The National Company Law Appellate Tribunal (NCLAT) has held that a person who has not suffered an invasion of his legal rights as a consumer or as a beneficiary of healthy competitive practices has no locus standi to approach the Competition Commission of India (CCI) in terms of Section 19(1)(a) of the Competition Act, 2002.
The judgment was passed by NCLAT while dismissing an appeal against CCI’s decision to close a complaint alleging violation of Competition Act by Ola and Uber.
Samir Agrawal (Law practitioner) had filed Information with the CCI, alleging a contravention of the Competition Act, 2002.As per the Informant, cab aggregators Ola and Uber formed a “hub and spoke cartel” as they used their respective algorithm to facilitate price fixing between drivers.
It was thus claimed that there was collusion between the drivers through the cab aggregators. The CCI Commission, however, refused to order an investigation in the matter after it opined that there existed no prima facie case.
Advocate Rajshekhar Rao argued for Ola with Trilegal Competition team including Partner Nisha Kaur Uberoi, Counsel Gautam Chawla, Senior Associates Shiv Johar and Rishabh Juneja and Associate Ankita Dhawan,
Uber was represented by Advocate Samar Bansal with Shardul Amarchand Mangaldas lawyers Rohan Arora, Aman Singh Sethi, Anjali Kumar and Devahuti Patha.
The NCLAT noted that as per the Competition Act, CCI was empowered to take cognizance of any allegation of contravention of anti-trust laws on its own motion or on the basis of the complaint or on the basis of reference made to it by the appropriate Government or statutory authority.
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It noted that information into allegations of contravention could be filed by any person, consumer or their association or trade association in terms of Section 19(1)(a).
NCLAT stated,
“The question that arises for consideration is whether a ‘person’ would mean any natural person irrespective of he being a consumer who has suffered invasion of his legal rights or a person whose legal rights have been or are likely to be jeopardised by the alleged anti-competitive agreement or abuse of dominant position.”
The NCLAT said that although the concept of locus standi had been diluted to some extent by allowing PILs, class action etc, when a statute like the Competition Act specifically provided for the mode of taking cognizance of allegations in a particular manner, a reference to receipt of any information “from any person” was necessarily to be construed as a reference to “a person who has suffered an invasion of his legal rights as a consumer or beneficiary of healthy competitive practices”.
It observed in the instant case, the Informant, an independent law-practitioner, had nothing on the record to show that he suffered a legal injury at the hands of Ola and Uber as a consumer or as a member of any consumer or trade association.
The NCLAT added that it was an admitted position that under the business model of Ola, there was no exchange of information amongst the drivers and the cab aggregators did not function as an association of its driver partners.
“Thus, the allegation of their facilitating a cartel defies the logic and has to be repelled.”, it said.
As far as the allegation of abuse of dominant position was concerned, the NCLAT stated that none of the two enterprises independently held dominant positions in the relevant market.
The NCLAT stated that to direct the Director-General to cause an investigation to be made into the matter, CCI must arrive at an opinion in regard to the existence or otherwise of a prima facie case qua alleged contravention.
In the instant case, the NCLAT observed, the Commission dealt with the allegations and recorded its opinion. In view of the above discussion, the NCLAT concluded that the opinion of the Commission with respect to the non-existence of a prima facie case could not be faulted on any ground.
The NCLAT thus held that the Informant had no locus standi to maintain an action qua the alleged contravention of the Act.
Finding no legal infirmity in the CCI order, the appeal was dismissed by NCLAT.
