‘No authority to prove cartelization’

‘No authority to prove cartelization’
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First Published: Fri, Oct 17 2008. 11 54 PM IST
Updated: Fri, Oct 17 2008. 11 54 PM IST
New Delhi: Even as a news report said India’s Monopolies and Restrictive Trade Practices Commission (MRTPC) was studying the alliance between Jet Airways and Kingfisher Airlines, an official at the Competition Commission of India (CCI) said that while he saw traces of cartelization in the deal, CCI would be unable to do anything about it. That’s because the body that has been set up to look at competition issues in India currently has a purely advisory role and the government is yet to appoint a chairman and five members for it.
Earlier this week, rivals Jet Airways (India) Ltd and Kingfisher Airlines Ltd announced an alliance that involves rationalizing routes and costs.
While MRTPC, a quasi-judicial body that will be disbanded once CCI is operational, can investigate unfair trade practices, it does not have the power to impose penalties. It can only ask companies from not continuing with such practices.
News agency PTI reported, quoting unnamed officials, that MRTPC had ordered its investigative arm Director General of Investigation and Registration to study whether the alliance between Jet and Kingfisher would result in a monopoly and submit a report within 60 days.
Mint couldn’t independently verify this. “We will only be able to comment on the development on Monday,” an MRTPC official told Mint.
CCI officials as well as senior lawyers, who did not want to be named, said that since MRTPC cannot impose penalties, the impact of its investigation would be limited. The official at CCI said that the commission recently met representatives of airlines to discuss issues related to competition and consumers. The executive, who did not want to be named, added that such meetings with various industry groups were routine and part of the body’s mandate to advocate such issues.
“However, we have made no observation on the recent Jet-Kingfisher deal as such because currently we have no powers to investigate,” added the official.
He said the absence of a chairman and members are also proving to be a hindrance. The official added that there are traces of cartelization in the Jet-Kingfisher deal. “This move may lead to reduced operations, select sectors in which only one of them will be present and raise(d) prices. All this will result in reduced competition in the sector, resulting in consumers getting affected.” A lawyer, however, said that it would be difficult to describe the alliance between the two loss-making airlines as a cartel without a close look at the arrangement between them.
“There are four areas under the Competition Act 2002 (amended), any of which, may lead to the presumption that a particular combination will have adverse effect on competition. These include price fixing, allocation of markets, limiting production of supply and bid rigging. However, competition is increasingly being considered to be benevolent for the consumers, business, as also the economy,” said G.R. Bhatia, partner at Luthra and Luthra Law offices. Neither firm has provided details on all areas of cooperation.
In August, Jet and affiliate JetLite had a 33.5% share of passenger traffic, followed by Kingfisher with 25%.
sangeeta.s@livemint.com
PTI contributed to this story.
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First Published: Fri, Oct 17 2008. 11 54 PM IST