CCI takes suo moto action against anti-competitive conduct of ‘Goa Taxi Union’ towards app-based Taxi aggregators

Topics covered in this article are as follows:

1. Brief Facts
2. Demands of Taxi Unions
3. CCI’s direction to DG to cause investigation
4. Arguments by Taxi Unions
5. CCI’s observation

1. Brief Facts

In this significant case of ‘Alleged Anti-Competitive Conduct of Taxi Unions in the State of Goa, In re – [2021] 128 taxmann.com 12 (CCI)’, the CCI, in the year 2018, suo-moto took up a case against ‘Goa tourist taxi unions’ based on newspaper reports regarding alleged concerted action on their part to prevent the entry of app-based taxi aggregator companies in the State of Goa.

In addition to the newspaper reports, it was noted that an online petition was filed to CM of Goa to allow entry of app-based aggregators services. The petition also highlighted that taxi drivers were not using the fare meters and were charging higher fares from the consumers.

The petition highlighted the benefits of introducing app-based aggregators in Goa, such as a boost to the tourism sector, increased tax revenue, employment for drivers, cheaper fares, easy route detection, cashless payment with an online receipt for every transaction, etc.

2. Demands of Taxi Unions

It was reported in various newspapers that due to constant strikes by various taxi unions, tourists were getting affected in Goa. The demands of the unions included “crackdown on an illegal taxi” and “cancellation of installation of speed governors”.

3. CCI’s direction to DG to cause investigation

The CCI noted that the conduct of taxi unions not allowing any app-based service providers in the State was restraining services, limiting the competition, technical development, and investment in the relevant services. Further, this conduct of taxi unions was also preventing the introduction of reforms by the State Government to bring transparency and improvement in the delivery of services. Thus, resulting in restricting the choice of consumers in contravention to the provisions of Section 3(3)(b) read with Section 3(1) of the Act.

Based on the above, the Commission instructed the Director-General (DG) to investigate the matter and submit a report.

The DG found that the Government of Goa had introduced, GoaMiles, a taxi smartphone app similar to Uber and Ola. The app subsidized the taxi fares by almost half of what one would pay to a taxi driver off the street. It provided benefits, including instant hiring 24*7 from anywhere, hassle-free payment, transparent rating system, exact information about location, and location time. However, the taxi unions in Goa opposed this app-based service and demanded that the government should hike the taxi fares in light of the rise in fuel prices and higher cost of living.

The DG submitted a report in January 2020, citing there were no fare meters, and organized groups of taxi operators in Goa control the rates and routes. The report also highlighted the fact that taxi operators were overcharging tourists in Goa. The DG submitted that the app-based taxi aggregator Ola and Uber wanted to enter the market. However, the open protests by taxi unions/Opposite Parties (OP) and safety concerns resulted in the denial of market access to Uber/Ola.

4. Arguments by Taxi Unions

The North Goa Tourist Taxi Owners Association said the report was only based on selective newspaper reports, and no attempt was made to investigate the matter equally.

The operators said that they could not be criticized for peacefully voicing their opposition against the entry of players, which will directly impact their livelihood. They keen out that despite their so-called anti-competitive lobbying with the government, the government formulated a policy for the aggregators. The policy allows the aggregators to operate and to have dynamic pricing.

About app aggregators, it was argued that the authorized representative of Uber stated that it did not even apply for any license for starting app-based taxi services in the State of Goa. About Ola, DG failed to examine the reasons behind its exit from the State of Goa and had stated that they had received threats from Taxi Owners Associations.

5. CCI’s observation

The Tribunal noted that no material was placed regarding the conduct of OPs indulging in strikes except few YouTube videos, Facebook Blogs, and news clippings. It held that such material remained uncorroborated and unauthenticated. Also, the DG failed to examine the reasons mentioned by the OPs for resorting to strikes, which included an increase in fees for permits, backdoor entry of app-based taxi aggregators, and installation of speed governors in taxis.

The CCI further observed that the State of Goa issued “Guidelines for Taxi Operator/ Radio Taxis/ Rent A Car and Taxi App Aggregators in the State of Goa”. These guidelines permitted app-based taxi aggregators to operate and to have range-bound dynamic pricing, which was in line with the business model of Ola and Uber.

Based on the above observations, the Commission concluded that there was no case of contravention of the provisions of Section 3(1) of the Act read with Section 3(3) against any of the OPs and directed that matter be closed immediately.