COMPAT sets-aside penalty imposed on domestic airlines and remands the matter back to the CCI |

COMPAT by its order dated April 18, 2016 set-aside the penalty imposed on three domestic airlines by the CCI for alleged cartelization and remanded the matter back to the CCI for passing appropriate order keeping in view the principles of natural justice. In the present case an information was filed by the Express Industry Council of India, alleging Jet Airways (India) Ltd., SpiceJet Ltd., Interglobe Aviation Ltd. (Indigo), Air India Limited and Go Airlines (India) Limited had joined hands and formed a cartel to introduce fuel surcharge (FSC) for transport cargo with effect from 15.05.2008 and uniformly increased the price from time to time, adversely affecting the freight companies and the end consumers. CCI, found a prima facie case and referred the case for investigation by the DG.

The DG, after a detailed investigation, found that the evidence available is enough to conclude the existence of a cartel amongst the aforesaid airlines.

However, the CCI disagreed with the entire findings of the DG and held that only Jet, SpiceJet, and Indigo acted in a concerted manner in fixing and revising the FSC rates and, thereby, contravened the provisions of Section 3(1) and Section 3(3) (a) of the Act. CCI did not find any evidence of collusion between Air India and Go –Air with the other three Airlines and exonerated Air India and Go-Airlines from the allegation. By its order dated November 17, 2015, the CCI imposed a total penalty of approx. INR 258 Crores on Jet Airlines , SpiceJet, and Indigo.

The order was challenged before COMPAT on the ground, among others, that the CCI had failed to give any notice to the Ops/ appellants before recording its dis-agreement with the findings of the DG. The appellants argued that such notice would have enabled them to file their objections with respect to such reasons and make arguments on that basis.

The COMPAT was of the view that by omitting to give notice to the appellants incorporating the reasons for CCI’s disagreement with the findings and conclusion recorded by the DG, the CCI deprived the appellants of a valuable opportunity to effectively defend themselves against the proposed action. Accordingly, the violation of the principles of natural justice by the CCI has caused serious prejudice to the appellants. The COMPAT has resultantly set-aside the impugned order with the direction to re-consider the DG Report. If the CCI is to disagree with the findings and conclusions recorded by the Jt. DG, then it shall indicate the reasons for such disagreement and issue notice to the parties incorporating the reasons of disagreement and give them opportunity to file their replies/ objections. The CCI shall then pass an order in accordance with law, after hearing the Ops/appellants. (Source: Order dated April 18, 2016. For full text see COMPAT website-www.compat.nic.in)

COMMENT: The present Order of COMPAT assumes importance being the first of its kind as no previous order of CCI has been overruled on account of the fact that prior notice of disagreement with findings of DG was not given by CCI to the OPs. This order now lays down a requirement on CCI to give such a notice in all future cases in spite of the fact that the inquiry held before the CCI provided full opportunity to defend was granted to each party in the instant case.

About the author

M M SHARMA

 Comdt. (Retd.) M. M. Sharma heads the Competition Law & Policy team in VA since 2009 and has over 30 years’ experience as an Advocate of Delhi High Court and holds a Post Graduate Diploma in Economics of Competition Law from Kings College, London. He has worked in the Competition Commission of India (CCI) as Additional Registrar during 2006-2008 and was responsible for drafting the Implementing Regulations under the Competition Act, 2002. He has experience of working as Head-Legal /In-house Counsel for a large Corporate Group in the Steel and Power sector before joining VA in 2009. He has represented clients as an independent arguing Counsel in landmark cases decided by CCI, the Competition Appellate Tribunal (COMPAT) , High Courts and the Supreme Court. As a prolific writer, he contributes articles and is regularly quoted on competition issues in National Newspapers and interviewed by TV Channels. He also teaches as a visiting faculty in various Universities and Institutions and is widely regarded as a subject expert in various Committees of Apex Business Chambers, such as FICCI, CII, ASSOCHAM and PHD CCI.  Mr. Sharma has been mentioned as a “Notable Practitioner” in the “Competition/Antitrust” category of Chambers & Partners (Asia Pacific) Ranking of Leading Lawyers for Business in India for the year 2012 and 2013. VA’s competition law and policy team has also been awarded the Law Firm of the Year Award for “Competition/Antitrust Law” for 2013 by the Indian Business Law Journal. Included as a ‘Recognised Practitioner’ in Individual Lawyers’ranking by Chamber’s Asia Pacific Guide 2020 for Antitrust/Competition Law.