Relief for Uber India, Supreme Court orders status quo on CCI probe

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Published: January 28, 2017 6:00:52 AM

A bench of Justices Dipak Misra and D Y Chandrachud while seeking response from CCI and Meru Cabs asked parties to maintain status quo till February 17, the next date of hearing.

The Supreme Court, Competition Appellate, Competition Commission of India, CCI, Uber IndiaA bench of Justices Dipak Misra and D Y Chandrachud while seeking response from CCI and Meru Cabs asked parties to maintain status quo till February 17, the next date of hearing. (Source: Reuters)

The Supreme Court on Friday put on hold the Competition Appellate Tribunal’s (Compat) order that directed fair trade watchdog Competition Commission of India (CCI) to probe afresh the alleged abuse of dominance by popular taxi-hailing app operator Uber.

A bench of Justices Dipak Misra and D Y Chandrachud while seeking response from CCI and Meru Cabs asked parties to maintain status quo till February 17, the next date of hearing.

Senior advocate Harish Salve, appearing for Uber, argued that the tribunal without forming any prima facie opinion ordered investigations by the director general, CCI.

“Compat on an appeal can only confirm, modify or set aside the CCI’s order. It is a complete reversal. Even for modifying, it has to form a prima facie opinion,” he argued.
However, senior counsel Abhishek Singhvi, appearing for Meru, opposed any stay, saying “they (Uber) are in a dominating position. Compat has given detailed reasons for disagreeing with CCI… If CCI can send it (for investigations), so can Compat.”

The Compat had in December last year ordered probe after Meru Travels Solutions challenged the CCI’s earlier decision that refused to order probe into allegations against Uber’s unfair practices including predatory pricing.

The tribunal had directed CCI’s probe unit Director General (DG) to conduct a fresh probe into the allegations of abuse of dominance and anti-competitive practices by Uber. The CCI in February last year had rejected Meru’s complaint, saying inability of the existing players to match the innovative technology of any player or the model created for operating in a particular industry cannot be said to be creating entry barriers in itself.

“The size of discounts and incentives shows there are either phenomenal efficiency improvements which are replacing existing business models with the new business models or there could be an anti-competitive stance to it,” the tribunal had said.

As per Meru’s complaint, Uber allegedly resorted to many abusive practices with the sole intent to establish its monopoly and eliminate otherwise equally efficient competitors from the market by way of discounts and incentives. It was alleged that Uber is spending about $885 million to generate a revenue of $415 million.

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The two — taxi-hailing apps like Uber and radio taxi service providers like Meru — are locked in a stiff competition all across the country. Taking note of Uber’s substantial market share, Compat said, besides the appellant (Meru), there are a few very small players in the market who can be seriously affected if any of the bigger players adopts anti-competitive practices.

It also observed that aggregator-based radio taxi service is a new paradigm of public transport in Indian cities which has revolutionised the manner in which we commute and work.

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