Kingfisher-Jet Airways deal on MRTPC radar
NEW DELHI: Jet and Kingfisher should have thought twice before jumping into bed as some anti-competitive elements of their alliance could expose them to regulatory scrutiny, say competition law experts. Route rationalisation — a key aspect of their arrangement — could directly impact competition in routes where both airlines have significant presence now, they said. The arrangement gives the combine control of over 60% of the domestic civil aviation industry.
Officials of the Monopolies and Restrictive Trade Practices Commission (MRTPC) have started looking into reports about the alliance to seek more information from the companies about possible anti-competitive nature of some parts of the agreement.
Although provisions of the competition law requiring prior approval from the competition regulator for mergers are yet to be notified, the arrangement announced late on Monday could still come into the scrutiny. Unlike mergers, such agreements are usually examined after they come into force.
The Competition Commission of India (CCI) could also look into the agreement once it gets enforcement and adjudication powers. As of now, the CCI lacks the teeth since it does not have a chairman or members and its powers have not been notified. Officials of the ministry of corporate affairs said the Justice Altamas Kabir panel would recommend members and chairperson of the reworked Commission in a week.
“In cases where an arrangement leads to a virtual integration of operations and a high market share, the agreement needs close professional examination by the Competition Commission of India to ensure that it does not adversely affect consumers and the economy. Ensuring that such arrangements do not affect competition, is good for companies also in the long term,” said Vinod Dhall, who was heading CCI until recently.
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kunal said,
Wrote on October 17, 2008 @ 11:48 am
it is essential in such cases that the particular arrangement in this case is assigned a name, it can definitely be categorised under combinations and the competition authorities can look into the matter suo moto. Further, looking at such alliances in the recent past like that of boing , it seems plausible that this combination will be hit by the anti combination norms. further , india has followed a european approach to the anti competiton and hence it becomes even more preesing to believe that kingfisher and jet might be at the wrong side of the law.
M Balakrishnan said,
Wrote on October 19, 2008 @ 7:32 pm
India has adopted the MRTP law and constituted the Commission largely following the British model. This may be quite unsuitable for two reasons, and a rethink for the law and the Commission is perhaps called for. In the highly industrialized West, both in Europe and in the US., is traffic volumes and densities are far higher, since air travel is the preferred mode over rail and road (so many countries each with a small land area, the distances between airports,tbe cloely dotted distances being mostly not large). In India, air traffic is developing during recent years, and unlike in the West, most of it is accounted for by sections of businessmen and corporate executives. Industrialization is now picking up momentum. One major cost is that of aviation fuel which is subject to global market influences. This leaves much need for finding ways for pruning costs elsewhere, that is in the employee force for different skills, and one good means of achieving this is to encourage mergers, through which optimization on number of employees and common facilities (ex. for maintenance of aircraft, repairs) can be achieved. Thus the MRTP concept, law and regulation of the aviation industry calls for change with respect to our specific conditions.