Introduction

Over the past 5-6 years, India has witnessed tremendous growth in the "taxi industry".
One can rightly say that this growth is due to the entry of online transportation
companies, in the capacity of aggregators. There are two popular companies under this
category. They are –
1. Ola, an Indian company, owned by ANI Technologies Pvt. Ltd.
2. Uber, a global company headquartered in San Francisco, California, United States,
owned by Uber Technologies Inc.
The emergence of these two companies has shaped the taxi/cab industry with never seen
before cheap fares and discounts to the customers while offering incentives to the drivers
as well. Ola and Uber follow a business model known as the aggregator model, which
means that the companies do not own the radio cabs but only acts as an aggregator
(platform) that connects the drivers with the prospective consumers. Due to this model, it
has come to the attention of companies operating under the asset-owned model, i.e.,
service providers who own the radio taxis themselves, that their business has taken a deep
dive since the operation of Ola and Uber, fearing an dismissal from the market.
 Background
In this case, fast track call cab pvt. Ltd. and meru travel solutions pvt. Ltd. Had filed
information separately, under section 19(1)(a) of the competition Act ,2002 against ANI
Technologies. Meru Cabs filed fresh complaints with CCI claiming that Uber, Ola are abusing
their dominant position in 4 different cities(Hyderabad, Mumbai, Chennai and Kolkata) by
burning vast sums of funding to distort the Indian market. Meru was the only major organized
player until a few years ago and currently operates in 24 cities. But it has no direct backing of
large foreign investors and it has previously filed anti-competitive cases against Uber and Ola.
The Competition Commission of India (CCI) has recently passed an order rejecting Meru’s
complaints against Ola and Uber (OPs) for predatory pricing and entering into anti-
competitive agreements. Among the complete range of allegations imposed, the central theme
of the complaint revolved around the issue of dominance of the OPs as a “group” owing to the
shareholding by common investors in Ola and Uber. Although the CCI exonerated the OPs of
the allegations considering the absence of dominance of the OPs in the markets for radio taxi
services in Hyderabad, Mumbai and Chennai, as well as the market for radio taxi and yellow
taxi services in Kolkata, it has made certain observations on the issue of antitrust activities
that is bound to occur because of common investors.
 Claims made by the Informant
1. The informant has alleged that OP’s are engaged with anti competitive activities
by providing unrealistic incentives to drivers and tying them to one network. The
informant blamed OP’s of offering discounts to customers and keeping their fares
low in order to capture market share. According to informant, providing incentives
did not came under the rationale of sound competitive policies.

2. The Informant has alleged that the OPs, i.e. Ola and Uber Group, are collectively
dominant in the ‘market for radio taxi services in the city of Hyderabad, Mumbai,
Kolkata and Chennai and that they have abused their dominant position.
Alternatively, the Informant has alleged that OPs are dominant as part of the same
‘group’ pursuant to common ownership by institutional investors.
 Claims made by the Informant
3. Further, the informant alleged OP’s of having common investors which was hampering
the competitive policies as having common investors would lead to sharing of sensitive
information. And while engaging in sharing of information they might start dominating the
market as a “group” as mentioned in section 5.
4. It is further submitted that Section 4 does not stipulate that there can be only one
dominant enterprise but states that ‘no enterprise’ shall abuse its dominant position. It is
stated that the term ‘no enterprise’ is to convey with certainty the prohibition and not to limit
such prohibition to one enterprise.
5. Softbank being the major common shareholder in both ola and uber might lead to them
dominating as a group and effecting the competition in the relevant market and eventually
harming the consumer interest. Same as in the case of Commissioner of Competition v. Visa
Canada Corporation and Master Card International Corporation, 2013, between Mastercard
and Visa.
 Findings of the Director General
The Commission thereafter directed the Director General (DG) to take up the matter
and submit an investigation report. After thorough observation and due
consideration, the DG noticed that Ola's market share was challenged by Uber rapid
and fast growth in the market. It was noted by the DG that in the first six months of
2015-16, while Ola's share in the market increased marginally by 2% to 3%, Uber's
share increased at a rate of 20% to 22%. As per a recent survey of the market share
statistics by Kalagato Pte, the market share of Uber has grown by 50% in the six
months to June, 2017, while Ola's share has grown by 44.2%.1 The DG opined that
for a player to have a dominant position in the relevant market, it should be able to
hold its market share for a reasonable period of time. In this case, Ola's share started
declining as Uber entered the relevant market almost three years after Ola's entry.
 Findings of the Commission
• After looking into the observations and findings of the DG in detail, the Commission gave an
exhaustive observation and finding of its own. The Commission does not fully disagree with
the Informants that the low prices of Ola are not because of cost efficiency, but because of
the funding it received from private equity funds. Hence, the Commission stated that no
evidence could be established to show that such funding was not competitive and
inequitable. It was in fact their penetrative pricing strategy that facilitated them to garner
high market shares in short span of time.
• Therefore, the Commission closed the case stating that the evidence on record did not
establish the dominance of Ola and in the market and its consequent abuse within the
provisions of Section 4 of the Act.
• The Informants’ contention that market share of more than 50% leads to a presumption of
dominance may not be accepted, especially when under the scheme of the Act, no
numerical threshold for presumption of dominance has been prescribed. Thus, the
Commission is of the view that prima facie dominance of Uber (in Case No. 27 of 2017) or
Ola (in Case No. 28 of 2017) is not made out.
• The market shares informed by the informant was taken from the research conducted by
Tech Sci, a private research company. CCI holds view that the source is not reliable enough
to take any judgement against the OPs.
 CCI findings as per sections
CCI notes that the allegations made by the informants in contravention of section 3(4)
read with section 3(1) of the act was misinterpreted. As there was no written record
and oral agreement between the OPs and their drivers related to discounts and
incentives. The Informant claimed that the OPs strategy/incentive amounts to such
agreements.
According to Commissions opinions Existence of an agreement between parties is a
pre-requisite to attract the provisions of section 3.
According to the section 4 of the competition act, only one enterprise or one group can
hold a dominant position in the market. And as per sec4(2), if more than one
enterprise are dominant this shall mean abusing of that dominant position.”Dominant
Position means 1)Operate Independently of competitive forces prevailing in the
market. 2) Affect competitors or consumers or the relevant market in its favour.”
Section 27 (b): Impose such penalty, as it may deem fit which shall be not more than
ten percent of the average of the turnover for the last three preceding financial
years, upon each of such person or enterprises which are parties to such agreements
or abuse.
Further, Section 19(4) of the Act, which enlists factors assessment of dominance, is
also of relevant in this regard. The plain reading of the factors mentioned under
Section 19(4) signifies that the focal point of such assessment is the alleged
dominant entity, around which the assessment revolves. If there was any scope of
more than one entity being envisaged by the Act, factors like ‘size and resources of
competitors’, ‘economic power of the enterprise including commercial advantages
over competitors’ etc. would not have found place under Section 19(4) of the Act.
Furthermore, in Section 28 of the Act, which specifically deal with division of
enterprises enjoying dominant position, the usage of the words unambiguously
indicates that the Act does not provide for more than one enterprise to be dominant
in the relevant market.
Degrees of Control

1) De facto

2) De Jure

3) Material
Influence
 Criticism of CCI
CCI dismissed the complaints made by the MERU Travel solution of sharing
common investors Softbank, Tiger Global Management LLC, sequoia capital, Didi
chuxing. Softbank being the major common shareholder in both Uber (17.5%)
and in OLA (more than 25%).
Even though this matter was not given due consideration by the CCI but there
was a possibility of sharing of sensitive information by the shareholders which
could hamper the rationale of competitive policies.
 Conclusion
It is abundantly clear from the above case that the Government in today's
world endorses fast growth and high competition in the business
industry, not only the taxi industry. This order passed by the Competition
Commission of India reaffirms that economic development is at the
forefront of the Government's agenda. The taxi market through the
aggregator model in India like the ones followed by Ola and Uber is still
at a very nascent stage and demands time to fully develop its pricing
strategy as stated by the Commission in its order. But our country has
definitely come a long way from the only available option of hailing a
black and yellow cab or auto rickshaws on the streets to the luxury of
booking a cab through a smartphone. However, it would be wise for the
concerned authorities and Government to draw up a course of action and
plan for the small and traditional players in the market in order for them
to survive and continue to add to the development of the economy as a
whole.
 Market share of operators in Hyderabad

Market share (% active Market share (% active Market share (% trips) as Market share (% trips) as
Company
fleet) as of October 2015 fleet) as of February 2017 of October 2015 of February 2017
Ola 41 46.24 43.8 49.2
Uber 40.1 45.47 42.8 48.3
Meru 10.07 3.1 7.6 1.4
Sky cab 3 0.7 2.1 0.4
Easy Cab 4.9 3.1 3.3 0.1
Other - - - 0.4

1) Uber and Ola are individually alleged to be dominant in the relevant market.
2) Ola and Uber collectively hold a dominant position and that section 4 of the act encompasses
dominance by more than one undertaking.
3)It is possible that both these entities are controlled by common investors and thus form the part of
the same group withing the meaning of the section 5 of the act.
 Market share of operators in Kolkata
Market share (% active Market share (% active Market share (% trips) as Market share (% trips) as
Company
fleet) as of May 2015 fleet) as on February 2017 of May 2015 on February 2017
Uber 54.6 60.7 58.7 63.8
Ola 33.3 33.2 32.5 34.8
Sure Taxis 7.7 - 5.3 -
Meru cabs 2 1.34 2 0.3
Mega cabs 0.8 2.01 1.2 0.6
Book my cab - 0.9 - 0.1
Fast Track - 0.07 - 0.01
others - 1.6 - 0.2

1) Uber is alleged to be dominant in the relevant market.

2) Ola and Uber collectively hold a dominant position and that section 4 of the act encompasses dominance by
more than one undertaking.
3)It is possible that both these entities are controlled by common investors and thus form the part of the same
group withing the meaning of the section 5 of the act.
 Market share of operators in Chennai
Market share (% active Market share (% active Market share (% trips) as Market share (% trips) as
Company
fleet) as of October 2015 fleet) as on February 2017 of October 2015 on February 2017
Ola + TFS 54.4 60.86 68.3 72.9
Uber 9.69 29.64 10.1 24.86
Meru 5.28 0.20 4.42 0.02
Fast Track 20.2 4.59 12.72 1.65
NTL 10.3 0.79 4.31 0.09
Utoo cabs - 0.79 - 0.09
others - 3.14 - 0.38

1) Ola is alleged to be dominant in the relevant market.

2) Ola and Uber collectively hold a dominant position and that section 4 of the act encompasses dominance by
more than one undertaking.
3) It is possible that both these entities are controlled by common investors and thus form the part of the same
group withing the meaning of the section 5 of the act.