SC blocks further probe into allegations of Uber’s unfair practices

New Delhi, Jan 27 (IANS) The Supreme Court on Friday asked the Competition Commission of India (CCI) not to further proceed with investigation into the alleged unfair practices and predatory pricing by cab aggregator Uber.

Ordering status quo, the bench of Justice Dipak Misra and Justice D.Y. Chandrachud issued notice to the CCI and directed the hearing of the matter on February 17.

The order came after senior counsel Harish Salve for Uber urged for the stay of investigation and Abhishek Manu Singhvi for taxi cab operator Meru wanted it to go on uninterrupted.

Salve told the court that investigation by the CCI's Director General, Investigation, would have "global repercussion" for his client. He said that the Competition Appellate Tribunal (Compat) could have remanded the matter back to CCI for reconsideration but it could not have ordered investigations on its own.

He said that Compat by its December 7 order has not rendered any prima facie finding to justify investigation - a view contested by Singhvi who referred to the paragraphs in Compat order to argue otherwise.

The apex court's order of status quo came on the appeal by Uber against Compat's December 7, 2016 direction to the CCI DG (Investigation) to investigate the allegations of Uber exploiting its market dominance and resorting to predatory pricing, or selling goods or providing services at a price below cost to reduce competition or eliminate the competitors, to the disadvantage of other cab operators.

The Compat order had came on an appeal by the radio taxi cab operator Meru, which had alleged that Uber was exploiting its dominant position in the market to eliminate others in the city travel business.

Meru had moved the Compat against February 10, 2016 order of the CCI, which said that Meru had failed to make a prima facie case for investigation into the allegations of abusing market dominance and predatory pricing to eliminate other efficient competitors in radio-taxi business.

The primary reasons for the phenomenal growth of Uber is large global funding and anti-competitive business model allowing it to unleash a series of abusive practices prohibited under the Competition Act and establish its monopoly and eliminate otherwise equally efficient competitors from the market, Meru had told both the CCI and the Compat.

It had said 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.

Besides this the fares of taxis under Uber was also backed by discounts and incentives in certain categories from time to time, Meru had contended.

The Compat, in its order, had said that the "availability of financial resources and existence of discounts and incentives associated with the model of business adopted by the respondents (Uber) are good supporting reasons to suggest that the issue of dominance needs to be seen from a perspective that does not limit to the market share of the enterprise alone".

Referring to market share figures, the Compat had said that "we do not intend to say that Uber is necessarily in a dominant position" but "we cannot ignore the fact that 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".

Noting that aggregator-based radio taxi service was a relatively new concept of public transport in Indian cities, it had said that "it cannot be said definitively that there is an abuse inherent in the business practices adopted by operator such as respondents (Uber) but the size of discounts and incentives show that 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. Whichever is true, the investigations would show.

Directing investigation, it had said that there good reasons for the same as it would "help in settling an issue which has agitated business discourse for quite some time".