Imposition of penalties by CCI upon three airlines for concerted action in fixing and revising fuel surcharge (FSC) for transporting cargo

Competition Commission of India(CCI): CCI imposed penalties upon three Airlines for concerted action in fixing and revising fuel surcharge (FSC) for transporting cargo which was filed by Express Industry Council of India under section 19(1)(a) of the Competition Act, 2002 against Jet Airways(India) Ltd., InterGlobe Aviation Limited, Spice Jet Limited, Air India Ltd.and Go Airlines(India) Ltd. alleging contravention of the provisions of section 3 of the Act which deals with anti-competitive agreements.

In the present case, the informant, Express Industry Council of India, vehemently opposed the investigation done by DG and further  alleged that FSC has been uniformally increased from the same date even without corresponding increase in the fuel prices by the Airlines, which constitute an act of cartelization. Furthermore, it was contended that none of the Airlines were able to furnish any data or costing studies for the determination of FSC even when there was no legal provision of levying it.  It was submitted by the Airlines that the business of Aviation is dependent on the comparative market study and existing competitive circumstances, which does not amount to an act of cartelization. It was further argued that the Domestic Air Cargo market was an oligopolistic market and merely because the Airlines works  in close proximity in the Airport premises would not amount to a concrete as determination of FSC rates changes due to changes in ATF prices and USD rates.

While imposing penalties, the Commission noted that such conduct in the air cargo industry undermines economic development of the country and ultimately acts to the detriment of end consumers. Considering the precarious financial position of Airlines, the penalty was imposed by the Commission @ 1% of their average turnover of the last three financial years. Accordingly, penalties of Rs. 151.69 crores, Rs. 63.74 crores and Rs.42.48 crores were imposed upon Jet Airways (India) Ltd, InterGlobe Aviation Limited and Spice Jet Limited respectively for the impugned conduct which was found to be in contravention of the provisions of section 3(1) read with section 3(3)(a) of the Act. Besides, cease and desist order was also issued against the Airlines. No penalty, however, was imposed upon Air India Limited as its conduct was not found to be parallel with other Airlines. Similarly, no penalty was imposed upon Go Airlines (India) as it gave its cargo belly space to third party vendors with no control on any part of commercial/ economic aspects of cargo operations done by vendors including imposition of FSC, [In re: Express Industry Council of India v. Jet Airways India Ltd.,Case No. 30 of 2013, decided on 17.11.2015]

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