NCLAT rejects petitions against Ola in alleged predatory pricing matter

The National Company Law Appellate Tribunal (NCLAT) has rejected petitions filed by ride sharing players Meru and Fast Track Call Cab against Ola alleging predatory pricing ways and anti-competitive practices in Bengaluru market.

The appeals were filed by the entities against ANI Technologies, which run the app-based taxi service under the brand name Ola.

It was alleged that Ola indulged in abuse of dominant position and entered into anti-competitive agreements with drivers in the Bengaluru market.

The appellate tribunal has upheld the order passed by the Competition Commission of India (CCI), which in July 2017 had rejected the allegations of abuse of dominant position against Ola. The watchdog's decision followed a detailed probe by its investigation arm Director General (DG).

The petitions by the two entities had challenged CCI's order.

While rejecting the petitions, NCLAT also said that Ola was not in a dominant position in the Bengaluru market.

"Moreover, since Ola is not in dominant position the question of abuse of dominant position through predatory pricing also does not get attracted. In sum, we do not think the orders of the Commission dated 19.7.2017 require any interference. Both the appeals are, therefore, dismissed," the appellate tribunal said in an order on January 7.

It was alleged that Ola indulged in predatory pricing by offering discounts to customers and incentives to drivers with the sole intention to monopolise the radio taxi services in Bengaluru after receiving four series of funding from their investors.

"Looking to the market behaviour of Ola, we hold a clear view that Ola was providing a mobile-app based solution to the riders and drivers in a new and easy way for taxi rides which includes taxi booking and payment," NCLAT said.

According to the appellate tribunal, Ola employed a pricing strategy to establish its brand and network to provide much more efficient and user-friendly services to customers in real-time at any place and anytime, to edge out the competitors who were already present in the radio taxi market in Bengaluru, which cannot be faulted as being predatory pricing.

Regarding the incentives that Ola provided to drivers, NCLAT said they were either in monetary form or in the shape of schemes that are dynamic in nature and change with market conditions.

"Moreover, participation in these schemes are completely optional for the drivers," NCLAT bench, comprising Justice Jarat Kumar Jain and Alok Srivastava, said.

The strategy is that once demand rises, Ola has to bring in more drivers in its network, and therefore its incentives to drivers are engineered to attract them to the network, the appellate tribunal said.

Further, NCLAT noted that these incentives are developed and offered with a view to offer advantageous terms of engagement so there are enough suppliers to take care of increasing demand.

"Therefore, we are of the view that Ola is working on generating demand through customer discounts and then bringing in more drivers to cater to the increased demand. Ola tries to create a win-win for the riders and drivers, and of course to its enterprise," NCLAT said.