Appeal No. 31/2016. Case: Meru Travels Solutions Private Limited Vs Competition Commission of India and Ors. COMPAT (Competition Appellate Tribunal)
| Case Number | Appeal No. 31/2016 |
| Counsel | For Appellant: A.N. Haksar, Senior Advocate assisted by Udayan Jain, Sonal Jain, Akshay Nanda, Rudra Dutta, Manas Gaur, Khyati Dhupar and Anju Thomas, Advocates |
| Judges | G.S. Singhvi, J. (Chairman), Rajeev Kher and Anita Kapur, Members |
| Issue | Competition Act, 2002 - Sections 19, 19(4), 26(1), 26(2), 4, 5 |
| Judgement Date | December 07, 2016 |
| Court | COMPAT (Competition Appellate Tribunal) |
Order:
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Having failed to satisfy the Competition Commission of India (the Commission) in forming prima facie opinion under Section 26(1) of the Competition Act (the Act), to order an investigation against alleged abuse of dominance by the respondent, the appellant has filed this appeal on 18.04.2016 against the order of the Commission dated 10.02.2016 in Case No. 96 of 2015.
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The appellant, M/s. Meru Travels Solutions Private Limited is a group holding company which provides radio taxi services through its fully owned subsidiaries namely, Meru Travels Solutions Private Limited and V - Link Automotive Services Private Limited. Both these subsidiaries are engaged in business of providing radio taxi services under the brand names, Meru, Meru Genie and Meru Flexi respectively in 21 major cities across India. The appellant started its Delhi operations in March 2008. Since 2012, appellant revised its business model and started providing radio taxi services through an aggregation model.
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Respondent No. 2, M/s. Uber India Systems Private Limited is a company registered in India whereas Respondent Nos. 3 to 5, M/s. Uber BV, M/s. Uber International Holding BV (which holds 90% shares of Respondent No. 2 besides 10% shares of Respondent No. 2 are held by Respondent No. 5 M/s. Uber International BV) are other associated companies. Respondent No. 6 M/s. Uber International Technologies Inc. is the ultimate holding company of the Uber Group companies. (Respondent Nos. 2 to 6 for short are termed 'Uber' hereinafter). According to the appeal memo, Uber provides radio taxi services under the brand name Uber. It entered the Indian market in 2013 and started its operations in Delhi NCR in December 2013. In Delhi NCR, they offer their services through three different brands which are Uber XL, Uber X and Uber Go.
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The Appellant filed information under Section 19 of the Act before the Commission on 9th October, 2015. The main elements of the information were as follows:
i) It was stated that Respondent No. 6 was founded by Travis Kalanick and Garett Camp in 2009 in the United States of America through various venture capital funds and private equity investors. Respondent No. 6 routes the financial resources for India operations through Respondent No. 3.
ii) The Appellant has given a table showing significant investments made in Respondent No. 6. The primary reasons according to appellant for Uber's phenomenal growth is large global funding and anti-competitive business model allowing it to unleash a series of abusive practices prohibited under the Act.
iii) Quoting certain newspaper reports, it has been stated that the company has earmarked US$ one billion for its Indian operations to be spent within 6 to 9 months to reach a target figure of one million trips per day. Appellant has quoted several newspaper reports to establish the large financial backup available to Uber.
iv) Since starting business in the Delhi NCR in December 2013, Uber has resorted to many abusive practices with the sole intent to establish its monopoly and eliminate otherwise equally efficient competitors from the market.
v) Uber and Meru operate in the same line of business, i.e. radio taxi services.
vi) It has been stated that average market price of radio taxis existing in Delhi NCR before the launch of Uber were in the range of about Rs. 23 per km. Uber launched its services @ Rs. 20 per km. and, thereafter, successively brought down its per kilometer price to Rs. 7/- per km, Rs. 12/- per km. and Rs. 9/- per km. for different categories of services. At the time of dropping its prices to Rs. 12/- per km. in November 2014, it offered incentives to first time customers and discounts of subsequent trips. Appellant has quoted the relevant advertisements given out by Uber on that occasion. This price was further brought down from Rs. 12/- to Rs. 7/- per km. for one of the services. Relevant advertisement has been provided in the information. A list of further discounts and incentives offered by Uber from time to time has been given in para 22 of the information.
vii) It has been further informed that Uber pays its drivers/car owners attached on its network unreasonably high incentives over and above and in addition to the trip fair received from the passengers. Para 23 of the information provides one such calculation indicating per trip net loss of Rs. 204/- to Uber.
viii) It was informed that as a consequence of these practices, the appellant's market share from 18% in December 2013 came to 11% in September 2015 by number of trips and it lost Rs. 107 crores during this period. Uber in this short span increased, from nowhere to a market share of about 50% by the number of trips done on its radio taxi service network. A chart showing respective market share of competing taxi services is reproduced below:
ix) It was alleged that Uber which is valued at US $ 51 billion with an allocation of US$ one billion for Indian operations has around 6,000 active cars in its fleet of radio taxi doing about 33 thousand trips per day in Delhi NCR. It was informed that Uber is spending about US $ 885 million to generate a revenue of US $ 415 million.
x) The information then went on to give details of the radio taxi service business, evolution of technology, role of GPS based platform, etc. On the issue of market share informant relied upon a market research report produced by New Age Tech Sci Research Private Limited (Tech Sci) which analyzed radio taxi service in Delhi NCR region as on 30th September 2015. A summary of market share in terms of fleet size, active fleet size and total trips per day in tabular form extracted from the report is reproduced below:
"Cabs registered with Radio Taxi Service providers and their related trips as extracted out of the...
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