The Competition Appellate Tribunal (Compat) on Thursday sought replies from the Competition Commission of India (CCI), Jet Airways and Etihad Airways on an appeal alleging that the competition watchdog?s approval to the deal between the two aviation companies was based on an ?incomplete assessment of facts and market conditions?.
The appeal, filed by former executive director of Air India Jitender Bhargava, challenges an October 14 order of the CCI granting approval to the R2,058-crore deal, as per which Abu-Dhabi-based Etihad agreed to buy a 24% stake in Jet. The deal was also approved by the Foreign Investment Promotion Board on July 29 this year, albeit, with certain riders
Bhargava, in his petition, claims the approval was ?bad in law and fraught with inconsistencies?. The petition accuses CCI of granting approval without seeking essential details from the companies and without undertaking a detailed investigation of the share-sale, even when the deal is likely to result in a post-combination market share of over 50%.
?The CCI failed to effectively carry out the Appreciable Adverse Effect on Competition (AAEC) assessment in accordance with the provisions of the (Competition) Act and in doing so, in its impugned order, placed all air passengers and indeed the entire airline industry into a grave risk of suffering irreparable damage and permanently eliminating competition,? the petition states.
It also says that if the proposed deal is permitted in its present form, passengers are likely to be deprived of airline choices on key routes and will have to fork out higher prices as they will be left with fewer options in timings and service quality.
Seeking a stay on the CCI order from Compat, Bhargava has highlighted that the failure to grant the same will lead to a condition where other airlines will be ?foreclosed? from competing effectively in certain markets, which will erode their profitability, causing them to exit from the industry. The tribunal has listed the matter for further hearing on January 9.