'For Public Welfare': CCI Closes Case Against Keralam's Priyadarshini Scheme Offering Free KSRTC Travel To Women

The Competition Commission of India on Tuesday closed proceedings against the State of Kerala and Kerala State Road Transport Corporation (KSRTC) over allegations that the Priyadarshini Scheme, a key promise of the newly elected Congress-led United Democratic Front Government, gave KSRTC an unfair competitive advantage over private stage carriage operators.

The Scheme provides free travel to women and transgender persons on KSRTC buses. The Commission held that the State-funded welfare measure and its resultant differential commercial impact on private operators, did not by itself constitute a contravention of Section 4 of the Competition Act, 2002.

A coram of Chairperson Ravneet Kaur, Members Sweta Kakkad and Deepak Anurag was considering an information filed by two private stage carriage operators, Bipin T. Alappat and Jose.

They alleged abuse of dominant position by the State of Kerala and KSRTC.

The Informants alleged that the Scheme was restricted to KSRTC buses, although private operators provided identical services on the same routes. Following its implementation, women passengers allegedly shifted from private buses to KSRTC because of the free-travel benefit.

This allegedly led to a decline in passenger occupancy and revenues of private operators.

They alleged that the conduct limited and restricted the provision of passenger transport services by private stage carriage operators. They also alleged that the Scheme denied private operators effective market access by diverting passengers to KSRTC.

The Informants sought discontinuation or modification of the Scheme to ensure a fair, non-discriminatory and competition-neutral implementation.

Examining the Scheme, the Commission noted,

"The Scheme is a Government policy measure intended to promote public welfare, create employment opportunities, and facilitate socio-economic empowerment of women and transgenders of the State.”

The Commission noted that free travel for women and transgender individuals on KSRTC buses was a State-funded policy measure. The State bears the corresponding cost of the travel.

It held that the Scheme influencing passenger choice did not, by itself, establish that the State or KSRTC had imposed an unfair or discriminatory condition on private operators or their passengers.

On the allegation of limiting or restricting services, the Commission observed:

“As regards contravention of Section 4(2)(b)(i) of the Act, the Commission notes that a change in passenger demand, even if it results in a relative commercial disadvantage to private operators, cannot, by itself, be characterised as conduct by the OPs intended to limit or restrict the provision of services or the market thereof.”

On denial of market access, the Commission noted that private operators had not been excluded from the market. They continued to operate their permitted services, carry passengers, and compete for passengers.

The Commission held that passenger preference for KSRTC because of the fare benefit did not, by itself, amount to denial of market access.

It further observed, “The alleged loss of fare-paying passengers or reduction in revenues may, at best, indicate a commercial disadvantage arising from the implementation of a welfare Scheme.”

The Commission said that the formulation and implementation of a Government welfare scheme aimed at public welfare would not ordinarily invite scrutiny under the Competition Act.

It held that the resulting differential commercial impact on private operators could not, by itself, be characterised as a contravention of the Act.

The Commission therefore held that no prima facie case of contravention of Section 4 was made out against the State of Kerala or KSRTC. It directed that the Information be closed under Section 26(2) of the Competition Act.