The Jet-Etihad deal may hit another air pocket as the market regulator, SEBI, is all set to re-examine its approval. The deal involves transfer of 24 per cent equity of Jet Airways to Abu Dhabi-based Etihad Airways for Rs 2,058 crore.

CII raises an issue “It was said that if any regulator raises an issue on the deal, the Securities Exchange Board of India may also re-consider its stand. The Competition Commission of India has raised the issue of control and has sent a show-cause notice to both the airlines related to commercial agreements, paving the way for re-examination of the matter by the market regulator,” a senior SEBI official told Business Line .

The official said that the regulator would examine whether there was any new material information after its approval and whether this could impact the issue of control in the company. On Monday, Jet Airways shares lost over 4 per cent to close at Rs 261.70 on the BSE.

Preliminary work for reopening the matter has already begun, the official said, adding that show-cause notices, however, would not be issued to the parties concerned. In October, SEBI had given its nod to the deal saying Etihad would not require to make an open offer.

The Cabinet Committee on Economic Affairs, the Foreign Investment Promotion Board and Competition Commission had already given approval, after which the transaction was closed on November 20.

Composite combination The Competition Commission, in its order dated November 12, had observed that the parties (Jet and Etihad) had entered into a composite combination comprising IA (investment agreement), SHA (shareholders agreement) and the CCA (commercial cooperative agreement), with the common/ultimate objective of enhancing their airline business through joint initiatives.

The effect of these agreements, including the governance structure, envisaged in the “CCA establishes Etihad’s joint control over Jet, more particularly over the assets and operations of Jet.” It is this point that is believed to have prompted SEBI to reconsider its stance.

When asked about the possible impact on the deal, especially after closure of the transaction, the official said if the regulator found anything wrong, it could lead to serious action, which include heavy penalty. It may be noted that if CCI too, finds any violation of the Act concerned, it could impose heavy penalty.

The Jet-Etihad deal, the first after the Government allowed foreign carriers to pick up stake in domestic Indian carriers, has brought in the largest foreign direct investment in aviation. However, turbulence in the deal is yet to end with lawsuit pending in the Supreme Court. Also, last week, the former executive director of Air India, Jitendra Bhargava, moved the Competition Appellate Tribunal with a petition seeking review of the Competition Commission’s approval and further investigation into the deal. The tribunal is slated to hear the matter on December 19.