The Hindu Business Line : Sahara buyout unlikely to trigger MRTP Act: Gupta

THE buyout of Air Sahara by Jet Airways is not likely to trigger any provisions of the Monopolies and Restrictive Trade Practices (MRTP) Act, according to the Ministry of Company Affairs.

"The deal, as it appears now, does not attract the provisions of the Act," Mr Prem Chand Gupta, Minister of State (Independent Charge) for Company Affairs, told Business Line.

This puts to rest all speculation that the deal leads to a possible abuse of dominant position by Jet Airways.

With the aviation sector opening up, the country would see more such players in the field, the Minister said.

The agreement is for Jet Airways to purchase Air Sahara for a consideration of $500 million.

The agreement would see Jet Airways acquire 27.6 crore equity shares (with a face value of Rs 10), five crore preferential shares and the group loans. Mr Gupta maintained that "being large or in a dominant position per se is not a problem, unless an entity indulges in abuse of dominant position. And there are provisions in the MRTP Act where the Ministry can take action if abuse of dominance is found."

Under the existing Act, monopolistic trade practice means a trade practice that has or is likely to have the effect of maintaining the prices of goods or charges for the services at an unreasonable level by limiting, reducing, or otherwise controlling the production, supply, or distribution of goods or the supply of the services or in any other manner.

The Act also stipulates that unreasonably preventing or lessening in the production, supply, or distribution of any goods or in supply of any services would also attract the provisions.

Moreover, any unreasonable increase in the prices at which goods are sold or resold would also attract the provisions of the Act.

However, the Ministry is yet to receive any official communication from the company on the deal, Mr Gupta said.

On whether the MRTP has the powers to investigate into monopolistic trade practices like cartelisation, as the provision in the Competition Commission of India are yet to be notified, the Minister said that Section 31 of the MRTP Act provides for investigation by the Commission.

According to the provision, where it appears to the Central Government that the owners of one or more undertakings are indulging in any practice, which is or may be a monopolistic practice, the Government may refer the matter to the MRTP Commission for an inquiry.

As regards amendments to the Competition Act, the Minister said that his Ministry was targeting the Budget session, which would enable the Competition Commission of India to scrutinise such acquisitions from the competition angle.

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Sahara buyout unlikely to trigger MRTP Act: Gupta