Karnataka transport flexi rates: NCLAT negates CCI order as no breach found

Earlier, the Commission had asked the state govt to review the scheme

In its first substantive order on competition appeals, the National Company Law Appellate Tribunal (NCLAT) has modified the Competition Commission of India's (CCI) order against Karnataka State Road Transport Corporation (KSRTC).

The appellate tribunal stated that since the competition watchdog has not found any abuse of dominance, it cannot impose any modifications on KSRTC's flexi scheme.

The Competition Commission had asked the Karnataka government to take a "fresh view" on flexi rates charged on certain bus routes by the state-owned KSRTC, even as it rejected a complaint of abuse of dominance filed against the transporter.

It had said there is nothing unfair on the part of KSRTC in charging fares through a 'flexi rate' scheme that are anyway less than the maximum fare fixed by the Karnataka government.

However, citing larger public interest at play, the CCI had urged the state government take a fresh view, saying: "The government of Karnataka should take a fresh view regarding the aforesaid schemes, decisions after inviting suggestions from various stakeholders".

Now, the appellate body said if the 'flexi-rate scheme', among other points, has not been held to be operative, the commission has no authority to express its views as to what the state government is required to do in the name of larger public interest."

The initial complaint was filed against KSRTC by two other transporters- Sree Gajanana Motor Transport Company Limited and North West Karnataka Road Transport Corporation. They had alleged that the KSRTC was not allowing them to operate in routes where the latter had a monopoly.

NCLAT is now an appellate body against the order of CCI, after the abolition of the Competition Appellate Tribunal (COMPAT).

In a separate order, however, the CCI ruled against a penalty imposition on the Cochin Port Trust over allegations of anti-competitive activity. The Commission has, instead, asked the firm to desist from such practices in future.   

This is a rare order where the CCI has not imposed any penalty on the accused despite finding it guilty of malpractice. The primary issue that was meant to be investigated by the CCI was the imposition of an alleged turn system by the Container Trailer Owners Coordination Committee at the Cochin Port. 

The Commission was also tasked with the responsibility of examining the veracity of the allegations with regard to the unilateral fixation of higher prices for transportation of containers between Informant Port and various inland destinations.