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Business News/ Companies / News/  Compat sets aside penalty on airlines over fuel charges
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Compat sets aside penalty on airlines over fuel charges

The case has been sent back to the CCI, which will continue to investigate suspected cartelization by the airlines in fixing fuel charges

All the airlines had levied fuel surcharge (FSC) at a uniform rate from the same date, which constitutes an act of cartelization under the Competition Act, 2002. Photo: Satish Bate/HTPremium
All the airlines had levied fuel surcharge (FSC) at a uniform rate from the same date, which constitutes an act of cartelization under the Competition Act, 2002.
Photo: Satish Bate/HT

New Delhi: The Competition Appellate Tribunal (Compat) on Monday set aside an order by the antitrust regulator Competition Commission of India (CCI) imposing a penalty on Jet Airways (India) Ltd, IndiGo (run by InterGlobe Aviation Ltd) and SpiceJet Ltd over fixing of fuel charges in cargo transport.

“The appeals have been allowed," justice G.S. Singhvi said while pronouncing the order.

The case has been remanded to the CCI, which will continue to investigate suspected cartelization by the airlines in fixing fuel charges while considering the report of the commission’s joint director general.

The order held that if the commission disagrees with certain findings of the report of the director general, a show-cause notice must be issued along with an opportunity extended to the opposite parties to file their response.

Ramji Srinivasan, counsel for IndiGo, had argued that the impugned order should be set aside on grounds of “violation of principles of natural justice".

“The commission’s failure to cite reasons for disagreement with DG report and lack of an effective opportunity to the airline companies to show that they had not formed any cartel for jacking up fuel surcharge from time to time has not only resulted in gross violation of principles of natural justice but has also caused prejudice," the order noted.

In November 2015, the CCI imposed a penalty of 151.69 crore on Jet Airways, 63.74 crore on IndiGo and 42.48 crore on SpiceJet for cartelization. The fine corresponds to 1% of the annual revenue of the companies.

The CCI’s order followed a complaint filed by Express Industry Council of India, an association of 29 parcel transportation firms, against Jet Airways, IndiGo, SpiceJet, Air India and GoAir. No penalty was imposed on GoAir and Air India.

In its order, CCI observed that the cargo revenue ranged from 20-30% of the overall revenue of the airlines and so cartelization could not be ruled out.

All the airlines had levied fuel surcharge at a uniform rate from the same date, which constitutes an act of cartelization under the Competition Act, 2002.

Subsequently, the airlines raised the fuel surcharge at the same time without any corresponding increase in fuel prices.

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Published: 18 Apr 2016, 04:35 PM IST
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