BackCompetition Commission probing airlines, tyre makers for alleged cartels
If any cartels were found, fines of as much as 10% of a company's revenue or profit could be imposed
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New Delhi: India’s antitrust agency has opened fresh probes of airlines and tyre makers over allegations of cartel behavior, the regulator’s chairman Ashok Chawla said.
All of the nation’s domestic carriers are being reviewed, Chawla, 64, said in an interview in New Delhi on Wednesday. He didn’t specify any air companies by name, nor did he identify any individual tyre makers.
If any cartels were found, fines of as much as 10% of a company’s revenue or profit could be imposed. That would be a particular blow to India’s debt-laden airlines, which have lost an average of $22 every time a passenger has stepped on board in the past seven years.
Cartelization is the “worst kind" of conduct, Chawla said. He has run the Competition Commission of India (CCI) since 2011 and earlier was a senior official in India’s aviation ministry.
The commission probed airlines in 2013 and 2014 and didn’t find evidence of cartels, Chawla said. The latest investigation, which will take about two months to complete, was initiated after a complaint by a parliamentary committee, he said.
“This time, the period is different, pricing behavior and market structure would be slightly different," Chawla said. “We may get some evidence."
Indian carriers have sometimes offered base fares of as low as 2 cents. Spot fares have increased since SpiceJet Ltd reduced its schedule late last year and after Kingfisher Airlines Ltd ceased operations in 2012.
‘Severe’ competition
“Airline pricing in India is now, more than ever, some of the most transparent and competed pricing in the world with so many discounts and promos," SpiceJet said in an e-mailed reply to questions. “Competition has never been more severe, and consumers have never had it so good. Cartels normally do not compete so fiercely and discount so much, they do the opposite: they raise fares."
Jet Airways India Ltd spokesman Manish Kalghatgi and IndiGo spokeswoman Sakshi Batra didn’t immediately respond to requests for comments late on Wednesday. IndiGo is the country’s largest carrier by market share, with just over 36% of domestic passenger traffic in December, followed by Jet Airways, Air India Ltd and SpiceJet.
The Indian government is considering temporarily capping minimum and maximum airfares offered by airlines such as state-run Air India and the local unit of AirAsia Bhd, a senior aviation ministry official said on 22 December 2014.
Chawla said cartelization “is an offense against the state." The commission is also probing bank savings account rates.
The agency previously investigated tyre makers in 2013. It didn’t find any illegal behavior, Chawla said. The biggest two Indian tyre makers by market capitalization are MRF Ltd and Apollo Tyres Ltd, according to data compiled by Bloomberg.
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