Case No. 06 of 2015. Case: Fast Track Call Cab Private Ltd. Vs ANI Technologies Pvt. Ltd.. Competition Commision of India

Case NumberCase No. 06 of 2015
Party NameFast Track Call Cab Private Ltd. Vs ANI Technologies Pvt. Ltd.
CounselFor Appellant: A.N. Haksar, Sr. Advocate, Udayan Jain, Chitra Parande and Rajiv M. Brahma, Advocates and For Respondents: Ramji Srinivasan, Sr. Advocate, Nisha Kaur Uberoi, Bharat Budholia, Nandita Sahai, Arvind and Sara Sundaram, Advocates
JudgesAshok Chawla, Chairperson, S.L. Bunker, Sudhir Mital, Augustine Peter, M.S. Sahoo, Members and G.P. Mittal, J. (Member)
IssueCompetition Act, 2002 - Sections 19(1)(a), 26(1), 33, 4, 4(2)(a)(i), 4(2)(a)(ii)
Judgement DateSeptember 03, 2015
CourtCompetition Commision of India

Order:

Order under Section 33 of the Competition Act 2002

  1. This order shall dispose of the prayer made by M/s. Fast Track Call Cab Private Limited (hereinafter, the 'Informant'), vide its application dated 08.06.2015, for grant of interim relief under section 33 of the Competition Act, 2002 (hereinafter, the 'Act'). The Informant has primarily prayed for an order from the Commission directing M/s. ANI Technologies Pvt. Ltd.(hereinafter, the 'Opposite Party') to restrain from indulging in alleged practice of predatory pricing.

  2. Briefly, the Commission, vide its order dated 24.04.2015 passed under section 26(1) of the Act, prima facieheld that the Opposite Party has abused its dominant position in violation of section 4 of the Act. The matter was accordingly sent to the Office of Director General (hereinafter, the 'DG') for detailed investigation. Pursuant to the said order, the Informant had filed an application seeking interim relief which was considered by the Commission in its meeting dated 17.06.2015 and it was decided to accord an opportunity of hearing to the Informant as well as to the Opposite Party. The Informant and the Opposite Party were represented by their legal counsels in the ordinary meeting of the Commission dated 15.07.2015 wherein detailed submissions were made on the interim application filed by the Informant.

  3. Bereft of details, the Informant, in the Information, inter alia, has alleged that the Opposite Party, armed with moneybags from various funding agencies, has unleashed a series of abusive practices of unfair conditions, predatory pricing etc. to establish its monopoly and eliminate otherwise equally efficient competitors, who cannot indulge in such predatory pricing in the radio taxi services market in the city of Bengaluru. It was contended that the Opposite Party, under the brand name Ola cabs, is offering various unrealistic discounts and rates to lure the customers and unviable incentives to its drivers thereby resulting in business loss for the Informant. It was also alleged that such conduct is resulting in ousting the existing players out of the market and is also creating entry barrier for the potential players.

  4. The Commission, while placing reliance on the material submitted by the Informant, prima facie, held the Opposite Party to be dominant in the relevant market of 'Radio Taxi services in the city of Bengaluru'. The Commission was of the view that the Opposite Party was spending more money on discounts and incentives on customers and drivers compared to the revenue it was earning, thereby contravening the provisions of section 4 of the Act. While passing the order under section 26(1) of the Act, the Commission observed that while the veracity of the figures submitted by the Informant is a subject matter of investigation, prima facie, such figures indicated low cost pricing by the Opposite Party to oust other players from the market.

  5. In the interim relief application, the Informant has contended that the Opposite Party after having received funds of about $250 Million from Soft Bank, Japan in March, 2014 unleashed an onslaught of anti-competitive practices resulting in large scale erosion of market share of the Informant. It was alleged that as a financial impact, monthly revenue of the Informant in the Bengaluru market eroded from Rs. 23 lakh in March 2014 to about Rs. 9.5 lakh by December 2014 leading to significant losses. It was also highlighted that despite the prima facie order of the Commission, the Opposite Party has not stopped its practices of charging predatory prices.

  6. The Informant has also stated that the radio taxi business model relies heavily on the network effect. That a competitors' practice of unduly luring away drivers from its network significantly reduces its ability to serve customers and similarly a competitors low prices to customers also lures away customers from using its network. Under such situation, the Informants' ability to bounce back from a reduced business is extremely difficult and next to impossible. The Informant has pointed out that the Opposite Party was fully aware of the effects of killing the competitor's network and instead of using good operational and ethical business practices, it had allegedly adopted predatory pricing tactics. It is averred that if such policy of the Opposite Party continues then in no time entrepreneurs like the Informant will be forced to exit from the market.

  7. The Informant has further contended that the balance of convenience is in its favour since it is on the verge of being eliminated from the market due to the abusive conduct of the Opposite Party. It is urged that if immediate ad-interim ex-parte orders are not granted in its favour, the informant shall suffer irreparable loss and injury, which cannot be compensated in terms of money.

  8. Based on these averments, the Informant has sought interim relief from the Commission and prayed that an ex-parte ad-interim stay should be granted and the Opposite Party be directed to restrain from indulging in predatory pricing with immediate effect.

  9. The Opposite Party, on the other hand, has submitted that the Informant's interim relief application is misconceived on account of discrepancies in the facts and figures submitted before the Commission at the time of filing the Information and at the time of filing the interim relief application. The counsels for the Opposite Party highlighted that the per trip loss to the Opposite Party was stated to be Rs. 230 in the Information whereas, the data submitted by the Informant along with the interim relief application shows that the average per trip loss to the Opposite Party to be around Rs. 84 (Rs. 9415 loss for 112 trips). Further, it is submitted that the Opposite Party has a complex pricing mechanism in place and the incentives and discounts are designed to compete with similarly placed service providers in the market like Uber.

  10. The Opposite Party has submitted that the Informant failed to give details about its business model and costing. In such a scenario, it would be unfair to attribute the Informant's failure to sustain itself in the market on account of its inefficiencies to the Opposite Party. It is also argued that the market is contestable in nature and any other service provider can also resort to venture funding the way the Opposite Party is doing. Accordingly, the Opposite Party submitted that the reliefs prayed for by the Informant are baseless and should not be allowed by the Commission.

  11. The Commission has perused the documents submitted by the parties and heard their counsels in detail. The principles for deciding the interim relief application under section 33 of the Act have been laid down by the Hon'ble Supreme Court in CCI v. SAIL (2010 Comp. LR 0061 SC) matter where in the Hon'ble Supreme Court mandated that while recording a reasoned order under section 33 of the Act, the Commission shall, inter alia, ensure fulfilment of following conditions:

    a) record its satisfaction (which has to be of much higher degree than formation of a prima facie view under Section 26(1) of the Act) in clear terms that an act in contravention of the stated provisions has been committed and continues to be committed or is about to be committed;

    b) it is necessary to issue order of restraint and

    c) from the record before the Commission, there is every likelihood that the party to the lis would suffer irreparable and irretrievable damage, or there is definite apprehension that it would have adverse effect on competition in the market.

  12. On the first element it may be mentioned that the Commission has already held that the Informant has a prima facie case and has directed the DG to conduct investigation in the matter. At the same time, the figures cited by the Informant regarding per trip loss incurred by the Opposite Party have already been modified in the interim relief application filed by the Informant. These figures are yet to be examined by the DG. Thus, simply because the Informant has a prima facie case, by itself will not entitle him to the grant of interim relief, unless, he satisfies that there is irreparable loss and injury to him and that the balance of convenience also lies in his favour.

  13. The existence of the second element, i.e., irreparable loss to the Informant or definite apprehension of adverse effect on competition in the market has also not been satisfied in the instant case. The Informant has contended that its active pool of 600 taxis in March, 2014, came down to a mere 250 taxis in March, 2015, because of the anti-competitive strategy of the Opposite Party. The Opposite Party, however, argued that out of 350 taxis which moved out of the Informant's network, only around 120 taxis came on the...

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