Indian Railways and IRCTC are not guilty of abuse of dominance but service charges on e-ticketing ought to be done away

Competition Commission of India: In its majority order, the competition watchdog ruled that allegations of abuse of dominant position in the relevant market of “transportation of passengers through railways across India including the ancillary segments like ticketing, catering on board, platform facilities etc. provided by Indian Railways” are misconceived and baseless. In the present case various informants alleged inter alia unfair, discriminatory and arbitrary practice by the Railway and IRCTC in Passenger Reservation System (PRS) by imposing service-charges on e-ticketing and not refunding it on cancellation, by charging additionally on booking through agents, by making the passengers pay gateway transactions charge, by charging higher price on tatkal and premium quota etc. The Commission observed that, it is not compulsory for passengers to book tickets via internet; the option of manual PRS counters for booking. E-ticking is an addition facility offered by IRCTC which is a value added service.  As a condition precedent to using its services, IRCTC requires prospective customers to agree to  pay this service charge before registering with IRCTC. Therefore, any customer wishing to avoid the payment of service charges may not register himself with IRCTC, thereby, making it amply clear that a customer does have the option to book tickets (through manual PRS counters) without paying any service charges. The additional charge on booking through agents may be avoided in the same manner. The Commission further observed that service charge on e-tickets and agents’ ticket is not unfair inasmuch as the same are realized to meet administrative costs and other logistic and development costs incurred to the IRCTC and agents.

The Commission ruled that charge on gateway transaction is not levied by the Railway but by the banks of the passengers as per the RBI guidelines, thus is not abusive. CCI declared non-refund of service charge justified for operational cost incurred by IRCTC. Tatkal scheme and charges are not unfair as they are part of Railway budget approved by the Parliament. Tatkal charge is found justified for compensating huge lose incurred by the Railways.

The Commission amongst other rejected the allegation of abuse by tying in compulsory provision of food in the premium trains. The Commission also rejected the allegation of creating monopoly of food courts at the large railway stations. Not allowing private players providing meals through e-catering is justifiable action under the provisions of the Railways Act, 1989.

The majority order of 4 out of 5 members of CCI opined that no case of contravention of the provisions of section 4 of the Act is established against the Indian Railways and IRCTC. However, the majority viewed that charging of service charge for the use of e-ticking may affect the consumers’ interests, and efficiency and promotion of technologically advanced e-ticketing there the concerned authority may do away with service charges and other unnecessary restrictions on booking of e-tickets which may not affect its revenues in any significant manner.

In his sole minority opinion, M. S. Sahoo, Member, was of opinion that that Railways have imposed unfair price in sale of tickets in electronic mode compared to that in brick-mortar mode (manual PRS) , while the former mode is cheaper and conserves resources, and thereby violated the provisions of section 4(2)(a)(ii) of the Competition Act, 2002. In his opinion the Railways and IRCTC have also restricted the use of technology in rendering services relating to sale of passenger tickets to the prejudice of customers, and thereby violated the provisions of section 4(2)(b)(ii) of the Act. Sharad Kumar Jhunjunwala v. Union of India, Ministry of Railways, (2014) CCI 33, decided on 10.08.2015

2 comments

  • TO
    CHAIRMAN
    CCI.

    SIR,

    REFER DELHI HIGH COURT CASE 993 OF 2012 ,IRCTC IS SUBSIDARY OF RAILWAYS .WITH RESPECT TO CCI ORDER..10/8/2015—HIGH COURT DISMISS RAILWAY APPEAL./ RAILWAY IS ENTERPRISE COMES UNDER AMBIT OF COMPETITION ACT,PRICE OF GOODS/ SERVICE MUST BE SAME, IRCTS IS SUBSIDARY OF RAILWAY.ALREADY SAVING IFRASTRUCTURE COST,STATIONARY , MANPOWER SALARY BY SALING ON LINE E –TICKETS. IT IS UNFAIR TO CHARGE ONLINE CHARGES.
    ….In his sole minority opinion, M. S. Sahoo, Member, was of opinion that that Railways have imposed unfair price in sale of tickets in electronic mode compared to that in brick-mortar mode (manual PRS) , while the former mode is cheaper and conserves resources, and thereby violated the provisions of section 4(2)(a)(ii) of the Competition Act, 2002. In his opinion the Railways and IRCTC have also restricted the use of technology in rendering services relating to sale of passenger tickets to the prejudice of customers, and thereby violated the provisions of section 4(2)(b)(ii) of the Act. [Sharad Kumar Jhunjunwala v. Union of India, Ministry of Railways, (2014) CCI 33, decided on 10.08.2015

  • In Sharad Kumar junjunwala vs UOi and ors CCI with its 4:1 judjudgment ruled in favour of railways,but government should listen to dissenting ruling of M.S.Sahoo while drafting future policy.
    Dissenting opinion was suppressed by majority ruling but it is worth pondering and cognizance should be taken by government

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