CCI dismisses allegation of predatory pricing against OLA Cabs CCI approves acquisition and amalgamation between HDFC Ergo and L&T

CCI dismisses allegation of predatory pricing against OLA Cabs

By way of an August 31 2016 order(1) the Competition Commission of India (CCI) dismissed allegations of abuse of dominance by Ola Cabs and Taxi For Sure (together, ANI Technologies Pvt Ltd (ANI)) for predatory pricing.

The three informants worked in the auto-rickshaw sector in the National Capital Region. It was alleged that ANI was driving away competitors in the market for paratransit services (ie, the auto-rickshaw and taxi services market) in the National Capital Region by paying more money to drivers than it collected from passengers.

The informants claimed that ANI was the largest provider of paratransit services in the country, with its fleet of 320,000 vehicles offering 750,000 rides per day and a market share of around 80% in India. It was stated that ANI had a fleet of 16,000 registered auto-rickshaws. The informants also highlighted that ANI had received substantial capital in the form of venture and private equity funds since 2011 and was highly resourceful. Thus, it was alleged that ANI held a dominant position in the market for paratransit services in the National Capital Region.

The CCI noted that in the two relevant markets (ie, radio taxis and auto-rickshaws in New Delhi), ANI was not in a dominant position, as there was stiff competition between ANI and Uber in providing radio taxi services in New Delhi. Similarly, in relation to auto-rickshaw services, ANI's market share was less than 20% in New Delhi.

The CCI concluded that ANI was not dominant in either of the relevant markets and hence no allegation of abuse of dominance could be made therein.

CCI approves acquisition and amalgamation between HDFC Ergo and L&T

The proposed combination relates to the acquisition of 100% of the shares in L&T General Insurance Company Limited (LTGI) by HDFC Ergo General Insurance Company Limited (HDFC Ergo) from Larsen and Toubro (L&T). Once acquired, HDFC Ergo will be merged with its 100% subsidiary LTGI.(2)

HDFC Ergo is engaged in providing housing finance, finance for commercial real estate and general insurance services. LTGI is engaged in providing general insurance services. It offers a range of general insurance products, spanning across the automotive, business, home and health insurance sectors.

The Competition Commission of India (CCI) noted that HDFC Ergo and LTGI have a combined market share of less than 5% in the market for general insurance services and less than 10% each in the markets for fire, marine, motor and health insurance. Further, it was noted that LTGI has limited presence in all segments and the incremental market share resulting from the proposed combination was insignificant (between 0% and 5%).

The CCI accepted the modification proposed by the parties to reduce the non-compete period for L&T from five years to three years. The proposed combination has been approved under Section 31 of the Competition Act.

For further information on this topic please contact MM Sharma at Vaish Associates by telephone (+91 11 4929 2525) or email (mmsharma@vaishlaw.com). The Vaish Associates website can be accessed atwww.vaishlaw.com.

Endnotes

(1) August 31 2016 order. For full text see the CCI's website.

(2) August 1 2016 order. For full text see the CCI's website.

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