CCI- Rounding Off Base Fare by Railways is Prima Facie Abuse of Dominant Position

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November 14, 2018

Case name: Mr. Meet Shah and anr. v. Union of India, Ministry of Railways and anr.

In this case, the Informant alleged that the practice of Opposite Parties namely Ministry of Railways and Indian Railway Catering and Tourism Corporation Ltd. to round off the actual base fare to the nearest higher multiple of Rs.5 to arrive at the total base fare is in contravention of the provisions of Section 4 of the Competition Act, 2002 i.e. Abuse of dominant position.

What is Abuse of Dominant Position under Competition Act?

The informant alleged that the OP’s are in a dominant position in the relevant market as they are the only players and are empowered to determine the pricing of e-tickets. Resultantly, the consumers have no choice other than agreeing to the arbitrary, unreasonable and unfair terms and conditions of the OP’s. Further, due to the statutory and regulatory framework, the dominance of the Opposite Parties is indisputable.

CCI’s Observation and Holding

In view of the representation made by the Parties, the Competition Commission of India (CCI/ Commission) was of the view that prima facie a case of contravention of the provisions of Section 4 of the Act was made out against the Opposite Parties.

Opposite Parties hold a Dominant Position in the relevant market- The Commission noted that the Opposite Parties enjoyed dominant position in the ‘market for sale of tickets by railways in India’.

The Commission observed that the OP’s were not been able to convince the Commission as to why the policy of rounding off of actual base fares to the next higher multiple of Rs.5 is applicable to the sale of online tickets. Thus, the Commission was of the view that the OP’s are rounding off the actual base fares for the online bookings without any plausible justification for the same.

In view of the aforesaid, the Commission held that the practice of rounding off actual base fares to the next higher multiple of Rs. 5 by the Opposite Parties, prima-facie amount to an imposition of unfair condition in the market for sale of rail tickets in India, particularly for online booking of rail tickets, in contravention of provisions of Section 4 (2)(a)(i) of the Act.

Thus, the Commission has now directed the Director General (the DG) to cause an investigation into the matter and submit his report.

The CCI’s order can be accessed here.

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