The two parties -- Abu Dhabi-based Etihad and Naresh Goyal-led Jet Airways -- had sought "rectification" to two parts of the order passed by the Competition Commission of India (CCI) on November 12 while clearing the deal.
The rectification was sought on the portion talking about Etihad's right to nominate certain board members being "significant", as also on the observation that Etihad was getting a "joint control" in running Jet Airways.
Both pleas were rejected by CCI, the fair trade regulator, in a fresh order dated November 26 and published today. This would not have any impact on the earlier CCI order passed on November 12 which said the Jet-Etihad deal did not pose any threat to competition.
However, CCI's observations about Etihad gaining joint control and "significant" rights to appoint directors on Jet's board differ from the companies' assertion and submissions before other regulators and agencies in this regard.
Passing the order, CCI said that the views/observations of the Commission regarding Etihad's joint control over Jet which are based on certain facts discussed in the November 12 order.
"While mistakes apparent on the record could be rectified ..., observation(s)/decision(s) of the Commission cannot be a subject matter of rectification," CCI said.
The deal was announced earlier this year and its closure was announced by the two companies last week. Etihad is acquiring 24 per cent stake for about Rs 2,060 crore. Besides CCI, Sebi, FIPB and other agencies have also cleared the deal but it has been taken to the Supreme Court by Subramanian Swamy.
On the plea to "rectify" the portion about "significant" right to appoint directors, CCI said "there is no mistake or factual error in the statements/observations made in paragraph 14 of the Order as it neither speaks about the total board size of Jet nor the number of independent directors' therein.
"Therefore, it is not possible to accept the Parties' contention that there is an incorrect statement regarding the total board size of Jet in the Order," CCI said.
The para 14 of the original order mentioned that Jet and Etihad were engaged in the business of providing international air transportation services and the proposed deal "categorically states that the Parties wish to enhance their airline business through a number of joint initiatives".
"In such a case, Etihad's acquisition of 24 per cent equity stake and the right to nominate two directors, out of the six shareholder directors, including the Vice-Chairman, in the Board of Directors of Jet, is considered as significant in terms of Etihad's ability to participate in the managerial affairs of Jet," CCI had said.
The para 16 of the original order observed that Jet and Etihad have entered into "a composite combination comprising inter alia the IA (Investment Agreement), SHA (Shareholder's Agreement) and the CCA (Commercial Cooperation 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."
The parties, with reference to para 14 of the main order, had submitted that the total board size of Jet, post deal, "would be 12 directors and not six shareholder directors as incorrectly stated in the order".
"While Jet has right to appoint four directors, Etihad only retains right to appoint two directors on the board, with remaining six directors being independent directors.
"It has also been stated that the Chairman will be a Jet nominee (appointed by the promoter) and will have a casting vote. Therefore, Jet would continue to retain control over the board, including the right to nominate the individuals as independent directors," the Commission's latest order said referring to the submissions made by the parties.
The Jet-Etihad deal had to be revised after Sebi raised objections over a previous structure that involved Etihad possibly getting larger control over Jet Airways, which is a publicly listed company in India.
CCI member Anurag Goel had dissented to the original order that approved the Jet-Etihad deal, saying that post combination it may cause appreciable adverse effect on competition within the relevant market.