CCI HOLDS THAT OYO HAS NOT ABUSED ITS DOMINANT POSITION WITHOUT HAVING DETERMINED DOMINANCE
Updated: Aug 28, 2020
[This article was first published on Concurrences Antitrust Publications (New York). The copyright to this article is vested with Concurrences Antitrust Publications and is being republished on this blog without any intention to infringe the copyright owned by Concurrences]
CCI in its recent judgements has exhibited a wide-ranging determinant quotient while examining the status of the dominant position of the market players. While it is commendable that CCI defines the relevant market in every dispute incorporating the facts of the particular dispute and bases its further judgement on that specifically carved-out definition of relevant market. CCI has shown vulnerability in the determination of dominant position by grounding its judgement on different factors in different disputes, while CCI allows market share to act a sole determinant of dominant position in one case, it prohibits the same in the other. The dual faced judging criteria of CCI have raised several quandaries ultimately leading to challenging the just authority of CCI.
In the case of RKG Hospitalities Pvt. Ltd (Informant hereinafter) v Oravel Stays Pvt. Ltd (OYO hereinafter) where the Informant alleged that OYO is in a dominant position in the relevant market of service for providing budget hotels to customers through online booking and that OYO imposes unfair and one-sided terms on its partners through the said position. In such a case of indispensable implications, The Competition Commission of India holding OYO’s relevant market to be ‘Market for franchising services for budget hotels in India’ has held that OYO has not abused its dominance under Section 4 of The Competition Act, 2002. Pertinently, CCI has noted that though OYO may be a significant player in the relevant market, presently it cannot be unambiguously concluded that it holds a dominant position. Further, without assessing whether OYO is dominant in its relevant or not CCI has passed a judgement that OYO is not abusing its dominance in the market. Interestingly, it becomes pertinent to note that settled canons for interpretation of Section 4 would suggest that there are three stages a case has to go through for a proven contravention. Firstly, by defining the Relevant Market (RM), Secondly, by establishing of dominant position in the defined RM, and finally abuse of that position. However, the said order bypasses that established principle by first defining the RM, and then tracking back on it and vehemently ignoring the second stage.
Surprisingly another pertinent concern is that CCI has taken an altogether different approach in this case totally disregarding the market share of OYO. While CCI has in numerous cases established dominance on the basis of market share. In the case of Matrix Info Systems Private Limited v. Intel Corporation, CCI while noting that the market share of Intel is at least three times the market share of its only competitor in the microprocessors market i.e. AMD, the Commission held that the “dominant position of Intel in the markets of microprocessors for Desktops and Laptop PCs in India is prima facie, established”.
CCI’s contradictory judgement in the case of RKG Hospitalities Pvt. Ltd v. Oravel Stays Pvt. Ltd (OYO), with its own other judgements show a vulnerability on the part of the Indian Competition watchdog. As indispensable as it seems, CCI in all other cases appointed a Director General (DG) for procedural inquiries including the establishment of a dominant position. Surprisingly, CCI in this did neither appointed any DG for any kind of inquiry nor considered the need for the establishment of dominance of the accused company, rather it rendered an unprecedented judgement breaking its own set norms without any reasonable basis solely relying on the arguments given by the accused company.
Interestingly, in the case of Dlf Ltd. v. Belaire Owners CCI based its determination of dominance of DLF in the market on the report given Director General (DG). Pertinently, in this case DG was heavily reliant on market share of DLF and its competitors which eventually proved to be the only significant factor for the examination of dominant position of DLF.
DG, in this case, had brought forward the market share calculated on the basis of data from Centre for Monitoring Indian Economy (CMIE) which applies to all companies operating in India where DG report suggested that DLF had the highest market share (45%) (while the closest competitor’s share was less than half of DLF’s share). Due to this, there were no competitive constraints on DLF. The CCI’s analysis concluded that DLF, was way ahead of its competitors and faced almost no threat in the market due to low market concentration by virtue of its level of vertical integration, brand value and financial strength. Stating CMIE data to be the most reliable available data, the Commission confirmed the analysis of DG regarding the dominant position of DLF Ltd. in the relevant market. Thus, in terms of section 19(4)(a) Commission held DLF to be dominant in the market. It becomes crystal clear that CCI in this case as well relied solely on the market share of the accused company in the establishment of its dominance in the market.
Notably, in another such case Matrimony.com Limited and Consumer Unity & Trust Society (CUTS) v Google, The DG noted that the market shares of Google and its competitors show that none of Google’s competitors has so far been able to match Google’s market strength either in general-purpose online web search services or online search advertising services in India. The Competition Commission of India acknowledged the fact that Google has revolutionised the manner in which users access information on the Internet and agrees with the DG that the market strength has been acquired by Google over a period of time. The structure of the market was both accepted to be both indicative of and conducive to Google’s dominance. In view of this, the Commission held that Google is dominant in both the relevant markets i.e. market for online general web search services and market for online search advertising services in India. Interestingly enough, CCI in this case as well relied on the market share of Google in the established of Google’s dominance in the market.
The burgeoning concern after the CCI passed judgement in OYO’s case is that determination of dominance in the relevant market lost significance rendering Section 19 of The Competition Act, 2013 to be unserviceable. CCI has shown its vulnerability in deciding similar cases on like footings in an unrecognised and unsubstantiated manner. The Time is ripe for Indian Competition Watchdog to proactively fashion a strong mechanism that will enable the Commission to tackle all kinds of anti-competitive disputes so as to create a healthy competition in the Indian markets.
[Vishal Rajvansh, a 3rd-year student at the National University of Study and Research in Law, Ranchi is the Founder-Editor of this blog (TCCLR)].
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