Court says CCI can examine Kingfisher-Jet

Court says CCI can examine Kingfisher-Jet

New Delhi: Kingfisher Airlines Ltd on Friday withdrew a petition it had filed in the Supreme Court against a probe by the Competition Commission of India (CCI) into its two-year-old strategic alliance with Jet Airways (India) Ltd.

Kingfisher had moved the apex court against a probe by CCI in May after losing an appeal in the Bombay high court.

The bench, led by Chief Justice S.H. Kapadia, refused to admit Kingfisher’s case, saying CCI was entitled to investigate the carrier. “The DG (director general of CCI) is entitled to ask you for any paperwork," Kapadia told Kingfisher’s lawyers.

The court’s stance clarifies the powers, functions and jurisdiction of the newly established watchdog, and makes clear that CCI can investigate agreements that pre-date the Competition Act of 2009.

This follows a landmark ruling on 9 September, in which the apex court said entities being investigated don’t have the right to be heard while CCI decides on the legitimacy of complaints involving them. The court also ruled that the appeals body, the Competition Appellate Tribunal, can only hear cases on which CCI has passed its orders.

Senior counsel Ashok Desai, who appeared for Kingfisher, told the court that CCI was not following directions laid down in the above judgement.

“You first answer the DG’s questions," Kapadia told him. Desai withdrew the petition, saying that the airline would take up the issue with CCI.

Kingfisher had approached the Bombay high court when CCI began the probe last year to examine whether the alliance was a case of cartelization. Kingfisher argued that the alliance pre-dated the Competition Act. It also said CCI couldn’t conduct an investigation as the previous anti-trust regulator, Monopolies and Restrictive Trade Practices Commission, had ruled earlier this month that there was no cause for an inquiry.

Neither CCI chairman Dhanendra Kumar nor Kingfisher’s lawyer Desai could be reached for comments.

Kingfisher and Jet cooperate in fuel management, ground-handling and cross-selling of flight tickets to select destinations. The current combined share of the two airlines in domestic passenger traffic is around 45%.

CCI started its probe in August 2009 after finding prima facie evidence of cartelization. The inquiry was suspended after Kingfisher moved the high court, but was restarted after it dismissed the petition.

G.R. Bhatia, partner at Luthra and Luthra Law Offices, said cooperation need not necessarily lead to cartelization.

“I feel CCI should look at the business and economic situation in a particular sector before taking a view whether a case needs to be investigated," he said. “In some cases, an understanding can be arrived at because of business compulsions or for survival rather than for anti-competitive moves."