COMPAT upholds CCI Order holding that IndiGo’s predatory recruitment of Air India’s trained pilots is not a competition issue but an employment issue-

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COMPAT by its order dated April 29, 2016 has upheld the CCI order dated February 10, 2016 refusing to intervene in the matter of predatory recruitment of Air India’s trained pilot against InterGlobe Aviation Limited. (IndiGo)

In its order, the CCI rejected Air India’s allegations against IndiGo for the violation of section 3(3) (b) and (c) and 4(2) (b) of the Competition Act 2002.

Air India alleged that IndiGo is enjoying dominant position in the relevant market civil aviation (52% of the market share) and has been abusing that position in clear violation of Section 4(2) (b) (a) and further pleaded that the conduct of IndiGo is violative of Section 3(3) (b) and (c) of the Act.

It was alleged that IndiGo has systematically indulged in predatory recruitment of trained pilots of Air India. Air India claimed to have spent a huge amount on training costs to the tune of INR 30 to 35 lacs, depending on the total flying hours to be completed by the pilot as a part of the training received at its institute at Hyderabad.

This predatory recruitment practice was looked into by the Director General of Civil Aviation (DGCA) vide it’s letter dated April 07, 2015, mandating all airlines to ensure that pilots hired by them finish required six month notice period. However, IndiGo continued to disregard this direction.

The CCI rejected to entertain the grievance made in the information filed by the Air India observing that even though a prima-facie case can be said to have been made out in favour of Air India Ltd. but the allegations leveled against the Indigo do not seem to raise any competition concern in the market. An airline recruiting another airline’s pilots will not bring about structural changes in the operations of the market.

The COMPAT has upheld the order of the CCI with the opinion that although, the CCI did not record detailed reasons for refusing to entertain the grievance made in the information filed by the Air India, such deficiency in the impugned order would not justify interference with the Tribunal because Air India, except making bald allegations did not place cogent material before the Commission to enable it to draw an inference that IndiGo has resorted to predatory hiring of Pilots, who have deserted the parent airlines in complete violation of the conditions of agreement and instructions issued by DGCA vide circulars dated 27.10.2009 and 07.04.2015.

The COMPAT held that Air India should have placed some tangible evidence on record to prima facie show that IndiGo had in fact indulged in predatory hiring of pilots already serving other airlines and, thereby, affected the flying operations of the particular airlines, which could be treated as abuse of dominant position within the meaning of Section 4(2) or violation of Section 3(3)(b) and (c) of the Act because that may have amounted to limiting the provision of services or the market.

COMPAT dismissed the appeal and noted that if Air India is able to gather material to support its case against IndiGo that it has acted in violation of Section 3 and/or 4, then it shall be free to file fresh case to enable the CCI to consider the desirability of ordering an investigation into the matter under Section 26(1) of the Act and the impugned order shall not operate as a bar to the consideration of fresh information. (Source: Order dated April 29, 2016. For full text see COMPAT website-www.compat.nic.in)