Fast Track Vs ANI – Case Analysis

Background Overview

The issue commenced with the filing of compliant by Fast Track Call Cab Pvt Ltd.
and Meru Travel Solutions Pvt. Ltd.(informants) that OLA (Opposition Party) is
unethically using its position as a market leader by providing hefty discounts to its
passengers as well as giving extra incentives to its taxi drivers. As Fast Track weren’t
able to produce such offerings, they have accused OLA for eating up their customers
by unfair means. Therefore, the informants have accused the OP for predatory
pricing under Section 4(2)(a)(iii) of the Act.

Court’s Reaction

As the issue of predatory pricing is only substantial in the event of one of the market
leaders occupying a dominant position in the market. The commission felt, that it is
of essential significance to ascertain if OLA was occupying a dominant position in the
market of ‘Radio Taxi Services of Bengaluru’. To affirm this, the commission ordered
the Director General to conduct a point by point investigation and to distinguish
specifically if OLA surely was the market leader in Bengaluru or not.

Director General’s Opinion

In order to conclude the investigation, the DG had to ascertain whether OLA was
indeed the dominant player in the Bengaluru market and secondly, if it was, whether
its actions amounted to predatory pricing among the market players or not.
Case Facts of Investigation

 DG analyzed the market of taxis in India and locally in Bengaluru as well. In

addition to this, the DG also compared the situation of traditional taxis with
the modern ones which operated under OLA, Meru, Uber etc.

 During the investigation, it was understood that OLA used a ‘Aggregator

Model’ where they link drivers to their passengers. Based on this model, the
DG segmented OLA and Uber into the Aggregator model while Mega and
Meru comprised the Hybrid model.

 In addition to this, the DG also noted that since these modern taxi services
provide more smart features like GPRS tracking, point to point pickup and
others, it would not be fair to club them with the traditional radio taxi services
operating throughout India. Therefore, the DG limited the geographic location
of operations to Bengaluru itself.

 To check whether OLA held a dominant position in the Bengaluru market, the
DG checked it against multiple parameters namely market share, fleet size
and number of trips (monthly as well as annually). But since these
parameters gave rise to issues of multiple counting, the DG rejected the
study.

 The DG then set the criteria that the dominant player in the market should be
able sustain its position for a considerable time period. Based on this, it was
observed that OLA’s market share declined sharply when Uber entered the
market, which continued for a period of three years.

 The DG then took into consideration various similar cases and found that
financial resources was another factor that determined the market leader.
Even though OLA’s financial resources were more in comparison to its peers
like Meru, Uber’s total capital investment was about 15 to 20 times of OLA.
Therefore, through the resources which Uber has, it was clear how Uber was
successfully able to counter OLA’s competition in the market.

 DG also observed that there was neither any kind of barrier for new entrant in
the taxi market of Bengaluru nor did OLA have any compulsion for restraining
its customers or drivers to its platform. Passengers were free to choose
 whichever platform they felt comfortable with. Thus, it was concluded that
OLA was not a dominant player in the market.

Central Issues

As evident from the case facts, it was critical to identify the market leader to
substantiate the allegations made against OLA. After that was established, the next
step would be to see whether ‘predatory-pricing’ was exercised by the dominant
market leader. Reports that were released by 6Wresearch and TechSci used for
market share analysis which alleged that OLA was in a dominant position. However,
OLA contested the reports stating that the report was published for an unknown
client and was to be used for internal purposes only, and hence the report should
not be admissible in court. Since TechSci and 6Wresearch had contradictory
findings, the Commission rejected the reports.

Court’s Judgement

After conducting a thorough research and analyzing the crucial facts of the
investigation, the DG in its report submitted to the commission mentioned that it
was inconclusive on whether OLA occupied a dominant position in the taxi market of
the city of Bengaluru, and thus the allegations of predatory pricing by the
Informants cannot be applicable in this case.

Case Learning

In a business environment of cut-throat competition, it is frequently observed that

competitors and market leaders use unethical strategies to curtail the growth of their
competition. Although it is understandable that establishing monopoly is an idea
situation for any market player, doing it legally and ethically is a responsibility that
every business undertakes while operating in the market.
It is not just the duty of businesses to foster healthy competition devoid of unfair
and dishonest means but also a moral obligation. In the long run, the businesses
that stand the test of time are the ones that uphold the values of society and follow
the stipulations of the law.