Case BriefsTribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): This reference was filed before Ashok Kumar, Chairperson and  Augustine Peter and U.C. Nahta, Members by the Chief Materials Manager/Sales, Eastern Railway i.e. informant under Section 19(1)(b) of the Competition Act, 2002 against Laxven Systems and Medha Servo Drives (P) Ltd., alleging contravention of provisions of Section 3 of the Competition Act.

Facts of the case were that informant floated a tender for procurement of Microprocessor Control and Fault Diagnostics System for Electric Locos as per Research Designs and Standard Organisation. As per the information brought before Commission, there were initially 4 approved vendors but an amendment was brought in the criteria for selection due to which 2 vendors were delisted. Laxven did not participate in the impugned tender due to which by default, Medha won the tender who quoted a high rate. Negotiation by informant were not accepted and they were forced to accept the high rate quoted by Medha thus, Laxven was alleged for non-participation as a result of bid suppression and formation of a cartel.

Commission observed the fact that Laxven had not participated in other tenders conducted in the 3 Railway Zones and the reason being that they had not developed a Prototype for the required System. Thus, the allegation of bid suppression and cartelization was unsubstantiated. The high rate quoted by Medha was found to be justified due to the improved system which was to be supplied to the informant. Commission on finding no contravention of Section 3 of the Act directed the information to be closed in terms of Section 26(2) of the Act. [Chief Material Manager v. Laxven Systems, 2019 SCC OnLine CCI 1, dated 02-01-2019]

Case BriefsTribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): The Bench comprising of Sudhir Mital (Chairperson) and Augustine Peter and U.C. Nahta (Members), closed a matter under Section 26 (2) of the Competition Act, 2002 against the OPs: Ola; Uber; Uber B.V., Amsterdam, Netherlands; and Uber Technologies Inc., San Francisco, USA for alleged contravention of provisions of Sections 3 of Competition Act, 2002.

The informant was stated to be primarily aggrieved by the pricing mechanisms adopted by the aforesaid OPs. It was alleged by him that the algorithmic pricing adopted by the OPs took away the liberty of individual drivers to compete with each other amounting to ‘price fixing’ in contravention of provisions of Section 3 of Competition Act, 2002. Further, algorithm pricing had taken away the freedom of the riders and drivers to choose the other side on the basis of price competition and both have to accept the price set by the algorithm. OPs act as ‘Hub’ where ‘spokes’ (competing drivers) collude on prices.

The Competition Commission drew its observations on keeping the three primary allegations of the informant in mind, i.e., Firstly, Cab Aggregators use their respective algorithms to fix price under Section 3(3)(a) read with Section 3(1) of the Competition Act for every ride and do not allow the drivers to compete on prices. Secondly, Price fixing acts as an imposition of minimum resale price maintenance agreement under Section 3(4)(e) of Competition Act, 2002 between the Cab Aggregators and their drivers. Thirdly, Owing to information asymmetry, i.e., Cab Aggregators possessing considerable personalized information about every rider have been able to price discriminate to the disadvantage of the riders.

Commission by throwing light upon the concept of hub and spoke in a conventional sense stated that it “refers to the exchange of sensitive information between competitors through a third party that facilitates the cartelistic behaviour of such competitors and it does not apply to the facts of the present case. In furtherance to the second allegation regarding resale price maintenance, the commission held it to be not tenable as OPs perform a centralised aggregation function that rests on the algorithmic determination of prices which brings no resale of services. Commission also observed that existence of an agreement, understanding or arrangement, demonstrating the meeting of minds is a sine qua non for establishing contravention under Section 3 of Competition Act, 2002; which in the present case does not appear neither between the Cab Aggregators and their respective driver nor between the drivers inter-se.

Thus the Commission dealt with above said allegations by stating that in its view no case of contravention of Section 3 was made out and hence concluded its order. [Samir Agarwal and ANI Technologies Ltd., In re,2018 SCC OnLine CCI 86, Order dated 06-11-2018]