The Competition Commission of India has imposed Rs 1 crore penalty on Abu-Dhabi based Etihad Airways for formalising some parts of its deal with Jet Airways without prior regulatory approvals.
In its order the CCI has said that the penalty has been imposed for “consummating parts of the deal” without prior approval of the fair trade regulator. It, however, said that the current penalty will have no bearing on its approval of the Jet-Etihad deal.
CCI said the Etihad had sought the Commission’s approval for the acquisition of 24 per cent equity in Jet and in relation to all the rights and benefits which the parties have commercially agreed upon in the amended Share Holders Agreement, Commercial Cooperation Agreement (CCA) and Corporate Governance Code.
However, the two parties had also entered into agreements on February 26 regarding sale of three landing/take-off slots of Jet at London Heathrow Airport to Etihad; and lease of the same slots back to Jet.
Based on the information provided by the parties, on October 18, the Commission issued a show cause notice to Etihad.
Etihad in its notice had previously said that the London transaction was an independent stand-alone one which did not form part of the combination.
CCI also noted that if the parties had treated the investment agreement and London transactions as entirely different and independent of each other, the relevant agreements would not have made any reference to each other particularly in the context of an event of default and as conditions precedent.
Etihad has been directed to pay the penalty within 60 days of the order.
Plea admitted Meanwhile, Competition Appellate Tribunal on Thursday has admitted a plea challenging the CCI’s approval to sale of 24 per cent stake in the Indian carrier to the Abu Dhabi-based airline and issued notices to the two airlines.
This comes close on the heels of the capital market regulator SEBI saying that it will re-examine the deal.
A three-member bench, headed by Justice V.S. Sirpurkar, refused to put a stay on fair trade regulator’s approval but gave a the next date of hearing as January 9. Former Executive Director of Air India Jitender Bhargava has moved appellate body stating that the deal will have an adverse impact on the domestic aviation industry.
On November 12, the CCI had approved the deal saying that proposed combination is not likely to have adverse effect on competition in India.
Air India competes with Jet Airways in domestic and international market and with Etihad in international market.
The Jet-Etihad deal is the largest deal in aviation, amounting Rs 2,058 crore.
bindu.menon@thehindu.co.in