15 November, 2016
On 31 August 2016, the Competition Commission of India (CCI) dismissed an information under Section 26(2) filed against M/s ANI Technologies Private Limited (Ola Cabs) in the case of Mr. Vilakshan Kr. Yadav and Ors v. M/s ANI Technologies Private Limited[1] alleging abuse of dominance, in contravention of Section 4 of the Competition Act, 2002 (Competition Act).
The information was filed with the CCI by a group of auto rickshaw and taxi drivers plying their trade in Delhi and the National Capital Region (NCR). The informants argued that the relevant product market should be defined as “paratransit services” comprising auto rickshaws, black-yellow taxis and city taxis given that all of these are used for point-to-point travel by passengers and, thus, compete within the same space. Further, according to the informants, the drivers for all these modes of transportation are drawn from the same pool. The informants asserted the relevant geographical market to be the NCR comprising Delhi and certain districts of three states namely, Haryana, Uttar Pradesh and Rajasthan. This was based on an agreement that was signed by the respective governments of these four states to issue permits for auto rickshaws and taxis providing unrestricted movement within the NCR.
The informants further claimed that Ola Cabs has received huge funds in the form of venture and private equity funding and is the largest provider of paratransit services in the country, with a fleet of 320,000 vehicles,750,000 rides per day, and a market share of around 80 per cent in India. The informants also claimed that Ola Cabs has 16,000 auto rickshaws registered on its network. The CCI heard Ola Cabs’ arguments in relation to the allegations too.
The CCI in its order observed that radio taxis like UBER and Ola Cabs form a separate product compared to regular auto rickshaws, “kaali-peeli” taxis and city taxis, due to customer preferences and their operating models. Within a city, consumers can travel/commute by local or private buses, taxis, auto rickshaws, etc. However, owing to the difference in comfort, time taken by various modes of transportation, buying power of the consumer etc., these different alternatives do not qualify to be substitutes for each other and cannot be classified as part of the same relevant market. This is in accord with the CCI’s decisions in the past where, it has consistently held that radio taxis form a distinct market.[2] The CCI, while prima facie defining the relevant product market as “radio taxi services”, took into consideration factors like: convenience, point-to-point pick and drop, pre-booking facility, ease of availability even at obscure places, round the clock availability, predictability in terms of expected waiting/ journey time, etc. One of the relevant product markets, therefore, has been defined to be the “market for provision of radio taxi services”.
The CCI, however, duly noted Ola Cabs’ presence in auto rickshaws. The CCI finally drew up two relevant product markets; first, the market for radio taxis; and second, the market for auto rickshaws. As regards the geographical market, after giving due consideration to practicality and various heterogeneous factors, the CCI found the city of Delhi to be the appropriate market in contrast to NCR as contended by the informants.
The CCI in the first product market, i.e., the radio taxi market, found that the competition between UBER and Ola Cabs is highly competitive and there seems to be no dominant player. It therefore found the requirement to answer the question of abuse unnecessary. In the market for auto rickshaws the CCI found that Ola Cabs operates 16,000 auto rickshaws in comparison to a total number of approximately 81,000 autos operating in Delhi. The CCI found that this number is too low to enquire further as to whether Ola Cabs is dominant in this market. Therefore, in both product markets, the CCI found that there is no dominance by Ola Cabs.
The consistent approach followed by the CCI is in line with the need to promote innovation, and technological advancement to ensure effective competition in the market. Further, it is commendable that the CCI is increasingly allowing both parties to be heard briefly at the preliminary stage, thereby, curtailing unnecessary litigation.
[1] Case No. 21 of 2016.
[2]Fast Track Call Cab Private Ltd. v. M/s ANI Technologies Pvt. Ltd., Case No. 06 of 2015, Meru Travel Solutions Private Limited (MTSPL) v. Uber India Systems Pvt. Ltd. & Ors., Case No. 81 of 2015, M/s Mega Cabs Pvt. Ltd. v. M/s ANI Technologies Pvt. Ltd., Case No. 82 of 2015, Meru Travel Solutions Private Limited (MTSPL) v. Uber India Systems Pvt. Ltd. & Ors., Case No. 96 of 2015 and Meru Travel Solutions Private Limited (MTSPL) v. M/s ANI Technologies Pvt. Ltd., Case No. 74 of 2015.
*Cyril Amarchand Managaldas represented Ola Cabs.
For further information, please contact:
Anshuman Sakle, Partner, Cyril Amarchand Mangaldas
anshuman.sakle@cyrilshroff.com
