The Supreme Court on Tuesday refused to interfere with the orders of the Competition Commission of India (CCI) and the National Company Law Tribunal (NCLAT) which had held that Ola and Uber do not facilitate cartelisation or anti-competitive practices leading to inflated charges for riders (Samir Agrawal v. Competition Commission of India).
However, on the issue of locus of the petitioner, the Bench of Justices Rohinton Fali Nariman, Krishna Murari and KM Joseph set aside the NCLAT finding that the petitioner Samir Agrawal was “not an informant” to move the CCI.
Agrawal, an advocate, had approached the CCI alleging that Ola and Uber were engaging in anti-competitive practices. He had sought an inquiry under Section 26(2) of the Competition Act against the two companies.
In a nutshell, it was alleged that due to algorithmic pricing, neither are riders able to negotiate fares with individual drivers for rides that are booked through the apps, nor are the drivers able to offer any discounts.
It was submitted that as per the terms and conditions agreed upon between Ola and Uber with their respective drivers, despite the fact that the drivers are independent entities who are not employees or agents of Ola or Uber, the driver is bound to accept the trip fare reflected in the app at the end of the trip, without having any discretion insofar as the same is concerned.
Further, it was contended that since Ola and Uber have greater bargaining power than riders in the determination of price, they can implement price discrimination, whereby riders are charged on the basis of their willingness to pay and as a result, artificially inflated fares have to be paid.
Thus, it was submitted that the pricing algorithm takes away the freedom of riders and drivers to choose the best price based on competition.
In its order passed in November 2018, the CCI held that the allegation as regards price discrimination was misplaced and unsupported by any evidence on record.
The CCI order was challenged before the NCLAT and by an order passed in May 2020, the NCLAT too declined to grant relief. Thereafter, an appeal was preferred before the Supreme Court.
Agrawal, who argued in-person, submitted that the pricing algorithm takes away the freedom of riders and drivers to choose the best price based oncompetition, as both have to accept the price set by the pricing algorithm
Senior Advocate Abhishek Manu Sighvi appearing for Uber, contended that there were no anti-competitive practices being resorted to, as there are other similar cab riding applications that offer competitive rates.
Advocate Rajshekhar Rao, appearing for Ola, supported Singhvi and stated that Agrawal was not an aggrieved party.
Stating that the NCLAT had given a narrow interpretation to Section 19 of the Competition Act, 2002, the Bench ruled that “CCI may receive information from any person and not merely from a person who is aggrieved by the conduct that is alleged to have occurred.”
The Court further held that when the “CCI performs inquisitorial, as opposed to adjudicatory functions, the doors of approaching the CCI and the appellate authority, i.e., the NCLAT, must be kept wide open in public interest, so as to subserve the high public purpose of the Act.”
However, as regards the merits of the case, the apex court upheld the findings of the CCI and the NCLAT, ruling that Ola and Uber do not facilitate cartelization or anti-competitive practices between drivers.
Drivers, it ruled, are independent individuals who act independently of each other and consequently, Section 3 of the Competition Act would not be attracted.
Samvad Partners’ Arjun Krishnan represented the CCI and briefed Additional Solicitor General Balbir Singh on behalf of CCI.