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Ergo Update

06-Feb-2020

The Competition Commission of India (CCI) dismissed a complaint filed by two Informants against the Ministry of Railways (MoR) and Indian Railway Catering and Tourism Corporation Limited (IRCTC, a subsidiary of the Indian Railways) (collectively, the OPs), which alleged that they abused their dominant position by rounding off the railway passenger fare.

The Informants submitted that the Indian Railways round off the passenger base fare to the next multiple of INR Five, and it is done for each passenger Individually even in case of a group booking. They contended that since a single paisa could be transferred electronically, rounding off is not justified for online bookings, and alleged that the OPs are making unfair and exorbitant gains out of the rounding off policy, and thus contravened Section 4 of the Competition Act 2002 (Competition Act). On 9 November 2019, the CCI found a prima facie case of abuse of dominance against the OPs and directed investigation by the Director General (DG) into the matter.

After the DG submitted its report, the CCI heard the parties and delineated the relevant market as the market for the sale of tickets by railways in India. As regards the issue of dominance, since the MoR is the sole player in the market of passenger transportation through railways across India, the OPs were held as dominant in the relevant market. The CCI then analysed as to how the rounding off policy came into vogue and noted that it was adopted as part of the ‘rationalisation of fare’ to recoup the enormous loss incurred by the Indian Railways. While concurring with the objective justifications provided by the MoR, the CCI, inter alia, observed (a) the rounding off has been adopted transparently and applies uniformly to all passengers and modes of booking without discrimination; (b) the policy has received consideration from the Parliament of India; (c) the policy is duly backed by social and commercial justifications, and thus cannot be termed as exploitative; (d) the policy has logistic benefit since currency in multiples of five is easier to deal with than exact change at offline booking counters.

Comment:

The case reaffirms the earlier decisions of the CCI, that public sector undertakings, including the Ministries, are not beyond the pale of antitrust scrutiny. Khaitan Competition/Antitrust Team represented the OPs. Despite a favourable order, the state-owned enterprises may like to take a note that exoneration from the penal consequences of the Competition Act is facts-based and varies on a case-to-case basis analysis.

-      Khaitan Competition/Antitrust Team

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Manas Kumar Chaudhuri (partners)

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