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(Team-E) Final Memorandum On Behalf of Appellant
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This document is a written submission on behalf of the appellant Smart Travels Pvt Ltd in an appeal filed before the Supreme Court of India against the order of the
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1ST CCI NUJS MOOT COURT COMPETITION, 2017

TEAM CODE - E

BEFORE THE HON’BLE SUPREME COURT OF INDIA

IN THE MATTER OF:

SMART TRAVELS Pvt Ltd. ….APPELLANT

VS.

COMPETITION COMMISSION OF INDIA

HOLA Pvt Ltd.

HYPER Pvt Ltd. ….RESPONDENTS

APPEAL NO. ****/2017

’
ON SUBMISSION TO THE HON BLE SC OF INDIA

UNDER SECTION 53 T OF THE COMPETITION ACT, 2002

WRITTEN SUBMISSION ON BEHALF OF THE APPELLANT

COUNSEL APPEARING ON BEHALF OF THE APPELLANT I

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TABLE OF CONTENTS

LIST OF ABBREVIATIONS ................................................................................................. VIII

STATEMENT OF JURISDICTION .......................................................................................... X

STATEMENT OF FACTS ......................................................................................................... XI

ISSUES PRESENTED ............................................................................................................. XIII

SUMMARY OF PLEADINGS ............................................................................................... XIV

PLEADINGS ................................................................................................................................. 1

[1]. The Present Appeal Is Maintainable. ....................................................................................... 1

1.1. The Present Appeal filed by The Appellant Is Maintainable On Ground That The Same Is
By Way of the Statutory Provision as laid down in Competition Act, 2002, itself. ................... 1

[2]. Hola Holds A Dominant Position In The Market For ‘Radio Taxi Services’ And It Is
Abusing The Said Dominant Position............................................................................................. 2

2.1. HOLA Is Dominant In The Relevant Market....................................................................... 2

2.2. Radio Taxi services in the city of Delhi Is The Relevant Market. ....................................... 2

2.3. Hola Is Dominant In The Identified Relevant Market. ........................................................ 4

2.3.1. HOLA Can Operate Independently Of The Competitive Forces Prevailing In The
Relevant Market. ..................................................................................................................... 5

2.3.2. HOLA Can Affect Competitors, Consumers Or The Relevant Market In Its Favour ... 6

[3]. Pricing By Hola Is Unjust And Predatory ................................................................................ 7

3.1. Hola Has Adopted Predatory Pricing. .................................................................................. 7

3.2. Adoption Of Such Predatory Pricing Is Opposed to The Mandates Of Competition Law. . 8

3.3. Adoption Of Such Predatory Pricing Entails Payment of Compensation. ........................... 9

3.4. Predatory Prices By Hola Was Not Adopted To Meet Competition ................................ 10

II
MEMORIAL ON BEHALF OF APPELLANT

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[4]. There Was An Anti-Competitive Agreement/ Secret Cartel Between Hola Pvt. Ltd. And
Hyper Pvt. Ltd. .............................................................................................................................. 11

4.1. The agreement between Hola and Hyper is a horizontal agreement u/s 3(3) of the
Competition Act ........................................................................................................................ 12

4.2. The agreement has an appreciable adverse effect on competition (AAEC) in the relevant
market. ....................................................................................................................................... 13

4.3. There Was a Secret Cartel Between Hola And Hyper ....................................................... 15

[5]. Besides Violation Of Competition Law, Hola Has Violated Other Laws As Well. .............. 16

5.1. There Is A Violation Of Environmental Law By Hola ...................................................... 16

5.2. Hola does not charge according to the minimum fares imposed by the state and central
government which is a further violation of Laws ..................................................................... 18

5.3. Action of Hola amounts to violation of Motor Vehicles Act, 1988 and Radio Taxi Scheme,
2006…………………………………………………………………………………………… 19

PRAYER ...................................................................................................................................... 20

III
MEMORIAL ON BEHALF OF APPELLANT

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LIST OF AUTHORITIES

A. STATUTES

1. The Constitution of India, 1950 .......................................................................................... 4

2. The Competition Act, 2002................................................................................................. 2
3. Motor Vehicles Act, 1988 ........................................................................................... 17, 18

B. CONSTITUTIONAL PROVISIONS

1. Entries 13, 56 and 57 of List II .......................................................................................... 4

C. INDIAN CASES

1. All India Tyre Dealers Federation v. Tyre Manufacturers, 2013 Comp LR 0092 (CCI) . 16
2. Ani Technologies Pvt Ltd vs. Government of NCT of Delhi & Ors, CM No.12160/2015
........................................................................................................................................... 17
3. Daily Passengers' Association, Bishnupur vs. State of West Bengal & Ors , (2004) 2
CALLT 192 HC. ............................................................................................................... 18
4. Fast Track Call Cab Pvt. Ltd. and Meru Travel Solutions Pvt. Ltd. v. ANI Technologies
Pvt. Ltd. (“Ola”), Case No. 6 & 74 of 2015........................................................................ 3
5. FICCI-Multiplex Association of India v. United Producers/ Distributors Forum, 2011
Copm LR 0079 (CCI) ....................................................................................................... 16
6. Garikapati Veeraya v. N. Subbiah Chowdhry, 1957 AIR 540............................................ 1
7. Haridas Exports v. All India Float Glass Manufacturers Association, AIR 2002 SC 2728.
........................................................................................................................................... 15
8. In Re: Shyam Vir Singh v. DLF Universal Limited, Case No. 24 of 2014 ........................ 4
9. M.C. Mehta vs. Union of India & Ors.; W.P.(C) No.13029/1985. ................................... 17
10. Re: Shyam Vir Singh v. DLF Universal Limited, Case No. 24/2014 ................................. 4
11. Saurabh Tripathy v. Great Eastern Energy Corporation Ltd., Case No. 63/2014, .............. 7
12. Shri Debapriyo Bhattacarya vs. The Principle Secretary, Home Department & Ors., Case
No. 54 of 2011 .................................................................................................................... 2

IV
MEMORIAL ON BEHALF OF APPELLANT

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13. Shri Shubham Srivastava Informant vs. Department of Industrial Policy and Promotion
Case No. 39 of 2013............................................................................................................ 2
14. Tata Engineering (TELCO) v. Registrar of Restrictive Trade Agreement, (1977) 2 SCC
55....................................................................................................................................... 14

D. EUROPEAN CASES

1. AZKO Chemie vs. Commission (1993) 5 CMLR 215. ...................................................... 7

2. BBI/Boosey and Hawkes: Interim Measures, 1987 OJ (L 286) 36 .................................... 6
3. Hoffmann-La Roche & Co. AG v. Commission, 1979 ECR 461, ¶4 (ECJ) ....................... 5
4. Johnson and Johnson, 80/1283, 1980 OJ 1377/16 ............................................................ 12
5. Manfredi v Lloyd Adriatico Assicurazioni SpA, 2007 Bus LR 188 (ECJ) ...................... 10
6. Manfredi v Lloyd Adriatico Assicurazioni SpA, 2007 Bus LR 188 (ECJ ........................ 10
7. Microsoft case (COMP/C-3/37.792) ............................................................................. 6, 10
8. National Panasonic U.K., 82/853, (1982) OJ 1354/28. .................................................... 12
9. Registrar of Restrictive Trade Agreement v. W.H. Smith and Sons, (1960) BA11 ER 721
........................................................................................................................................... 12
10. United Brands Co. v. Commission, 1978 ECR 207, ¶65 (ECJ) ......................................... 5

E. U.S. CASES

1. Cargill, Inc. v. Monfort of Colorado, Inc., 479 U. S. 104, 117 (1986) ............................. 10
2. D. E. Rogers Associates, Inc. v. Gardner-Denver Co., 718 F. 2d 1431, 1439 (CA6 1983) 9
3. Falls City Industries, Inc. v. Vanco Beverage, Inc., 460 U. S. 428, 434 (1983)................. 9
4. FTC v. Anheuser-Busch, Inc., 363 U. S. 536……………………………………………..9
5. Henry v. Chloride, Inc., 809 F. 2d 1334, 1345 (CA8 1987) ............................................... 9
6. In re E. I. DuPont de Nemours & Co., 96 F. T. C. 653, 749 (1980) ................................. 10
7. Inglis & Sons Baking Co. v. ITT Continental Baking Co., 668 F. 2d 1014, 1041 (CA9
1981) ................................................................................................................................... 9
8. International Telephone & Telegraph Corp., 104 F. T. C. 280, 401–402 (1984) ............... 9
9. Malcolm v. Marathon Oil Co., 642 F. 2d 845, 853, n. 16 (CA5) ....................................... 9

V
MEMORIAL ON BEHALF OF APPELLANT

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10. Malcolm v. Marathon Oil Co., 642 F. 2d 845, 853, n. 16 (CA5), cert. denied, 454 U. S.
1125 (1981) ......................................................................................................................... 9
11. Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U. S. 574 ............................. 10
12. Pacific Engineering & Production Co. of Nevada v. Kerr-McGee Corp., 551 F. 2d 790,
798 (CA10) ......................................................................................................................... 9
13. Prints India v. Springer India Pvt. Ltd., Case 16/2010, ¶9 (CCI) ....................................... 3
14. Saurabh Tripathy v. Great Eastern Energy Corporation Ltd., Case No. 63/2014, ¶18
(CCI) ................................................................................................................................... 7
15. Spectrum Sports, Inc. v. McQuillan, 506 U. S. 447, 455 (1993) ........................................ 9
16. Spectrum Sports, Inc. v. McQuillan, 506 U. S. 447, 455 (1993), ....................................... 9
17. Swift & Co. v. United States, 196 U. S. 375, 396 (1905) ................................................... 9
18. Swift & Co. v. United States, 196 U. S. 375, 396 (1905). .................................................. 9
19. United States v. National Dairy Products Corp., 372 U. S. 29 (1963) ............................. 10
20. United States v. United Shoe Machinery Corp,110 F Supp 295 ........................................ 7
21. United States vs United Shoe Machinery Corp,110 F Supp 295 ........................................ 7
22. Utah Pie Co. v. Continental Baking Co. 386 U. S. 685 (1967) .......................................... 9
23. Utah Pie Co. v. Continental Baking Co. 386 U. S. 685 (1967). ......................................... 9
24. Verizon Communications Inc. v. Law offices of Curtis Trinko, 540 US 398 (2004). ..... 15
25. Verizon Communications Inc. v. Law offices of Curtis Trinko, 540 US 398 (2004) ...... 15
26. William Inglis & Sons Baking Co. v. ITT Continental Baking Co., 668 F. 2d 1014, 1041
(CA9 1981) ......................................................................................................................... 9

F. OTHER CASES

1. Ashton v. C. of I.R. 75 ATC 6001 at 6006 ....................................................................... 13

G. BOOKS

1. “The practice of Competition Law”, Law society of Singapore, Law Gazette, June 2206
(2). ..................................................................................................................................... 12
2. Adam Smith, The Wealth of Nations, Book I, Chapter X ................................................ 15

VI
MEMORIAL ON BEHALF OF APPELLANT

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3. Areeda & H. Hovenkamp, Antitrust Law ........................................................................... 9

4. Competition Law of India by Abir Roy and Jayanth Kumar, chapter 4 page 110, Eastern
Law House Private Ltd. ...................................................................................................... 6
5. F. Wijckmans, and F. Tuytschaever, VERTICAL AGREEMENTS IN EU COMPETITION LAW,
106, (2nd edn., 2011)............................................................................................................ 3
6. OLA Cab Case: The Tale of Predatory Pricing in the Radio Cab Market, (2015) PL
(Comp. L) December 59 at page 60 .................................................................................... 4
7. S. Dugar, GUIDE TO COMPETITION LAW, Vol. 1, 555 (5th edn., 2010). ............................... 7

H. TREATISES
1. Treaty on the Functioning of the European Union ............................................................. 5

I. OTHER AUTHORITIES
1. Guidance on Article 102 Enforcement Priorities in Applying Article 82 EC Treaty to
Abusive Exclusionary Conduct by Dominant Undertakings, OJ 2009 (C 45)7 ................. 5
2. Guidance on Article 102 Enforcement Prioritiesin Applying Article 82 EC Treaty to
Abusive Exclusionary Conduct by Dominant Undertakings OJ 2009 (C 45)7, ¶10
[hereinafter, Enforcement Guidance].................................................................................. 5
3. HENRY CAMPBELL BLACK: BLACKS' LAW DICTIONERY’, 6TH ED., CENTENNIAL L ED. (1891-
1991). ................................................................................................................................ 13
4. http://hdl.handle.net/10603/143804. ................................................................................. 16
5. http://www.cci.gov.in/sites/default/files/advocacy_booklet_document/cartel%20book.pdf
........................................................................................................................................... 15
6. http://www.cci.gov.in/sites/default/files/advocacy_booklet_document/CCI%20Basic%20
Introduction_0.pdf ............................................................................................................ 12
7. Report of High Level Committee on Competition Law & Policy, SVS Raghavan
Committee (2000), .............................................................................................................. 8
8. Suman Sanwal, Guidelines for Cartel for CCI 16 (2006). ................................................ 15

VII
MEMORIAL ON BEHALF OF APPELLANT

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LIST OF ABBREVIATIONS

& : And

¶ : Paragraph

AAEC : Appreciable Adverse Effect On Competition

AIR : All India Report

All. : Allahabad

Anr. : Another

Asso. : Association

AVC : Average Variable Cost

CCI : Competition Commission of India

CEO : Chief Executive Officer

Co. : Company

Comm. : Commission

Commr. : Commissioner

COMPAT : Competition Appellate Tribunal

Corp. : Corporation

Del : Delhi

DG : Director General

EC : European Commission

ECR : Efficient Consumer Response

ENTR : Effective Net Take Rate

Exp. : Explanation

VIII
MEMORIAL ON BEHALF OF APPELLANT

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GPS : Global Positioning System

HC : High Court

Hon’ble : Honorable

L. Rev. : Law Review

MRTP : Monopolies and Restrictive Trade Practices

NCLAT : National Company Appellate Tribunal

NSE : National Stock Exchange

Ors. : Others

Pvt. : Private

Raj. : Rajasthan

S. : Section

SC : Supreme Court

SCC : Supreme Court Cases

SCR : Supreme Court Review

TFEU : Treaty on the Functioning of the European Union

u/s : Under Section

UK : United Kingdom

Univ. : University

UOI : Union of India

US : United States

IX
MEMORIAL ON BEHALF OF APPELLANT

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STATEMENT OF JURISDICTION

THE APPELLANTS HAVE APPROACHED THIS HON’BLE COURT UNDER SECTION

53T OF THE COMPETITION ACT, 2002.

“53T: Appeal to Supreme Court.

The Central Government or any State Government or the Commission or any statutory authority
or any local authority or any enterprise or any person aggrieved by any decision or order of the
Appellate Tribunal may file an appeal to the Supreme Court within sixty days from the date of
communication of the decision or order of the Appellate Tribunal to them;

Provided that the Supreme Court may, if it is satisfied that the applicant was prevented by
sufficient cause from filing the appeal within the said period, allow it to be filed after the expiry
of the said period of sixty days.”

The present memorandum sets forth the facts, contentions and arguments in the present case.

X
MEMORIAL ON BEHALF OF APPELLANT

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STATEMENT OF FACTS

ESTABLISHMENT & CONDUCTS OF SMART CO.

In April 2008, Smart Travels Pvt. Ltd. (hereinafter referred as Smart Co) was established by Mr.
Shubho Roy and his batch-mate Mr. Burman as its CEO. In November 2009, Smart Co expanded
its fleet & services in Bangalore and Kolkata with 200 cabs in each city after starting off in
Mumbai and Delhi with 500 cabs in each city.

Smart Co licensed its cars from the respective State/Regional Transport Authority and ensured
certain requirements of the fleet such as- necessary permits, air conditioners, road fitness
certificate, basic hygiene requirements, valid licenses of drivers, background check, etc. among
others. All the expenses regarding fuel, salary, insurance, permit, fleet maintenance were covered
by Smart Co itself.

Along with these, the car was fitted with a GPS and the driver was provided a phone installed
with software for radio cab business abstaining it from downloading other competing networks’
application.

By July 2014, Smart Co was getting around 500 point-to-point trips per cab per month on an
average and acquired a market share of around 30% of the radio cab market according the fleet
size which it operated in the urban cities.

ESTABLISHMENT & CONDUCTS OF HOLA

Hola Pvt. Ltd. was incorporated in July 2014 with Mr. Krishnan as its CEO as he convinced the
investors, some of whom had already invested in Smart Co to stick to this in the long run
forsaking profit in the short term.

Hola followed a purely aggregator model. The taxies were not owned by the company rather it
created a platform for a network of cabs and customers which included a call centre, software
apps for mobiles, GPS, feedback system, setting up of price charging formula, etc.

Hola has a revenue-sharing arrangement with individual drivers or fleet operators. Drivers are
also given incentives based on performance, loyalty, feedback from customers, minimum
number of trips in a given period. Hola does not charge according to the minimum fares imposed

XI
MEMORIAL ON BEHALF OF APPELLANT

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by State or Central laws. Also, its cars are often found to have violated environmental norms
such as requiring CNG tanks for which it claims to be an aggregator and zero accountability for
such breaches.

In April 2017, Mr. Krishnan stated that the top four cities account for over 90% of their business
with each cab doing 700 direct trips per cab per month on an average.

REASON OF CONFLICT OF INTEREST

The below cost-price of Hola was being funded by multiple rounds of capital raising and not by
its business activities. This resulted in the loss of 5% market share of Smart Co from July 2014-
July 2016. Mr. Shubho Roy’s allegation of unfair pricing by Hola was denied by Mr. Krishnan
who appreciated the superiority of the economics of the aggregator-based model.

The grievance of Smart Co was entertained by CCI which was of the view that Hola held a
dominant position in the market for ‘Radio Taxi Services in the city of Delhi’ and that it was
abusing its dominant position. The DG started its investigation into the matter after the
Commission directed him to do so.

The conclusion of the DG’s Report was that although Hola charges below the average variable
cost, it is not a dominant player as another market player- Hyper Pvt. Ltd. acquired the market
share by similar below cost-pricing strategy. Further, the report contained that due to the lively
competition in the market, it is not possible for Hola to increase prices above competition levels.
CCI agreed with the findings of the DG and rejected Smart Co’s allegations. On appeal, NCLAT
also rejected Smart Co’s claim. The appeal is now before the SC against the NCLAT’s order.

XII
MEMORIAL ON BEHALF OF APPELLANT

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ISSUES PRESENTED

I.

WHETHER THE PRESENT APPEAL IS MAINTAINABLE?

II.

WHETHER HOLA HOLDS A DOMINANT POSITION IN THE MARKET FOR ‘RADIO TAXI
SERVICES’ AND IT IS ABUSING THE SAID DOMINANT POSITION?

III.

WHETHER THE PRICING BY HOLA IS UNJUST AND PREDATORY?

IV.

WHETHER THERE WAS AN ANTI-COMPETITIVE AGREEMENT/ SECRET CARTEL BETWEEN

HOLA PVT. LTD. AND HYPER PVT. LTD?

V.

WHETHER HOLA HAD VIOLATED ANY OTHER LAW OTHER THAN THE COMPETITION ACT,
2002?

XIII
MEMORIAL ON BEHALF OF APPELLANT

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SUMMARY OF PLEADINGS

[1]. WHETHER THE PRESENT APPEAL IS MAINTAINABLE?

It is humbly submitted before the Hon’ble SC that, the present appeal is maintainable. The
appellants have approached the SC under section 53 T of the Competition Act, 2002. As a
specific statutory provision to appeal to SC is given in the Act, therefore as a matter of right and
not being a matter of procedure, the aggrieved party has approached the Hon’ble Court to appeal
against the order of NCLAT.

[2]. WHETHER HOLA HOLDS A DOMINANT POSITION IN THE MARKET FOR ‘RADIO TAXI
SERVICES’ AND IT IS ABUSING THE SAID DOMINANT POSITION?

It is humbly submitted before the Hon’ble SC that, Hola holds a Dominant Position in the market
for ‘Radio Taxi Services’ and it is abusing the alleged Dominant Position. Hola not only
dominates the other competitive players of the market. Due to the absence of lively competition
in the market between Hola and its competitor Hola is dominant and can very well operate
independently of the competitive forces prevalent in the relevant market. Hola being a dominant
player in the relevant market has an adverse effect on competition and also effects the behavior
of the consumers.

[3]. WHETHER THE PRICING BY HOLA IS UNJUST AND PREDATORY?

It is humbly submitted before the Hon’ble SC that, Pricing by Hola can be regarded as Unjust
and Predatory. The predatory pricing strategy adopted by Hola Pvt. Ltd., poses such reasonable
possibility coupled with quite dangerous probability of actual monopolization. Once the
competitors who are already facing significant decline in their market share are driven out of the
market then a monopoly will be created by the Hola Pvt. Ltd and subsequently it will recoup its
investment by manipulating the prices in its favour. The priced adopted by Hola were in no
situation to meet competition.

XIV
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[4]. WHETHER THERE WAS AN ANTI-COMPETITIVE AGREEMENT/ SECRET CARTEL BETWEEN

HOLA PVT. LTD. AND HYPER PVT. LTD?

It is humbly submitted before the Hon’ble SC that, there was an anti-competitive horizontal
agreement between Hola and Hyper under section 3(3) of the Competition Act, 2002. The
agreement formed by them had an appreciable adverse effect on competition and created a
barrier for new entrants. The secret cartelization done by Hola and Hyper imposed unreasonable
restriction on free trade in the relevant market.

[5]. WHETHER HOLA HAD VIOLATED ANY OTHER LAW OTHER THAN THE COMPETITION
ACT, 2002?

It is humbly submitted before the Hon’ble SC that, Hola not only violated the provisions of
Competition Act but also violated the environmental norms as their cabs required CNG tanks.
They had also violated the provisions of Motor Vehicles Act and Radio Taxi Scheme by not
following the minimum price fixed by the central and state governments and not having the
permit for the operation of radio taxi services in the relevant market.

XV
MEMORIAL ON BEHALF OF APPELLANT

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PLEADINGS

[1]. THE PRESENT APPEAL IS MAINTAINABLE.

1. It is humbly before the court that the appeal in question is maintainable. There exists a
statutory provision in the Competition Act, 2002 itself according to which the aggrieved party
can invoke the jurisdiction of the Apex Court.

2. By application of such statutory provision, the appellants have approached the Supreme Court
and hence in presence of such a provision of statutory appeal, there exists no discretion to reject
the same. Further, the DG has acted within the ambit of its jurisdiction so no question arises
regarding the concrete reality of the Report.

1.1. The Present Appeal filed by The Appellant Is Maintainable On Ground That

The Same Is By Way of the Statutory Provision as laid down in Competition Act,

2002, itself.

3. It is humbly submitted that the Section 53 T of the Competition Act, 2002 allows the
aggrieved party to appeal against the order of NCLAT1. According to this section, an appeal to
Supreme Court would suffice when any person is aggrieved by the decision or order of the
Appellate Tribunal. It is further submitted that as a specific statutory provision to appeal to SC is
given in the Act, therefore as a matter of right and not being a matter of procedure2, the
aggrieved party has approached the Hon’ble Court to appeal against the order of NCLAT.

4. Moreover, it is contended that the appellants have not invoked any other jurisdiction of the
Hon’ble Court as the provision regarding the appeal has been given in the Act itself. And, the
aggrieved party has approached the court in conformity to that provision being Section 53 T.

1
National Company Law Appellate Tribunal
2
Garikapati Veeraya v. N. Subbiah Chowdhry, 1957 AIR 540.

1
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[2]. HOLA HOLDS A DOMINANT POSITION IN THE MARKET FOR ‘RADIO TAXI SERVICES’ AND
IT IS ABUSING THE SAID DOMINANT POSITION.

5. Section 4(1) of the Act states that no enterprise or group shall abuse its dominant position3. It
is submitted that the findings of NCLAT are incorrect and there is violation because HOLA is
dominant in the relevant market [A]. It has abused its dominant position [B].

2.1. HOLA Is Dominant In The Relevant Market

Hola is an Enterprise

9. Hola is an enterprise as per defined in section 2(h) of the Competition Act, 2002.

10. 'Enterprise' as defined under Section 2(h) of the Act brings within its ambit any firm or
person engaged in activities relating to production, storage, supply, distribution, and acquisition
etc of goods. Rendering services of any kind is also a critical inclusion in the definition.

11. The term 'services' has a particularly wide meaning within the Act, encompassing sectors
such as banking, communication, education, financing, insurance, chit funds, real estate,
transport, storage, material treatment, processing, supply of electrical or other energy, boarding,
lodging, entertainment, amusement, construction, conveyancing of news or information and
advertising, etc.

12. The word engaged in reflects both regularity and continuity of the activities mentioned in the
section.4 Furthermore, the words ‘engaged in’ preceding the words ‘any activity’ reflect both
regularity and continuity of the activities mentioned in the section.5Therefore, Hola being
engaged in a regular transport service is thus, an enterprise.

2.2. Radio Taxi services in the city of Delhi Is The Relevant Market.

3
Section 4(1), The Competition Act, 2002.
4
Shri Debapriyo Bhattacarya vs. The Principle Secretary, Home Department & Ors., Case No. 54 of 2011.
5
Shri Shubham Srivastava Informant vs. Department of Industrial Policy and Promotion Case No. 39 of 2013.

2
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13. The ascertainment of the relevant market is essential for analyzing a case of abuse of
dominance.6 The dominant position of an enterprise or a group within an identified ‘relevant
market’ has to be established first.7 When determining what constitutes the relevant market, due
regard must be given to both the relevant product as well as geographic market.8

14. All those products or services which are regarded as interchangeable or substitutable by
reason of characteristics of the products or services, their prices and intended use form part of
the same relevant product market.9 Relevant product market is primarily determined by gauging
product substitutability from a consumer’s perspective.10 In the instant case, the relevant product
is the radio taxi services.

15. There are different business models prevailing in the radio taxi service industry i.e. asset-
owned model, aggregator model and hybrid model. It is contended that the services offered by
hola are that of a radio taxi provider and the services being consumed by the users of hola are
that of radio taxis. It is stated that hola enters into contracts with the taxi owners and uses its
brand image, platform to offer the services of taxis to the customers. It has also been submitted
that Hola determines the tariffs payable by the consumers for the taxi services and has control
over all aspects of taxi services. Hence, it is submitted that the argument that it is merely a
platform which is connecting customers and drivers cannot be accepted and is a misnomer.

16. Furthermore, the Commission recognized that the services offered by Ola and other radio taxi
service providers were functionally substitutable11. The Commission observed that mere
adoption of a new business model to provide the same services would not create a distinct
relevant product market. This is further supported by CCI’s end –use test which was adopted to

6
Prints India v. Springer India Pvt. Ltd., Case 16/2010, ¶9 (CCI)
7
Explanation 2, section 4(2), Competition Act, 2002.
8
Section 19(5), Competition Act, 2002.
9
Section 2(t), Competition Act, 2002
10
F. Wijckmans, and F. Tuytschaever, V ERTICAL AGREEMENTS IN EU COMPETITION LAW, 106, (2nd edn., 2011).
11
Fast Track Call Cab Pvt. Ltd. and Meru Travel Solutions Pvt. Ltd. v. ANI Technologies Pvt. Ltd. (“ Ola”), Case
No. 6 & 74 of 2015

3
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delineate the relevant market in the Dlf Universal Case.12 Similarly, in the instant case, owner
based and aggregator based radio cab services can’t be identified as a distinct market.

17. The ‘relevant geographic market’13 is also taken into consideration to identify the relevant
market.14 Relevant geographic market has been defined under Section 2(s) of the Act as the
market comprising the area in which the conditions of Competition for supply of goods or
 provision of services or demand of goods or services are distinctly homogenous and can be
distinguished with the conditions prevailing in that area.15 With regard to the geographic market,
it is a fact that transport is a State subject under the Constitution 16 and therefore, the radio taxi
schemes formulated by the State Governments differ from State to State and City to city. Thus,
the regulatory conditions of competition are homogenous only in a particular city like Delhi and
distinct from conditions prevailing in any other neighbouring cities/states.

18. Further, the radio/local point-to-point taxi service is a highly localized service from demand
side and supply side perspective. This is on account that a customer willing to commute within a
city will have to rely on radio cab services available within that particular city only as it is not
feasible to opt for radio cab services from other city. Based on these considerations, the relevant
geographic market was delineated as the city of Delhi. In conclusion, it is submitted that “the
radio taxi services for city of Delhi” is the relevant market.

2.3. Hola Is Dominant In The Identified Relevant Market.

19. As has been argued above, the relevant market in the instant case is the market for the ‘radio
taxi services in the city of Delhi’. As regards dominance, Hola is a self-proclaimed dominant
player in the market17. There have been public statements made by the CEO Mr. Krishnan that it
has a high market share in the radio taxi industry in India.

12
In Re: Shyam Vir Singh v. DLF Universal Limited, Case No. 24 of 2014
13
Section 2(s), Competition Act, 2002.
14
Section 19(5), Competition Act, 2002.
15
OLA Cab Case: The Tale of Predatory Pricing in the Radio Cab Market, (2015) PL (Comp. L) December 59 at
page 60
16
Entries 13, 56 and 57 of List II, Constitution of India, 1950
17
Page 3, ¶ 3 of the moot-proposition

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20. Section 4 deals with abuse of Dominant Position in relevant market. Explanation (a) of the
section defines dominant position as “a position of strength, enjoyed by an enterprise, in the
relevant market, in India, which enables it to—

a. operate independently of competitive forces prevailing in the relevant market; or

b. affect its competitors or consumers or the relevant market in its favour”

21. It is submitted that HOLA is in a dominant position in this market because first, hola operates
independently of the competitive forces prevailing in the relevant market and secondly, Hola can
affect competitors, consumers or the relevant market in its favour.

2.3.1. HOLA Can Operate Independently Of The Competitive Forces Prevailing In The
Relevant Market.

22. It is an established principle that a firm would be able to behave independently of

competitive forces, if it has acquired a position of economic strength.18 This position of
economic strength can be understood to be one of substantial market power.19 In the instant case,
HOLA has substantial market power of 75% in the identified relevant market. This is on account
of the fact that in April 2017, a newspaper quoted Mr. Krishnan as stating: “In the top four cities,
we have over 75% market share against our nearest competitor.”

23. Section 19(4) of the Act enumerates various factors to show that OP is dominant. In this
regard, it is submitted that market share of more than 50% of an entity creates a presumption of
dominance. The market share of Hola is more than the aggregate of all the competitors put
together for the years 2014-15 and 2016-17. Furthermore, even within the first 1 year of its
launched Hola had a fleet size of 400 in each of the top Indian cities - Mumbai, Delhi, Bangalore
and Kolkata - with each cab doing more than 700 point-to-point trips per cab per month on
average.

18
United Brands Co. v. Commission, 1978 ECR 207, ¶65 (ECJ); Hoffmann-La Roche & Co. AG v. Commission,
1979 ECR 461, ¶4 (ECJ).
19
Guidance on Article 102 Enforcement Priorities in Applying Article 82 EC Treaty to Abusive Exclusionary
Conduct by Dominant Undertakings, OJ 2009 (C 45)7, ¶10 [hereinafter, Enforcement Guidance]; Art. 102, TFEU.

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24. It is further contended that in the present case, as per the HHI index, the concentration of
Hola itself is over 5625 and that of the market is over 6250. This, as per the Informants, shows
that OP is dominant in a highly concentrated market. Since there is absence of lively competition
in the market between Hola and its competitor. Therefore, it is submitted that HOLA is dominant
and can very well operate independently of the competitive forces prevalent in the relevant
market.

2.3.2. HOLA Can Affect Competitors, Consumers Or The Relevant Market In Its
Favour.

25. A dominant position may be inferred if there are high barriers to entry that guard the market
shares.20An enterprise should have the ability to engage in conduct that excludes competition or
prevents the entry of newcomers into the relevant market, and should be able to influence the
relevant market in its favor.21 As argued above, Hola has also introduced high entry barriers in
the relevant market. It is stated that radio taxi market is characterized by network effects22 which
can act as an entry barrier. It is claimed that Hola was the first player to build a strong network
with the help of its predatory model by virtue of which, it tipped the market in its favour, which
has given it a strong edge in the market over its competitors. Since it would take considerable
time for a new player to capture a good position and compete against an established player, the
network effects result in high entry barriers for potential entrants. Therefore, anomalous behavior
of HOLA would have significant effect on the market or competitors.

26. In addition, the ultimate effect of Hola paying such high incentives locked in a lot of drivers
and increased its customer base as well. Further, the agreement that Hola enters into with its
drivers contains an exclusivity clause in the form of software applications for mobiles and thus,
locks in a lot of drivers. It is alleged that this further proves that Hola is in a dominant position.

20
Competition Law of India by Abir Roy and Jayanth Kumar, chapter 4 page 110, Eastern Law House Private
Ltd.
21
BBI/Boosey and Hawkes: Interim Measures, 1987 OJ (L 286) 36, ¶18 (EC) [hereinafter, Boosey]; section19(4)(h),
Competition Act, 2002.
22
Microsoft case (COMP/C-3/37.792) and MasterCard/Visa case

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27. Additionally, the buyers have countervailing buying power because of the competitive
market.23 The essential requirement to prove that there is sufficient countervailing buyer power,
it is necessary to show that buyers/consumers have the power to negotiate and to substantially
affect the service provider by shifting to a competing network. Both the essential requirements
are missing in the present case because of the large network created by Hola. In conclusion, it is
submitted that HOLA holds a dominant position in the relevant market. Therefore, HOLA has
violated section 4 of the Act.

[3]. PRICING BY HOLA IS UNJUST AND PREDATORY

28. In the present case, the market identified by CCI is the relevant market and Hola is dominant
in that market, also Hola has abused this dominant position. This is because first, Hola has
adopted predatory pricing. Secondly, actions of Hola are not protected as price imposed by Hola
was not adopted to meet the competition.

3.1. Hola Has Adopted Predatory Pricing.

29. Predatory pricing is an exclusionary practice.24 The Act has been influenced by the European
Competition Law and US Antitrust Law. 25The Act specifically includes predatory pricing26 as
an act of abuse of dominance. The Act defines predatory pricing as ‘ the sale of goods or
provision of services , at a price which is below cost, as may be determined by regulations , of
production of the goods or provision of services, with a view to reduce competition or eliminate
the competitors’.27 Usually, where the price is below average variable costs, predation is
presumed. The Competition Commission of India has adopted the Average Variable Cost28

23
Saurabh Tripathy v. Great Eastern Energy Corporation Ltd., Case No. 63 of 2014, ¶18 (CCI)
24
United States v. United Shoe Machinery Corp,110 F Supp 295
25
S. Dugar, GUIDE TO COMPETITION LAW, Vol. 1, 555 (5th edn., 2010).
26
section 4(2) (a) (ii) of The Competition Act 2002
27
Explanation (b) of section 4 (2) (e)
28
“Cost’ in Explanation (b) to section 4 of the Ac t shall mean average variable cost unless the commissions decide
otherwise.

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(AVS) as the appropriate measure of cost. In AZKO Chemie vs. Commission29 , the European
Court of Justice sanctioned two different methods of analysis for determining whether an
undertaking has practiced predatory pricing. First, prices below average variable cost must
always be considered abusive. In such case, there is no conceivable economic purpose other than
the elimination of a competitor. Since each item produced and sold entails a loss to the
undertaking.

30. European court of Justice has held that it must be possible to penalize predatory pricing
whenever there is risk that competitors will be eliminated since the aim pursued, which is to
maintain undistorted competition, rules out waiting until such a strategy leads to the actual
elimination of competitors.

31. The Raghavan Committee observes on predatory pricing as follows;30

“Predatory pricing is defined as the situation where a firm with market power prices below cost
as to drive competitors out of the market and, in this way, acquire and maintain a position of
dominance …… in reality, predation is only established after the fact, i.e., once the rival has left
the market and the predator has acquired monopoly position in the market. However, any law to
prevent is meaningful, only if it takes effect before the fact, i.e. before the competitor has left the
market”.

32. Such prices can drive from the market undertakings, which are as efficient as the dominant
undertaking but which because of their smaller financial resources are incapable to withstand the
competition.

3.2. Adoption Of Such Predatory Pricing Is Opposed to The Mandates Of

Competition Law.

33. Appellant contends that respondent’s discriminatory volume rebates threatened substantial
competitive injury by furthering a predatory pricing scheme designed to purge competition from

29
AZKO Chemie vs. Commission (1993) 5 CMLR 215.
30
Report of High Level Committee on Competition Law & Policy, SVS Raghavan Committee (2000), pg. 39, ¶
4.5.1

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the economy segment of the cigarette market. This type of injury, which harms direct
competitors of the discriminating seller, is known as primary-line injury. 31 In case of Utah Pie32
as early as in the year 1967, it held to permit liability for primary-line price discrimination on a
mere showing that the defendant intended to harm competition or produced a declining price
structure. Moreover, in plethora of case-laws it has been held that injury inflicted by predatory
pricing schemes are actionable33.

34. Predatory pricing is condemned when it poses “a dangerous probability of actual

monopolization34,”as well as when there be “a reasonable possibility” of substantial injury to
competition before its protections is triggered35. In the present matter the predatory pricing
strategy adopted by Hola Pvt. Ltd., poses such reasonable possibility coupled with quite
dangerous probability of actual monopolization. Moreover, here is a “dangerous probability” that
an attempt to achieve monopoly power will succeed36 and hence requires immediate restraint on
its exercise.

3.3. Adoption Of Such Predatory Pricing Entails Payment of Compensation.

35. Here in the instant case, a business rival (namely; Hola Pvt. Ltd.) has priced its products in an
unfair manner with an object to eliminate or retard competition and thereby gain and exercise
control over prices in the relevant market and the same requires immediate action of this Hon’ble
Court by declaring such acts as illegal and to grant an immediate injunction against such acts
with due compensation and directions not to repeat such illegality in future as well.

31
FTC v. Anheuser-Busch, Inc., 363 U. S. 536
32
Utah Pie Co. v. Continental Baking Co. 386 U. S. 685 (1967) .
33
Henry v. Chloride, Inc., 809 F. 2d 1334, 1345 (CA8 1987); D. E. Rogers Associates, Inc. v. Gardner-Denver Co.,
718 F. 2d 1431, 1439 (CA6 1983), William Inglis & Sons Baking Co. v. ITT Continental Baking Co., 668 F. 2d
1014, 1041 (CA9 1981), Malcolm v. Marathon Oil Co., 642 F. 2d 845, 853, n. 16 (CA5), ; Pacific Engineering &
Production Co. of Nevada v. Kerr-McGee Corp., 551 F. 2d 790, 798 (CA10) , cert. denied, 434 U. S. 879 (1977);
International Telephone & Telegraph Corp., 104 F. T. C. 280, 401 –402 (1984); Hovenkamp, supra, at 189; 3 Areeda
& Turner ¶720c; P. Areeda & H. Hovenkamp, Antitrust Law ¶720c (Supp.1992)
34
Spectrum Sports, Inc. v. McQuillan, 506 U. S. 447, 455 (1993) ,
35
Falls City Industries, Inc. v. Vanco Beverage, Inc., 460 U. S. 428, 434 (1983) .
36
Swift & Co. v. United States, 196 U. S. 375, 396 (1905) .

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