Information may be received from any person in proceedings under the Competition Act: SC

Information may be received from any person, whether such person is or is not personally affected in proceedings under the Competition Act: SC

Samir Agrawal v. Competition Commission of India & Ors.

Civil Appeal No. 3100 of 2020

Decided on December 15, 2020.

Counsels involved in the case: Dr. Abhishek Manu Singhvi, Shri Rajshekhar Rao, Shri Balbir Singh

A three-judge bench of the Supreme Court comprising of Justice Rohinton Fali Nariman, Justice K.M. Joseph and Justice Krishna Murari decided the current litigation.

The appellant-informant alleged that the pricing algorithm used by Ola and Uber artificially manipulates supply and demand due to which riders are not able to negotiate fares with individual drivers for rides that are booked through the apps, nor are the drivers able to offer any discounts, thereby taking away the freedom of riders and drivers to choose the best price on the basis of competition. The drivers receive their share of the fare only after the deduction of a commission by Ola and Uber for the services offered to the rider. Thus, the Informant submitted that the Ola and Uber apps function akin to a trade association, facilitating the operation of a cartel. Further, since Ola and Uber have greater bargaining power than riders in the determination of price, they are able to implement price discrimination, whereby riders are charged on the basis of their willingness to pay and as a result, artificially inflated fares are paid. The appellant, by an Information filed on 13.08.2018 sought that the Competition Commission of India initiate an inquiry under Section 26(2) of the Competition Act, 2002 (“the Act”), into the alleged anti-competitive conduct of Ola and Uber, alleging that they entered into price-fixing agreements in contravention of Section 3(1) read with Section 3(3)(a) of the Act, and engaged in resale price maintenance in contravention of Section 3(1) read with Section 3(4)(e) of the Act.

The CCI by its order dated 06.11.2018 held that there was no case of contravention of the provisions of Section 3 and closed the matter. Aggrieved by the Order of the CCI, the appellant filed an appeal before the National Company Law Appellate Tribunal (“NCLAT”) which resulted in the impugned judgment dated 29.05.2020.

The appellant, who appeared in person before the Court, attacked the finding of the NCLAT as to locus standi and referred various provisions of the Act, including Sections 19 and 35, arguing that the amendments made in the Sections would show that any person can be an informant who can approach the CCI, as one does not have to be a “consumer” or a “complainant”. The Appellant then argued substantially what was submitted before the CCI and NCLAT on the merits, stating that the arrangements in the present case amounted to “hub and spoke” arrangements which indicated that the provisions of Section 3 of the Act had clearly been violated.

As against this, Dr. Abhishek Manu Singhvi, learned senior advocate appearing on behalf of Uber, relied on the concurrent findings of fact of the CCI and the NCLAT, and stated that they could not be said to be even remotely perverse and would therefore have to be upheld. He stated that there is complete discretion with the drivers to negotiate fares with riders, not only insofar as Ola and Uber are concerned, but also otherwise, there being nothing in either the agreements or practice, which prevents them from doing so. Furthermore, he contended that there would be no question of any anti-competitive practice in the form of cartelization, as there are thousands of drivers, none of whom have anything to do with each other, there being no common meeting of minds as far as they are concerned and that on the contrary, the apps allow drivers to negotiate fares that are below what is quoted in the app, thereby increasing competition and giving riders greater flexibility to take rides with those drivers who offer the most competitive fares.

Shri Rajshekhar Rao, learned advocate appearing on behalf of Ola, supported Dr. Singhvi’s submissions on merits, but added that even if the Appellant could be said to be an informant for the purposes of Section 19 of the Act, he could not be said to be a “person, aggrieved” for the purposes of filing an appeal under Section 53B under the Act, and referred to the judgment in Adi Pherozshah Gandhi v. H.M. Seervai, Advocate General of Maharashtra, (1970) 2 SCC 484.

The learned ASG, Shri Balbir Singh, appearing on behalf of the CCI, stated that though he would support the CCI’s Order closing the case, he would also support the right of the Appellant to approach the CCI with information.

The Court heard the learned counsel appearing on behalf of the various parties.

The Court set aside the impugned judgment of the NCLAT in its narrow construction of Section 19 of the Act:

The 2009 Regulations also point in the same direction inasmuch as regulation 10, which has been set out hereinabove, does not require the informant to state how he is personally aggrieved by the contravention of the Act, but only requires a statement of facts and details of the alleged contravention to be set out in the information filed. Also, regulation 25 shows that public interest must be foremost in the consideration of the CCI when an application is made to it in writing that a person or enterprise has substantial interest in the outcome of the proceedings, and such person may therefore be allowed to take part in the proceedings. What is also extremely important is regulation 35, by which the CCI must maintain confidentiality of the identity of an informant on a request made to it in writing, so that such informant be free from harassment by persons involved in contravening the Act. (Para 16)

The Court observed:

Clearly, therefore, given the context of the Act in which the CCI and the NCLAT deal with practices which have an adverse effect on competition in derogation of the interest of consumers, it is clear that the Act vests powers in the CCI and enables it to act in rem, in public interest. This would make it clear that a “person aggrieved” must, in the context of the Act, be understood widely and not be constructed narrowly, as was done in Adi Pherozshah Gandhi (supra). Further, it is not without significance that the expressions used in sections 53B and 53T of the Act are “any person”, thereby signifying that all persons who bring to the CCI information of practices that are contrary to the provisions of the Act, could be said to be aggrieved by an adverse order of the CCI in case it refuses to act upon the information supplied. By way of contrast, section 53N(3) speaks of making payment to an applicant as compensation for the loss or damage caused to the applicant as a result of any contravention of the provisions of Chapter II of the Act, having been committed by an enterprise. By this sub-section, clearly, therefore, “any person” who makes an application for compensation, under sub-section (1) of section 53N of the Act, would refer only to persons who have suffered loss or damage, thereby, qualifying the expression “any person” as being a person who has suffered loss or damage. Thus, the preliminary objections against the Informant/Appellant filing Information before the CCI and filing an appeal before the NCLAT are rejected. (Para 20)

The Court held:

Coming now to the merits, we have already set out the concurrent findings of fact of the CCI and the NCLAT, wherein it has been found that Ola and Uber do not facilitate cartelization or anti-competitive practices between drivers, who are independent individuals, who act independently of each other, so as to attract the application of section 3 of the Act, as has been held by both the CCI and the NCLAT. We, therefore, see no reason to interfere with these findings. (Para 23)

Consequently, the Court dismissed the appeal.

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Jhanavi M