SC directs investigation over Uber’s involvement in anti-competitive practices

Online taxi aggregator platform Uber has found itself in murky waters after the Supreme Court has ordered detailed investigations in its business operations to substantiate allegations of anti-competitive behaviour and predatory pricing.

On last Tuesday, the apex court dismissed an appeal filed by Uber’s Indian entity against an order dated December 7, 2016, of the former Competition Appellate Tribunal (‘COMPAT’).

In the said order, the tribunal had called for an investigation regarding the Uber’s market dominance and the prima facie case of predatory pricing or any form of abusive conduct by the cab aggregator. The apex court took reference to Meru’s allegations made in 2015 with the Competition Commission of India (CCI).

In its complaint , Meru had accused Uber of engaging in anti-competitive practices and raised three major points in its appeal to CCI:

*Uber was using predatory pricing of cab rides on its platform, intentionally losing as much as Rs 200 per ride, abusing its dominance and availability of massive funding from global investors.

*For entering into exclusive contracts with the drivers and stopping them from driving for any other cab aggregator hence discrediting their status of “Independent third-party service providers.”

* Payment structures and unreasonably high incentives offered by Uber for the drivers were preventing the drivers from joining other platforms and forming entry barriers.

Although the complaint was disposed of by the CCI citing a lack of a prima facie case against the aggregator and dismissing the requirement of an investigation by the Director-General(DG).

However, COMPAT overruled CCI’s observation.

Uber appealed against the COMPAT’s order in the Supreme Court but the court dismissed the plea last week. Besides dismissal, the bench ordered DG to start a detailed investigation and summon evidence regarding the following points :

*The size and nature of the geographical market; determination of Uber’s dominance by gathering information about its fleet size, customers base as well as Uber’s funding.

*Factor in global trends, network expansion, predatory pricing including excessive incentives to drivers and the anti-competitive agreements with cab drivers.

The Supreme Court also pulled up CCI for its decision to dismiss the complaint at the prima facie stage itself and not to call for an enquiry, thus putting a significant burden of proof on informants(read Meru). The bench directed the DG to conclude the investigation and submit the resulting evidence within six months.