Supreme Court of India
UBER INDIA SYSTEMS PVT. LTD. versus COMPETITION COMMISSION OF INDIA & ORS. on 3 September 2019
UBER INDIA SYSTEMS PVT. LTD.
v.
COMPETITION COMMISSION OF INDIA & ORS.
(Civil Appeal No. 641 of 2017)
SEPTEMBER 03, 2019
[R. F. NARIMAN AND SURYA KANT, JJ.]
Competition Act, 2002: s. 4 – Abuse of dominant position –Allegation that appellant losing Rs. 204 per trip in respect of everytrip made by cars of the fleet owners which does not make anyeconomic sense other than pointing to appellant’s intent to eliminatecompetition in the market – Held: There is prima facie case u/s.26(1) as to infringement of s. 4 – Two ingredients for abuse ofdominant position is, the dominant position itself and its abuse –From the allegation it is clear that if, in fact, a loss is made for tripsmade, Explanation (a)(ii) would prima facie be attracted as thiswould certainly affect the appellant’s competitors in the appellant’sfavour or the relevant market in its favour – Under s. 4(2)(a), solong as this dominant position, whether directly or indirectly, imposesan unfair price in purchase or sale including predatory price ofservices, abuse of dominant position also gets attracted – Thus, theorder passed by the appellate tribunal is upheld – Director Generalto complete investigation within the stipulated period.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 641 of2017
From the Judgment and Order dated 07.12.2016 of theCompetition Appellate Tribunal in Appeal No. 31 of 2016.
With
Civil Appeal No. 7012 of 2019.
Dhruv Mehta, Kapil Sibal, Sr. Advs., Anuj Berry, Malak Bhatt,Aman Singh Sethi, P. S. S. Bhargava, S. S. Shroff, Advs. for the Appellant.
Raju Ramchandran, Sr. Adv., Naveen R. Nath, Rahul Jain, SonalJain, Udayan Jain, Ms. Heena Sharma, Kamal Sharma, Ishkaran Singh,Shankar Naryanan, Advs. for the Respondents.
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AThe Judgment of the Court was delivered by
R. F. NARIMAN, J.
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1. Having heard lengthy arguments of Shri Dhruv Mehta, learnedsenior counsel appearing for the appellant, and Shri Raju Ramchandran,learned senior counsel appearing on behalf of the respondent, we are ofBthe view that interference in these appeals is not called for.
2. The only reason we do so is because we were shown, as partof information that was provided, the following statement:
“23. Uber’s discount and incentive offered to consumer pale incomparison with the fidelity inducing discounts offered to driversCto keep them attached on its network to the exclusion of othermarket players. Uber pays drivers/car owners attached on itsnetwork unreasonably high incentives over and above and inaddition to the trip fare received from the passengers. A summaryof the incentives provided to one fleet owner attached to Uber’sDnetwork, having 4 cars, which were driven by 9 drivers isreproduced below.
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3. In light of the abovementioned statement, it can be seen thatUber was losing Rs.204 per trip in respect of the every trip made by thecars of the fleet owners, which does not make any economic senseother than pointing to Uber’s intent to eliminate competition in the market.Copies of the statements of aforesaid fleet owners’ along with a summaryfor the period June 1 to June 28,2015 is annexed herewith as AnnexureA-15 Colly.”
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4. Based on this information alone, we are of the view that itwould be very difficult to say that there is no prima facie case underSection 26(1) as to infringement of Section 4 of the Competition Act,2002.
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5. Section 4 is set out hereinbelow:
6. Abuse of dominant position.-(1) No enterprise or group shallabuse its dominant position.
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A(2) There shall be an abuse of dominant position under sub-section(1), if an enterprise or a group,—
(a) directly or indirectly, imposes unfair or discriminatory—
(i) condition in purchase or sale of goods or service; or
(ii) price in purchase or sale (including predatory price) ofgoods or service.
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7. Explanation.— For the purposes of this clause, the unfair ordiscriminatory condition in purchase or sale of goods or service referredto in sub-clause (i) and unfair or discriminatory price in purchase or saleCof goods (including predatory price) or service referred to in sub-clause(ii) shall not include such discriminatory conditions or prices which maybe adopted to meet the competition; or (b) limits or restricts—
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(i) production of goods or provision of services or markettherefor; or
(ii) technical or scientific development relating to goods orservices to the prejudice of consumers; or E(c) indulges in practice or practices resulting in denial of marketaccess in any manner; or (d) makes conclusion of contracts subject to acceptance by otherparties of supplementary obligations which, by their nature or accordingto commercial usage, have no connection with the subject of suchFcontracts; or (e) uses its dominant position in one relevant market to enter into,or protect, other relevant market.
8. Explanation.—For the purposes of this section, the expression—
(a) “dominant position” means a position of strength, enjoyed byGan enterprise, in the relevant market, in India, which enables it to—
(i) operate independently of competitive forces prevailing inthe relevant market; or
(ii) affect its competitors or consumers or the relevant marketin its favour; H
(b) “predatory price” means the sale of goods or provision ofservices, at a price which is below the cost, as may be determined byregulations, of production of the goods or provision of services, with aview to reduce competition or eliminate the competitors.
(c) ”group” shall have the same meaning as assigned to it in clause(b) of the Explanation to section 5.”
9. There are two important ingredients which section 4(1) itselfrefers to if there is to be an abuse of dominant position -
(1) the dominant position itself.
(2) its abuse.
10. ‘Dominant position’ as defined in Explanation (a) refers to aposition 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 relevantmarket in its favour.
11. Given the allegation made, as extracted above, it is clear thatif, in fact, a loss is made for trips made, Explanation (a)(ii) would primafacie be attracted inasmuch as this would certainly affect the appellant’scompetitors in the appellant’s favour or the relevant market in its favour.Insofar as ‘abuse’ of dominant position is concerned, under Section4(2)(a), so long as this dominant position, whether directly or indirectly,imposes an unfair price in purchase or sale including predatory price ofservices, abuse of dominant position also gets attracted. Explanation(b) which defines ‘predatory price’ means sale of services at a pricewhich is below cost.
12. This being the case, on the facts of this case, on this groundalone, we do not think it fit to interfere with the order made by theAppellate Tribunal.
13. The appeals are dismissed with no orders as to costs.
14. The Director General is requested to complete investigationwithin a period of six months from today.
Nidhi Jain
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