The Abu Dhabi-based Etihad had in November entered into a deal to buy a 24% in Jet.
The CCI move, according to analysts, could signal a possible review of the clearance given to the Jet-Etihad deal by the fair trade watchdog on November 12. In a related development, the CCI clearance itself has been challenged in the Competition Appellate Tribunal by Air Indias former executive director Jitendra Bhargava on the grounds that it had failed to conduct an independent analysis of the amended transaction documents, among others. Jets scrip ended the day 7.04% lower at R272.75 on the BSE.
In intra-day trade, the stock plunged nearly 8% to Rs 270.20, its 52-week low. On the NSE, the scrip dipped 7.03% to settle at R272.55. Following the stocks fall, the market value of Jet slipped by R234 crore to R3,098 crore.
On Thursday CCI chairman Ashok Chawla had confirmed that CCI has sent out notices to both airlines seeking information about possible commercial agreements between the two carriers that they may not have disclosed to the commission in their original application seeking approval.
The CCI on November 12 had approved the acquisition of 24% in Jet Airways by Etihad worth R2,058 crore.
The notices have been sent under Section 43A of the Competition Act, which deals with concealment of certain information from the regulator.
While approving the merger, the CCI in its November 12 order had said: "...Approval, however, shall have no bearing on proceedings under Section 43A of the Competition Act." Under this section, the CCI has powers to slap penalties for non-furnishing of information on M&A deals.
Jet had sold its flight slots at Heathrow Airport, London, to Etihad in February as part of the deal. This was before the nod by the CCI and is seen as operationalising the commercial cooperation agreement ahead of regulatory approval and concealment of this information from the regulator.
Chawla said that the CCI heard the responses from Jet and Etihad on Wednesday and will pronounce its final decision in a few days. Even assuming the duo sail through, their trouble won't end as the case filed in the Compat would run its own course independently. The matter would come up for hearing on December 19.
In his petition to Compat, Bhargava has called the CCI's approval to the deal "bad in law, fraught with inconsistencies and issued without proper analysis of market conditions.
The petition is critical of the order terming it riddled with "failure to conduct an independent analysis of the amended transaction documents", "failure to consider third-party concerns", "incorrect analysis of the relevant market", "incomplete competition analysis of the proposed combination" and "no assessment of barriers to entry". As per Bhargava's petition, if the proposed combination is permitted, passengers are likely to be deprived of airline choices on key routes and may have to pay higher prices with fewer options on planes, timings and service quality.
Air India is already opposed to the deal saying it would divert outbound traffic from India to a foreign carrier.