber there are other players also in the field who offer their services to commuters/ riders in lieu of consideration. It emerges from the record that both Ola and Uber provide radio taxi services on demand. A consumer is required to download the app before he is able to avail the services of the Cab Aggregators. A cab is booked by a rider using the respective App of the Cab Aggregators which connects the rider with the driver and provides an estimate of fare using an algorithm. The allegation of Informant that the drivers attached to Cab Aggregators are independent third party service provider and not in their employment, thereby price determination by Cab Aggregators amounts to price fixing on behalf of drivers, has to be outrightly rejected as no collusion inter se the Cab Aggregators has been forthcoming from the Informant. The concept of hub and spoke cartel stated to be applicable to the business model of Ola and Uber as a hub with their platforms acting as a hub for collusion inter se the spokes i.e. drivers resting upon US Class Action Suit titled "Spencer Meyer v. Travis Kalanick" has no application as the busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsport sector and the Cab Aggregators in the instant case distinctly do not hold dominant position in the relevant market. Admittedly, these two Cab Aggregators are not operating as a joint venture or a group, thus both enterprises taken together cannot be deemed to be holding a dominant position within the ambit of Section 4 of the Act. Even otherwise, none of the two enterprises is independently alleged to be holding a dominant position in the relevant market of providing services. This proposition of fact being an admitted position in the case, question of abuse of dominant position has to be outrightly rejected. 19. Lastly, coming to the issue of the Commission's powers under Section 26(2), be it seen that where the Commission is of the opinion that there exists no prima facie case, it shall close the matter forthwith. This is in contrast to provision engrafted in sub-section (1) of Section 26 which provides that if the Commission is of the opinion that there exists a prima facie case, it shall direct the Director General to cause an investigation to be made into the matter. It is abundantly clear that the Commission must arrive at an opinion in regard to existence or otherwis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed under 26(2) providing for closing of information by the Commission on arriving at an opinion that no prima facie case exists. A quasi-judicial body like Commission while appreciating the material placed before it in support of allegations of anti-competitive agreements or abuse of dominant position has to form an opinion in regard to existence or otherwise of a prima facie case through proper application of mind and the order reflecting such opinion of the Commission has to be informed of reasons. Any view taken by the Commission without recording reasons would demonstrate lack of application of mind and exercise of arbitrary power which cannot be supported. In the instant case, the Commission has dealt with the allegations clearly identifying the issues and recording its opinion thereon in the light of law and contemporary decision occupying the field. Nothing to the contrary could be demonstrated by the Informant to warrant interference. 21. In view of the foregoing discussion, we are of the considered opinion that even on the merits there is no substance in the allegations emanating from the Informant. The opinion of the Commission in regard to non-existence of a prima fac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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