This Article attempts to answer some relevant questions in and around the case of Meru Travel Solutions vs. Uber India Systems, Competition Commission of India order no. 81 of 2015.

1. Why did the CCI find that Uber was not dominant in the relevant market? What role does market share play in assessing dominance? Are there other factors that the CCI should have taken into account when assessing Uber's dominance in this case?
   
   The Competition Commission of India (CCI) observed that the particular case pertains to the abuse of a dominant position by way of predatory pricing under section 4 of the Competition Act, 2002 (Act, 2002). For this section, it is essential to determine the relevant market, comprising of relevant product market and relevant geographic market, ie sections 2(r), (s) and (t) and the factors laid down under section 19(6) and (7) of the Act, 2002. The CCI did not find Uber dominant in the relevant market because:

   Relevant Product Market:

   The CCI held that there was a growing dependence on radio taxis because of their easy availability and predictability. But Kolkata is a peculiar market as the consumers here also heavily rely on the yellow taxis for their transportation as they are equally easy to book, low pricing and availability making the yellow taxis an alternative option for them. Hence, the CCI included yellow taxis also in the relevant product market, expanding it to be 'services offered by radio taxis and yellow taxis'.
   
   

   Relevant Geographic Market:

   The CCI held that The operations of taxis are restricted to the city/ State limits, and they generally do not have the permit to go beyond the boundaries. And as the taxi services market is largely regulated by State transport authorities, it makes the conditions of competition homogenous only within a particular city/ State. Hence, the relevant geographic market in the present case was Kolkata, making the relevant market to be 'services offered by radio taxis and yellow taxis in Kolkata'.
   
   

   Market Share:

   The CCI held that apart from the stiff competition between Uber and OLA in the radio taxi industry in Kolkata, there was also competition from the yellow taxi services. Therefore, this decreases the market share of Uber by more, ie 5.8%.
   
   Hence, the CCI relying on the Relevant market and the Market share of the Uber company, held that it was not dominant and directed the case to be closed under section 26(2) of the Act, 2002 as no case under section 3 or 4 is made out against the OP Group.
   
   The Role Of Market Shares In Assessing Dominance:
   The position of the company in the relevant market is primarily indicated by its market share, but there is no specific market share threshold proving that a company is dominant (the established practice is companies holding less than 40% of the market share are less likely to be dominant.[1]) The market share of any company depicts the market power, the presence and reach of the company in that market, the ability to change the market regulations to their advantage.
   
   It can manipulate the market price and thereby control its profit margin and possibly the ability to increase obstacles to potential new entrants into the market. Therefore, a large market share will have a larger impact on the market and shall affect the other players negatively. The higher market share of one player shall depict restriction in the competition as the smaller market shareholders will not be able to compete at that price or services provided by the former. Therefore, market share plays a significant role in determining dominance in the market.
   
   The Act, 2002, Under section 19(4), sets out several factors to inquire whether an enterprise enjoys a dominant position or not under section 4.
   
   For the above case, apart from the 'Market share of the enterprise', the following factors could also have been taken into consideration[2]:
   
   1. Size and resources of the enterprise;
   2. Size and importance of the competitors;
   3. The economic power of the enterprise, including commercial advantages over competitors;
   4. Vertical integration of the enterprises or sale or service network of such enterprises;
   5. Dependence of consumers on the enterprise;
   6. Entry barriers including barriers such as regulatory barriers, financial risk, the high capital cost of entry, marketing entry barriers, etc;
   7. Countervailing buying power;
   8. Market structure and size of the market.
2. According to the CCI order, in this case, what is the most important factor for defining a relevant product market? Did the CCI find that yellow taxis were part of the same relevant product market as radio taxis? What test did the CCI use for defining the relevant product market in this case? Are there other tests that the CCI could have used for defining the relevant product market?The Competition Commission of India (CCI) considered certain factors for defining a relevant product market that is:
   1. Substitutability of the product/service as perceived by the consumer.
   2. The basic characteristics, intended end-use, price etc., of different alternatives are some of the factors that help in determining whether the two products are substitutable or not.
   3. The features of radio taxis like the convenience of time-saving, point-to-point pick and drop, pre-booking facility, ease of availability even at obscure places, round-the-clock availability, predictability in terms of expected waiting/journey time etc.
   4. Consumers have a growing dependence on radio taxis because of their easy availability and predictability.
   5. The service the yellow taxis provide for consumers' day-to-day travelling/transportation requirements owing to their ease of booking, predictability in terms of availability, low pricing etc.
   
   Yes, the CCI did find the yellow taxis as part of the same relevant market as the radio taxis because Kolkata is a peculiar market where the ease of availability and predictability of the yellow taxis provides stiff competition to Uber.
   
   The test that the CCI used in the case for defining the relevant product market was of substitutability of the product/service as perceived by the consumer. Demand substitution identifies the products that are considered to be substituted for one another by the consumer; unless these products are homogenous, there will be no perfect substitute.
   
   Several factors need to be considered for this test:
   1. What are consumer preferences?
   2. Whether consumers can switch immediately between products or need time to adapt to a different product?
   3. Is there a similarity in the quality of the product or the price of the product?
   4. Whether the substitutes are available or not?
   Yes, there are other tests to determine the relevant product market, like:
   1. The SSNIP test or the Hypothetical Monopolist Test: A relevant market is found if a "Small but Significant Non-transitory Increase in Price" above the competitive level is profitable and sustainable when exercised by a hypothetical monopolist.
   2. Switching costs: are the costs that a consumer incurs as a result of changing brands, suppliers, or products. It can be monetary or psychological in nature.
   3. Characteristics and intent to use analysis: although this test is insufficient to inquire whether two products are demand substitutes or not, it can be used as a preliminary examination. It cannot work in isolation.
   4. Prices: The price of products may affect whether or not they are in the same market. Price may be a reflection of a product's characteristics. If the price change does not affect the use and function of the product, then the products can be considered to be in different relevant product markets.
   5. Supply Substitution: If a manufacturer of one product can readily switch production to another product, then both products may be in the same relevant market.

I am in two minds when it comes to the definition of Relevant Product Market. If I go by the definition provided by the CCI in the above case, then it is absolutely correct because the definition of Relevant Product Market in the case revolves around the substitutability of the product on the basis of its characteristics and end-use.

And the definition provided in the Competition Act, 2002 (Act, 2002) is "relevant product market", which means a market comprising all those products or services which are regarded as interchangeable or substitutable by the consumer because of characteristics of the products or services, their prices and intended use.[2] Therefore, to determine a relevant product market, two factors are very essential, ie substitutability and the product's characteristics.

But in practice, we see that these two factors cannot work in isolation for determining the product market. It requires several other indices for the same like price, availability, different facilities, etc. To conclude, for the purpose of theoretical application, the definition is sufficient, but it can be broadened for a better application and removal of doubts.

End-Notes:

1. Paulo Burnier da Silveira, 'Relevant Market' (Concurrences, 1 January 1900) (https://www.concurrences.com/en/dictionary/Relevantmarket) accessed on 1 July 2023.
2. The Competition Act, 2002, s. 2(t).
3. 'Definition of Dominant Position and the Boards Approach' (Mondaq) (https://www.mondaq.com/advicecentre/content/1666/Definition-of-Dominant-Position-and-the-Boards-Approach) accessed on 1 July 2023.
4. The Competition Act, 2002, s. 19(4).