The CNMC closes proceedings against Cabify and Uber

On May 28, the Spanish Markets and Competition Commission (“CNMC”) resolved to close the proceedings against MAXI MOBILITY SPAIN, S.L. (“Cabify”) and UBER SYSTEMS SPAIN, S.L. (“Uber”) for three possible cases of conduct prohibited by the Spanish Law for the Defense of Competition (“LDC”).

Between September and October 2018, the CNMC received several complaints against Uber and Cabify’s initiative, publicized by Unauto, to provide their services for free for 12 hours on September 26, 2018. This initiative was also questioned by Madrid Council’s Directorate General for Traffic Management and Oversight, which filed a consultation before the CNMC on whether that campaign might be contrary to the LDC.

On January 22 and 25, 2019, an individual reported alleged price fixing, contrary to section 1 of the LDC, by Cabify, Uber, and the VTCs.

On July 16, 2019, another complaint was filed against Uber for having preferential access to the MADCOOL festival in its capacity as sponsor.

After analyzing the facts, the structures of the affected market, and the responses to the information requests during the preliminary investigation, the CNMC concluded that there was no evidence of infringement of the LDC in relation to any of the three conducts reported.

With regard to the first conduct investigated, the CNMC concluded that the offer made on September 26, 2018:

• was not contrary to article 1 of LDC, which prohibits agreements between competitors restricting competition.The campaign had a limited duration (a single day), with practically unnoticeable effects on the taxi sector, which has a very low share of trips booked in advance like those of the VTCs. The CNMC also stated that, on September 26, 2018, although Cabify and Uber’s services were free, the number of trips completed by each operator remained the same;

• did not infringe article 2 of the LDC, which prohibits abuse of dominant position.  The campaign was not meant to exclude and was a one-off promotion; and

• was not contrary to article 3 of the LDC, which prohibits disloyal practices.This promotion, which was a sale below cost, did not fall within any of the cases that section 16 of the LDC establishes to consider a conduct to be disloyal. Specifically, (a) this day of free services did not mislead the consumer because the promotional nature of the offer and its one-off duration were clear and specified on the website; (b) competitors are not discredited in a case of promotional sale such as this; and (c) there is no evidence of a predatory intention, as applying discounts and similar promotions is normal market practice.

Regarding the second conduct investigated—the alleged pricing agreement between the VTCs through the platforms—the CNMC considered it proven that the necessary interdependence between them to generate a pricing agreement was not present, as they do not require exclusivity from their customers or drivers, and it is the VTCs of each territory that freely decide to use the platforms’ services.

Finally, with regard to the last conduct investigated, related to the Madcool Festival, the CNMC considered that Uber’s use of a priority lane and having an exclusive car park did not affect public interest (as required in article 3 of the LDC), as it was a one-off, short-lived advantage restricted to one festival and justified by Uber’s status as sponsor.

In view of this, a member of the Board of the CNMC issued a dissenting vote expressing partial disagreement with the final resolution and with the analysis of the three conducts as a single case.

The dissenting member believed that, although both the first conduct and the alleged pricing agreement between platforms had been properly investigated and resolved, the possible pricing agreement between the drivers in each platform and the facts on which the third conduct was based had not been analyzed. This could have had consequences on competition because of the economic significance of the festival, regardless of the one-off, limited nature of Uber’s offer for the Madcool festival. Therefore, in this member’s opinion, a new, full investigation of the case should have been ordered.

The dissenting vote indicated that the three conducts examined were independent in time and space and should not have been investigated in a single proceeding, which has led to a generic market definition that did not take into account each of the conducts investigated.

Authors: Cristina Vila and Victoria Rivas