Kingfisher Airlines has moved the Supreme Court seeking quashing of an order by the Competition Commission of India (CCI) directing a probe into its strategic alliance with Jet Airways. In August last year, the CCI had restarted the investigations to examine the alliance to rationalise the fares of the two leading private airlines. The commission is investigating if the deal created a monopoly in the aviation sector.
Kingfisher is challenging the authority of CCI to reopen the case that was closed by former anti-trust regulator Monopolies and Restrictive Trade Practices Commission (MRTPC) on September 4 last year or even to investigate the same.
If the case of cartelisation is made out, CCI can impose a heavy fine amounting to three times the profit or 10% of the individual turnover of the firms for the period of cartelisation.
The Kingfisher appeal is against a Bombay High Court judgment of March 31 that dismissed the airlines’ plea against the inquiry. The airline headed by Vijay Mallya has contended that the Competition Act was amended after the alliance was formed and as such, the new rules can not have a retrospective effect. The impugned August 4, 2009 notices under the Act which ?purported to commence investigation in respect of the proposed alliance were ex-facie illegal and without jurisdiction since the provisions under which the inquiry was sought to be conducted viz., Sections 3, 4, 19, 42 and 43 of the Act came into force only on May 20, 2009 and ex-facie these sections are prospective and not retrospective, and can apply only to agreements entered into after May 20, 2009, ? the petition stated.
?What is prohibited by Section 3 is the entering into of the agreement and not the continuation of preexisting agreements,? it added. While the high court had dismissed Kingfisher’s plea on March 31, the authorities on April 15 had asked the airline and Mallya to subject themselves to the ?ex-facie illegal proceedings.?
Seeking stay of all the proceedings, the airline said that it apprehended the authorities would initiate coercive steps including imposition of penalty and the same would cause ?grave and serious harm, loss and prejudice which cannot be compensated in terms of monies.?
According to Kingfisher, merely because MRTPC found that it had not breached any provisions of law, does not imply that it can be subjected to renewed inquiry on the same allegations by another Commission without any justification.
Besides, the High Court failed to appreciate that notwithstanding the repeal of the MRTP Act (with effect from September 1, 2009), MRTPC continued to have jurisdiction and powers for two years from the date of commencement of the Competition Act in respect of cases or proceedings filed before the commencement of the Act as if the MRTP Act had not been repealed, the airline submitted in its petition before the apex court, the petition added.