Note On Competition/Anti-Trust Law and its Efficacy in Tackling Issues Concerning Privacy (Part III) – And a Post Script.

[The previous post seemed way too long for a blog post, so decided to split it and post a ‘Part III’. The previous posts can be found here and here. Also as a bonus – an anticlimax post script. ;)]

INDIA

As already stated above, India has also till date been following the traditional model of competition law enforcement. The language and the concepts of the Competition Act, 2002 are heavily borrowed from the Treaty on the Functioning of the European Union (T.F.E.U.) and the enforcement structure enumerated under the act, i.e., the Competition Commission of India (C.C.I.) and the Director General of Investigations (D.G.) is also similar to the enforcement structure of the E.U.

The Commission displayed its cognizance of data collection, though not from a Privacy perspective, in the case of Matrimony.com Ltd. v. Google LLC, Case No. 07 of 2012. In its Final Order dated 31.01.2018, while imposing a fine of Rs. 135.86 crores on Google, it observed:

“In fact, it would not be out of place to equate data in this century to what oil was to the last one. The Commission is not oblivious of the increasing value of data for firms which can be used to target advertising better. Moreover, the data can be turned into any number of revenue generating artificial-intelligence (AI) based innovations.”

However, prior to this, in the case of Vinod Kumar Gupta v. WhatsApp Inc., Case No. 99 of 2016, specifically assailing the acquisition and the privacy policies of the respective entities, the Commission while dismissing the Complaint, specifically observed:

“14. On the issue of dominance of the OP in the relevant market as defined supra, the Commission notes that in India a number of other players such as Apple with iMessage, BlackBerry with BBM, Samsung with ChatON, Google with Google Hangouts and Microsoft with Skype are providing consumer communication apps and are also active in the provisions of smartphone hardware and operating systems. Besides, many other consumer communication apps providers such as Hike, Viber, WeChat and Snapchat are also active in market. As per the information available in the public domain, globally ‘WhatsApp’ is having a billion monthly active users and within India, it is having 160 million monthly active users. According to a study of ‘Jana and mCent’, 97% of the smartphone users in India use a communication app daily and the most popular is ‘WhatsApp’, which is installed on 96% of devices and has more daily active users than any other communication app in India. As per the said report, ‘WhatsApp’ is installed in 2.3 times more devices than home-grown messaging app Hike. According to a study conducted by ‘TNS/TNC Connected Life Study 2015’, 56% of the internet users in India use ‘WhatsApp’ and 51% use ‘Facebook’ every day. Further, amongst India’s internet users, ‘WhatsApp’ tops the list of instant messaging apps. Further, citing a study conducted by Global Web Index, the Informant has submitted that 64% of mobile users in India use ‘WhatsApp’ which is the largest as compared to any other mobile messaging app usage. Based on the the above, the Commission is of the opinion that the OP is in a dominant position in the relevant market as defined under para 13 above.

15. With regard to the abusive conduct of the OP in the relevant market, it is noted that the Informant has alleged that the OP is abusing its dominant position in the relevant market by introducing privacy policy which compels its users to share their account details and other information with ‘Facebook’. In this regard, the Commission observes that the data sharing terms of the privacy policy of the OP as updated on 25th August, 2016 relate to sharing of users’ ‘WhatsApp’ account information with ‘Facebook’ to improve the online advertisement and products experiences available on user’s ‘Facebook’ page. It is noted that the OP provides the option to its users to ‘opt out’ of sharing user account information with ‘Facebook’ within 30 days of agreeing to the updated terms of service and privacy policy. Moreover, the OP has submitted that ‘Facebook family of companies’ will use such information for the purpose of improving infrastructure and delivery systems, understanding how their services are used, securing systems, and fighting spam, abuse or infringement activities. The Commission also finds force in the submission of the OP regarding its users safeguards that all types of ‘WhatsApp’ messages (including chats, group chats, images, videos, voice messages and files) and ‘WhatsApp’ calls are protected by end-to-end encryption so that third parties and ‘WhatsApp’ cannot read them and also the message can only be decrypted by the recipient. Further, as stated in the key updates summary of the OP, nothing a user shares on ‘WhatsApp’, including his/ her messages, photos, and account information, will be shared onto ‘Facebook’ or any other apps of ‘Facebook family of companies’ for any third party to see, and nothing a user posts on those apps will be shared by ‘WhatsApp’ for any third party to see.

……..

19. The Commission also observes that there are no significant costs preventing the users to switch from one consumer communication apps to another. It may be due to the following reasons: (i) all consumer communication apps are offered for free of cost or at a very low price (mostly free), (ii) all consumer communication apps are easily downloadable on smartphones and can co-exist on the same handset (also called ‘multi homing’) without taking much capacity along with other apps, (iii) once consumer communication apps are installed on a device, users can pass on from one app to its competitor apps in no-time, (iv) consumer communication apps are normally characterised by simple user interfaces so that costs of switching to a new app are minimal for consumers, and (v) information about new apps is easily accessible given the ever increasing number of reviews of consumer communication apps on apps store like google play store etc. Furthermore, the expansion of Hike Messenger to nearly 100 million user base within three years of launching their services into the aforesaid market reflects that in this market, there are no significant barriers to entry and consumers appear to be price sensitive. Based on the above, the Commission is of the view that even though ‘WhatsApp’ appears to be dominant in the relevant market, the allegations of predatory pricing have no substance and the OP has not contravened any of the provisions of Section 4 of the Act.”

The most comprehensive discussion by the Commission on the aspect of data collection and sharing appears to be under the combination procedure in the Jhaadu Holdings LLC Case, i.e., the Acquisition of 9.99 percent of the equity share capital in Jio Platforms Limited by Facebook, Inc. The relevant portions of the Order of the Commission dated 24.06.2020 are as follows:

“(ii) Potential data sharing between the parties

50. Most of the data driven businesses are multi-sided platforms where one or more sides of the platform is designed to attract user presence and the other sides are used for monetizing the data relating to user behaviour. For instance, Facebook application is a social media platform. One side of its platform offers free services to users for social interaction and on the other side, the monitored behaviour of the users is used as an input to offer advertisement services (targeted display ads). As noted earlier, the social media and other applications of Facebook group are popular amongst internet users and Facebook is expected to have access to rich data regarding user behaviour. Facebook has submitted that it has a data policy that explains the nature of information collected by Facebook and how it is being used. It inter alia explains data sharing with third party partners.

51. Jio Platforms including RJIO, on the other hand, is also in a position to collect and possess consumer data. The privacy policy of RJIO defines Non-Personal Information as information that does not identify the user or any other individual, and includes session, web beacons and usage and transaction data, aggregate log data and aggregate information. It further states that RJIO uses this information, inter-alia, to tailor its services to the interests of its users, to measure traffic within its services, to improve the quality, functionality and interactivity and let advertisers know the geographic locations from where its users/ visitors come. The privacy policy further provides that the information provided by the users will be used for a number of purposes connected with RJIO’s business operations including (a) verifying the identity, access, privileges assigned and relationship with the user; (b) provisioning of products/services, testing or improvement of services, recommending various products or services; (c) communicating about bills, invoices, existing or new offers, content, advertisements, surveys, key policies or other administrative information; (d) analytics and reviews for improvement of RJIO’s services; (e) improving user experience while using RJIO’s services by presenting tailored advertising, products and offers; and (g) other usages that users may consent to.

52. Business combination between entities having access to user data can be analysed from the perspective of data backed market power. The assessment in such instances needs to focus on the incentives of parties to pool or share their databank and monetize such data in possible means.

53. In the instant matter, it is noted that the Proposed Combination is an acquisition of 9.99% stake in Jio Platforms by Facebook group. This may not result in unrestricted access to each other’s resources including user data. Nevertheless, the parties may have incentives to engage in mutually beneficial data sharing. In this regard, Jaadhu has submitted that “there is no data to be shared as part of the Proposed Transaction” (i.e. proposed acquisition of shares in Jio Platforms by Jaadhu). It has been further clarified in the response dated 12th June, 2020 by Jaadhu that:

“It is clarified that data sharing is NOT the purpose of the Proposed Commercial Arrangement, nor will either side be acquiring ownership of the other’s data pursuant to the Proposed Commercial Arrangement. However, for implementation of the Proposed Commercial Arrangement, WhatsApp and JioMart (which is owned by RRL and operated by Jio Platforms) will receive or send limited data. This data is:

(i)being provided only for the purpose of facilitating e-commerce transactions on JioMart. Its use is limited, proportionate and solely for the purpose of implementing the Proposed Commercial Arrangement. Further, ****** the MSA explicitly prohibits the Commercial Arrangement Partners from using confidential information received from the other party for their own business purposes, or from disclosing it to third parties, *********************************************** ********************************************************** ********************************************************** ************************************************;

(ii)neither exclusionary, inimitable nor rare, and substitutes exist…; and

(iii)processed in accordance with applicable law and parties’ data policies.”

54. The Commission observes that RJIO is a prominent telecommunication player in India with more than one-third of wireless subscribers on its network. The group entities of Jaadhu viz. Facebook Group, on the other hand, are the second leading player in online advertisement space and leading player in online display advertisement services. The user data possessed by Jio Platforms including RJIO and Facebook Group are complementary to each other given the symbiotic interface between telecommunication business and OTT content/ application users. Thus, any anti-competitive conduct resulting from any data sharing in the future could be taken up by the Commission under Sections 3 and/or 4 of the Act having due regard to the dynamics of the concerned markets and position of the parties therein.

55. Considering the material on record including the details provided in the Notice and the assessment of the Proposed Combination based on factors stated in Section 20(4) of the Act, the Commission is of the opinion that the Proposed Combination is not likely to have any appreciable adverse effect on competition in India. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act. The Commission also notes that the parties confirm that the Proposed Combination does not contemplate any non-compete covenants.

56. This order shall stand revoked if, at any time, the information provided by Jaadhu is found to be incorrect.”

Recently, the Chairman of the C.C.I, Ashok Kumar Gupta, remarked that “Lowering of privacy protection by dominant enterprises could be construed to be an abuse of dominant position and therefore fall within the ambit of antitrust as low privacy standards implies reduction in consumer welfare.” However, no fresh investigation appears to have been initiated by the regulator as on date.

P.S. (As promised) –

So we have a bit of an anti-climax in this space, with TechCrunch reporting day before yesterday through Natasha Lomas that Google won’t end support for tracking cookies unless UK’s competition watchdog agrees !! It’s a long article, but well worth the read, especially for grasping the contours of Google’s self-styled “Privacy Sandbox” it announced earlier this year.

My favourite portion was and I quote:

“But the key issue here is how privacy and competition regulation interacts — and potentially conflicts — with the very salient risk that ill-thought-through and overly blunt competition interventions could essentially lock in privacy abuses of web users (as a result of a legacy of weak enforcement around online privacy, which allowed for rampant, consent-less ad tracking and targeting of Internet users to develop and thrive in the first place).

Poor privacy enforcement coupled with banhammer-wielding competition regulators does not look like a good recipe for protecting web users’ rights.”

Note On Competition/Anti-Trust Law and its Efficacy in Tackling Issues Concerning Privacy (Part II).

Continued from our previous post:-

EUROPEAN UNION (E.U.)

In the E.U., the European Commission (E.C.) and its Directorate General for Competition are responsible for the administration of competition law. In regard to privacy matters, the General Data Protection Regulation is regulated by the European Data Protection Board. European authorities have also had the opportunity to deal with data implications on several occasions.

Initially, in the 2014 Facebook-WhatsApp Merger Case, Case No. COMP/M.7217 it took at extremely conservative approach on the issue of privacy. To quote from the Commission’s Order itself:

“For the purposes of this decision, the Commission has analysed potential data concentration only to the extent that it is likely to strengthen Facebook’s position in the online advertising market or in any sub-segments thereof. Any privacy-related concerns flowing from the increased concentration of data within the control of Facebook as a result of the Transaction do not fall within the scope of the EU competition law rules but within the scope of the EU data protection rules.“

On the other hand, in 2016, in the Microsoft-Linkedin Merger Case, Case M.8124 the E.C. approved the acquisition of LinkedIn by Microsoft, subject to several conditions. Both companies retained large datasets comprised primarily of personal information. The E.C. found that the combination of Microsoft’s and LinkedIn’s datasets would act as a barrier to entry. The E.C.’s commitments included granting competing professional social network service providers access to Microsoft Graph, a gateway for software developers which is used to build applications and services that can, subject to user consent, access data stored in the Microsoft cloud, such as contact information, calendar information, emails etc. Software developers can potentially use this data to drive subscribers and usage to their professional social networks. Simply put, the Commission considered Privacy as a parameter for non-price competition Interestingly, the F.T.C. did not find anticompetitive implications in this transaction.

However, it is in fact the German Competition Authority Bundeskartellamt, and subsequently the Federal Court of Justice of Germany which have taken the first proactive to privacy protection through competition law.

In its decision of 6 February 2019 the Bundeskartellamt prohibited Facebook Inc., Menlo Park, USA, Facebook Ireland Ltd., Dublin, Ireland, and Facebook Germany GmbH, Hamburg, Germany from making the use of the Facebook social network by private users residing in Germany, who also use its corporate services WhatsApp, Oculus, Masquerade and Instagram, conditional on the collection of user and device related data by Facebook and combining that information with the Facebook.com user accounts without the users’ consent. The prohibition was based on Section 19(1) of the German Competition Act. The prohibition also applied to terms making the private use of Facebook.com conditional on Facebook being able to combine information saved on the “Facebook account” without the users’ consent with information collected on websites visited or third-party mobile apps used via Facebook business tools and use this data. The Court concluded that there was no effective consent to the users’ information being collected if their consent is a prerequisite for using the Facebook.com service in the first place.

The Bundeskartellamt found Facebook had abused its market power based on the extent of collecting, using and merging data in a user account and imposed on Facebook far-reaching restrictions in the processing of user data. The Bundeskartellamt saw the use of the conditions of use as an abuse of dominant position. It found Facebook dominant in the national market for the provision of social networks. It abuses this position by, contrary to the provisions of the General Data Protection Regulation (G.D.P.R.), making the private use of the network dependent on its authorization to link user and user device-related data generated outside of facebook.com with personal data without further consent of the users. With a resolution dated 06.02.2019, the Federal Cartel Office prohibited Facebook and other group companies from using the corresponding terms of use and processing personal data accordingly. The Federal Court of Justice on 23.06.2020 upheld this decision.

Margrethe Vestager, the current European Commissioner for Competition since 2014, has also recently stated before the European Parliament’s economy committee on Tuesday that there could be scope for “investigating if it’s actually legal for a dominant provider to stop supplying” services, adding that the EU “would have a number of tools to use.”

To be continued further….

Collective Dominance in Competition Law

So the people at Virtual Lawyer (Check them out on Instagram and Facebook) recently got in touch to deliver an online talk on a topic of my choosing, and I was more than happy to grab the opportunity to verbally regurgitate on an issue which doesn’t get its due attention, yet which is slowly gaining relevance as the competition climate in our economy changes – Collective Dominance in Competition Law.

My apprehension of it being too niche topic was fortunately belied, as the ‘Question and Answer’ session refused to end and we had to start a fresh meeting to try to go through them all. 🙂 🙂

The links to YouTube videos can be found here and here.

An in case you prefer Instagram IGTV, then here and here.

A big thank you to Virtual Lawyer for letting me rant in public. 🙂

A liberal competition law in the works to facilitate M&As

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The Economic Times recently ran a story on how a liberal competition law regime was in the works and was part of the plan of action for the first hundred days after the formation of the new government.

The proposals seem majorly focused on speeding up IBC resolutions, which isn’t bad, but one does wish that the Corporate Affairs Ministry would also seriously look into the fixing the many flaws in the Competition Act, 2002, in Order to prevent unnecessary litigation on non-competition law issues which have off late become synonymous with Indian Competition Law jurisprudence.

For starters, it would be great if the new government could once again revive the Competition Amendment Bill, which unfortunately lapsed more than half a decade back. We have previously written about it here and here. It wasn’t perfect, but it would have gone a long way in plugging some of the gaps.

Delhi High Court Slaps Cost of Rs 1 Lakh. Writ against Section 26(1) CCI Order.

case dismissed In a rather interesting/unforeseeable turn of events, the Ld. single judge of the Hon’ble Delhi High Court (‘DHC’) has come down heavily on a Petitioner seeking relief against a Section 26(1) Order passed by the Competition Commission of India (‘CCI’).

The writ was filed against order passed by the CCI under Section 26(1) under Section 26(1) of the Competition Act, 2002 (‘the Act’), whereby the CCI had directed the Director General (‘DG’) to conduct an investigation on an allegation that the petitioner along with certain other manufacturers had contravened the provisions of Section 3(3)(a) and Section 3 (3)(d) of the Act.

The petitioner’s case was solely based on the contention that the said 26(1) order did not make any specific allegation against the petitioner.

A noteworthy background on this particular Sec 26(1) matter; is that the same petitioners had earlier moved to the writ court praying for relief of inspection of files of the CCI pertaining to the said order. And the same relief was granted by the DHC.

Now coming back to exactly what irked the Ld. Single Judge into imposing such heavy costs on the petitioner. Allegedly the whole controversy circles around an apparent untrue statement submitted before the court by the petitioners on their knowledge of the DG investigation in this particular case.

During the course of arguments , the counsel on behalf on the CCI, submitted before the court, certain documents relating to DG’s questionnaire, which was apparently sent to the Petitioners back in the year 2015, and the petitioners had duly participated in the investigation by replying to the said questionnaire. Without going into any finer details I will just say that this very movement was a true table turner. Because at this juncture the Ld. Single Judge went on to the extent of noting that the false statement and false affidavit of the petitioner make for a fit case to invite proceedings under section 340 of the Cr.P.C.

While not interfering with the operations of the said CCI order, and refusing to stay the DG investigation, the court while placing reliance on the Supreme Court case of Competition Commission of India v Steel Authority of India: (2010) 10 744; observed that that an order under Section 26(1) of the Act is in the nature of an administrative order and does not affect the rights of the parties. The Supreme Court had also examined the scheme of the Act and held that the legislative intent was not to permit any appeal against the order passed under Section 26(1) of the Act. Thus, an order under Section 26(1) of the Act cannot be interfered with unless it is established to be perverse or suffering from jurisdictional errors.

And accordingly the said petition was dismissed with with cost quantified at Rs.1,00,000/-. What will now remain interesting to see is how this order impacts the practice being followed by the Opposite parties of challenging the CCI’s order before the writ court under Article 226 of the Constitution. Would the attitude of not staying the operation of a 26(1) order finally mean that at last the Competition regulator will have proper time and opportunity of investigating into various alleged contraventions. OR maybe instead of an Article 226 remedy, a review/recall application before the CCI would be the appropriate way out for the Opposite Parties (Ah! btw hopefully an elaborate post discussing some thoughts on the CCI’s power of Review/Recall- soon). And maybe these investigations see the light of the day and aren’t just left hanging in the middle struggling for a decisive fate for years and years. And maybe just maybe this would be another step into the direction of having a stronger competition law regime in India.

Fast Track Call Cab Pvt. Ltd. and Anr. v. ANI Technologies Pvt. Ltd., Case No. 6 and 74 of 2015

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There are certain cases in any area of jurisprudence in law, including competition law, which tend to make an individual mark of their own. This may be simply due to the parties involved, or because the cases involve seminal questions in law which would help clarify the legislation involved for future use, or because the ramifications (not necessarily negative) of the Final Order go beyond just the law involved, and into the arena of a change in the very economics or social structure of the system the case may question.

In my personal opinion, Fast Track Call Cab Pvt. Ltd. and Anr. v. ANI Technologies Pvt. Ltd., Case No. 6 and 74 of 2015 falls into this category and for all the reasons stated above.

My criticism of past Orders of the Commission through this Blog is well known, but this time, I must bring on record my appreciation. The Final Order is by no means perfect or maybe even completely legally sound in all aspects, but it does display not only the growing maturity of competition jurisprudence by the Commission, but also at least an attempt by the D.G. to not be content with a superficial investigation of relevant market dynamics.

Both Ola and Uber have already suffered enough regulatory troubles regards surge pricing and driver registration from various transport departments across the country, and though Ola has won this round, there will most probably be an Appeal. But the biggest fallout for Ola (and even Uber), which in my personal opinions has made it a pyrrhic victory, is that the D.G. and the Commission have extensively written about the below cost pricing strategies adopted by both companies. In fact, the D.G. has gone so far as to note that the significant market share of Ola or Uber has nothing to do with technological innovation but is rather the pure consequent of below cost pricing. Whether the companies like it or not, it is probable that both Ola and Uber will be prodded to bring down the revenue drain, not just by investors but also by competitors and various state departments as economically, a market providing services below cost can under no circumstances be considered an economically sound market, and creates potential avenues for future investigations by the Commission.

COLLECTIVE DOMINANCE BACK IN THE LIMELIGHT

An alternative argument which was raised by the Informants while objecting to the D.G. Report was that there is a possibility of two entities exercising dominance at the same time. The Informants claimed that the analysis of the D.G. pointed towards the presence of more than one dominant player in the relevant market. Furthermore, they submitted that the D.G. in its report had admitted the growth of both Ola and Uber was not the result of any technological innovation or efficiency but the result of a practice to charge substantially below the average variable cost. The Informants also quoted the observations of the Canadian Competition Tribunal in the Visa Mastercard Case, which noted that both MasterCard and Visa can individually possess market power in the relevant market. It was thus submitted that a conclusion of simultaneous dominance of Ola and Uber was not incompatible with the provisions of the Competition Act, 2002.

I have already on a number of occasions discussed Collective Dominance (See here, here and here) and how it is not presently recognised under the Act. The Commission’s reasoning is similar to what we have already propagated here and I have nothing new to add in this area.

However, for the fun of it, let us hypothetically presume that Collective Dominance was recognised under the Competition Act. Could Ola and Uber have been held liable for abuse of dominant conduct ?? I would submit the answer would still be a no.

Firstly, since the Uber investigation has been stayed by the Supreme Court, no finding or penalty could be imposed upon Uber. But beyond that, secondly and more importantly, is that Ola and Uber would never be able to breach the threshold for Collective Dominance under Competition Law, and to understand why one needs to look into the case of U.S.A. v. VISA Et al., 344 F.3d 229 (United States Court of Appeals, second Circuit.). Similar issues were raised against VISA and Mastercard. To summarise, the United States Department of Justice brought enforcement action against the two payment card networks and licensor of one payment card brand, alleging that governance duality between networks and networks’ exclusivity rules were agreements in restraint of trade in violation of Sherman Antitrust Act. Challenging the organizational structure of two of the nation’s four major payment card systems, the complaint charged that MasterCard and Visa U.S.A., which are organized as joint ventures owned by their member banking institutions,conspired to restrain trade in two ways: (1) By enacting rules permitting a member-owner of one to function as a director of the other (an arrangement the government described as “dual governance”) (Count I); and (2) by enacting and enforcing “exclusionary rules,” which prohibit their member banks from issuing American Express (“Amex”) or Discover cards (Count II).

The Court held that Visa U.S.A. and MasterCard violated the Sherman Antitrust Act by enforcing their respective versions of the exclusionary rule, barring their member banks from issuing Amex or Discover cards. The Court further held that Visa International, which owns the Visa brand, licenses it to Visa U.S.A., and exercises certain governance powers over Visa U.S.A., was liable for participating in Visa U.S.A.’s violation. Factually, it is important to note that a member of either the Visa U.S.A. or MasterCard network could also be a member of the other network. Thus a bank that was a member of Visa U.S.A.’s network and issued Visa cards could also be a member of the MasterCard network and issue MasterCard cards. On the other hand, both MasterCard and Visa U.S.A. had promulgated rules that prohibited their members from issuing American Express or Discover cards. Evidence was also cited that atleast three major U.S. issuer banks would have contracted with American Express to issue Amex cards in the United States but for the exclusionary rules.

In other words, in Visa Mastercard, there was active collusion between the two entities to limit market access to the other two competitors, whereas in the case of Ola and Uber, it is anything but !! Both companies are constantly at each other’s throats on pricing and volume of rides in the country. We are starting to see a cut back on the below cost pricing strategy, but only a continual market watch on the sector will help to gather enough data to understand the consequent effects, and it is too early to take a firm decision as of today. Since Ola and Uber have together effectively turned the market as one heavily based on network effects, strong competition and constant change in market share might be the norm between the two for some time to come.

POST SCRIPT: UBER IN INDIA

The Uber legal team would have been on their tenterhooks till this Order came out, and will be studying it closely (the investigation against Uber has been stayed due to questions of law regarding the powers of the erstwhile Competition Appellate Tribunal (COMPAT) and the matter is presently pending in the Supreme Court). The relevant market would obviously include Uber, and the D.G./Commission made a number of observations regarding the company, such as:

1. “…[i]n the first six months of 2015-16 (till September 2015), the D.G. noticed that while OP’s market share increased from marginally by 2% to 3%, Uber’s share increased at a faster rate i.e. by about 20%-22%.” [This is definitely due to a lower base rate.]

2. “It was further noted that from March 2015 onwards, Uber has maintained the second position. The D.G. also noted that from January to September 2015, Uber’s trip size registered growth of nearly 1200%, while OP’s growth has been about 63% during the same period.” [Same reason as above.]

3. “The D.G., thus, noted that backed by its marketing technology and logistics and financial support, Uber was able to successfully counter the pricing strategy of OP, and being able to sustain losses, which restrained OP from exercising market power in the relevant market. This was evident from the fact that similar strategy was followed by Uber and as a result, the gap in market share between OP and Uber narrowed down from 69% in January 2015 to 22% by September 2015.”

4. “Further, with the steady increase in Uber’s market share from 6 – 7% in January 2015 to 36-37% in September 2015, it could not be said whether OP would be in a position to hold on to its market share for a sustainable period for assessment of dominance in the relevant market.”

5. “Thus, D.G. opined that both OP and Uber have adopted ‘below-cost pricing strategy’. However, since the scheme of the Act only attracts the provisions of Section 4 when an incumbent is found to be dominant, the D.G. stated that OP can be said to have
indulged in abuse by way of predatory pricing, only if it is found to be dominant in the relevant market. Since OP was not found to be dominant, the D.G. concluded that OP did not contravene the provisions of Section 4 of the Act.” [Emphasis added]

6. “On the other hand, Uber, which entered the relevant market in 2013-14, expanded its network rapidly to account for nearly one third of the active fleet in the relevant market in 2015-16. In terms of annual number of trips, its share increased from 1 – 2% in 2013-14 to 30-31% in 2015-16.”

7. “…[U]ber, entered the relevant market in the year 2013 and garnered a sizeable market share in just about two years’ time. In terms of number of trips on monthly basis, its share increased from 0-1% in August 2013 to 36-37% in September 2015. Further, Uber showed a steady growth February 2015 onwards, with its share in terms of monthly number of trips having increased from 6-7 % in January 2015 to 36-37% by September 2015. Its entry as well as steady growth during the period of investigation shows that the market was evolving. While Uber’s entry, as the Informant has argued, did not dislodge OP during the period of investigation, OP’s declining market share post January 2015 reflects the competitive constraint posed by Uber and the fragility of leadership position in a dynamic business environment, as discussed earlier.”

8. “As a matter of record, in the present case, OP does not have an edge over all its competitors in terms of the size and resources. Interestingly, the investigation revealed that that Uber Inc., which is the parent company for Uber had a total capital investment of about 15 to 20 times of OP’s financial resources.” [The C.C.I. doesn’t seem to have made much of this, but it is important to note that “size and resources of the enterprise” and “economic power of the enterprise including commercial advantages over competitors” are two of the factors to be taken into consideration during an inquiry under Section 19(4)(b) and Section 19(4)(d) of the Act respectively.]

All this goes to show that Ola may owe Uber one for its victory, and also that Uber will be fully focused to ensure a favourable outcome in the Supreme Court to avoid the cross hairs of the D.G./C.C.I.

C.C.I./T.R.A.I. and Flashbacks to Old Posts

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The recent C.C.I. – T.R.A.I. jurisdiction conflict regarding tariff investigations reminded of an old post which was written a long time ago. Those were very early days for the Competition Act and the C.C.I., but a theoretical conflict was spoken off even then. Personally, I find it surprising that it took so long for a dispute between the two to come to the fore, but without a doubt, sooner or later, it was bound to rear its head.

The old posts can be found here and here. I have nothing more to add, except factually, the C.C.I. appears to have failed to hold its own in Court when it’s jurisdiction came to be challenged regards the C.E.R.C. and the P.N.G.R.B. The P.N.G.R.B. Case was pending even at the time the previous posts were written, but subsequently fell below the radar. Surprisingly, neither of the Judgements (the C.E.R.C. Case or the P.N.G.R.B. Case) can be found. Please do post a link in the comments in case you find them or have access to them.

Indian Merger Control – 30 Days Sword Gone (And an Introduction :-))

Allow us to introduce Ms. Samali Verma, who will now join us on this Blog. She is presently pursuing a Judicial Clerkship at the High Court of Delhi and has extensive experience on the subject of our love prior to her present role. She plans to start with small snippets/updates and we soon hope to see larger posts from her over time. Welcome to the Blog, Samali. 🙂

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In a significant development, the Ministry of Corporate affairs vide its notification dated 29.06.2017 has brought in a relaxation with respect to the time-period within which a merger/combination transaction is to be notified to the Competition Commission of India (C.C.I.).

This notification exempts an enterprise, from filing a notice within 30 days, for a period of five years from the date of the notification. The C.C.I. has now effectively done away with the earlier mandate which required filling within 30 days of a trigger event.

This is a much appreciated relaxation in the merger control regime in India. This change was long due, and now this finally puts India at par with the internationally accepted best practices in the merger control regime. It is expected to further increase the ease of doing business in India and is a welcome step, especially for those involved in multi-jurisdictional filings, as this removes the artificial pressure of having to comply with the 30 day deadline. The failure to give notice to the C.C.I. of a notifiable transaction may attract penalty, which may extend to one percent of the total turnover or assets of the combination.

Click here for a copy of the Notification.