SC refuses to stay CCI probe into Kingfisher-Jet Airways alliance

Written by Indu Bhan | Indu Bhan | New Delhi | Updated: Aug 1 2010, 05:12am hrs
The Supreme Court on Friday refused to stay the Competition Commission of Indias order that directed probe into Vijay Mallya-promoted Kingfisher Airlines strategic alliance with Jet Airways.

The commission had in August 2009 restarted the investigations to examine the two-year-old alliance between the two leading private airlines as it felt the code-sharing and ground handling agreement would create a monopoly in the aviation industry.

A bench headed by Chief Justice SH Kapadia while refusing to stay the Bombay High Court judgment that dismissed Kingfishers plea said that it was analysing the Competition Commission Act, particularly the issue whether the CCIs powers to initiate investigations at the showcause notice stage can be challenged. It said that the court would lay norms for such an investigation and the Kingfishers petition will be taken up after it pronounced its decision on another similar issue.

It may be noted that the Bench on Thursday reserved judgment on a petition filed by CCI alleging that its appellate body, Competition Appellate Tribunal, was overstepping its power by staying an probe initiated into an alleged cartel-like arrangement between SAIL and the Indian Railways.

Senior counsel FS Nariman, on behalf of the Mallya-headed airline, contended that the Act was amended after the alliance was formed and as such, the new rules can not have a retrospective effect.

Meanwhile, additional solicitor general Parag Tripathi, appearing for CCI, told the court that Kingfisher was not co-operating in the investigation.

The airlines had in October 2008 announced an alliance to help them rationalise the rates and provide improved standards of services of wider choice of air travel options to consumers.

The anti-trust body, created under the Competition Commission Act, is supposed to act against formation of business cartels which may hamper fair competition.

Kingfisher is challenging CCI authority to reopen the case that was closed by former anti-trust regulator Monopolies and Restrictive Trade Practices Commission on September 4, 2009 or to investigate the same.

In case of cartelisation, 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.