Alleged abuse of market power. Telangana HC dismisses GMR’s writ petition against CCI probe

Telangana High Court has dismissed the writ petition filed by GMR challenging the CCI investigation for alleged abuse of market power. This would mean that Competition Commission, acting on a complaint filed by an aircraft Maintenance, Repair and Overhaul (MRO) service provider Air Works, can resume its investigation (against GMR) that was stalled for the last two-three years, sources close to the developments said.

It may be recalled that Telangana High Court had, at the end of September, reserved an order on a writ petition filed by GMR challenging the CCI order directing a probe against it for alleged abuse of market power.

Earlier, on an information filed by Air Works (MRO), the CCI passed an order in October 2019 finding GMR to have prima facie contravened the provisions of the Competition Act, 2002, which prohibit abuse of dominant position. 

Accordingly, CCI had directed a detailed probe by its investigation arm (Director General/ DG) into the alleged abuse of its dominant position and denial of market access by GMR Hyderabad International Airport Ltd (GHIAL), part of GMR Group, which operates Rajiv Gandhi International Airport(RGIA) in Hyderabad. 

GMR challenged the CCI order before Telangana High Court and obtained an interim stay on the probe in 2019.  

In in its complaint before CCI, the MRO pointed out that under a Concession Agreement, GMR has the exclusive rights to maintain, manage and operate the RGIA, which enabled it to use its discretion in the provision of services by third parties at RGIA. 

GMR entered into agreements to give space to business entities desirous of operating from the airport premises. Air works is one of the third-party service providers providing MRO services at RGIA. 

Complaint

Air Works in its complaint before CCI levelled various allegations pertaining to abuse of dominance by GMR which included: denial of market access by refusing to renew the license and by withholding access to the premises at the airport causing impediments to provide Line Maintenance Services; leveraging its dominant position in the upstream market (provision of access to airport facilities/premises) and indulging in exclusionary practices and restricting provision of services in the downstream market (provisioning of Line Maintenance Services/ MRO services) thereby eliminating competition; by ousting Air Works from providing Line Maintenance Services at RGIA and thereby limiting and restricting provision of services, adversely affecting competition in the market; creating a monopolistic environment which would enable GMR Aero Technic Limited/ GAT (a group company of GMR Group, which it wanted to promote) to operate on its own terms and conditions without being affected by any competition and charge exorbitant charges from the customers (Airlines) thereby increasing the cost to end customers. 

Inquiry

While ordering the investigation, CCI noted in its order that “…the facts of the present case prima facie suggest denial of market access to the Informant coupled with exclusionary motive by GMR to favour its own group entity (i.e. GAT). Owing to its dominance in the upstream market and its presence in the downstream market, GMR seems to have distorted the level playing field” and added that the case seems to pose a greater competition concern given the presence of a competitive relationship between GMR (through GAT) and Air Works in the downstream market. 

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