CCI by its order dated November 17, 2015 penalized three Airlines for the violation of Section 3(3)(a) read with section 3 (1) of the Competition Act, 2002 (Act). CCI imposed a penalty of 1% of the average turnover of preceding three years on Jet Airways (India) Ltd., InterGlobe Aviation Limited and Spice Jet Ltd., which amounted to INR 151.69 Crores, INR 63.74 Crores and INR 42.48 Crores respectively. A cease and desist order has also been issued.
CCI found that the airlines were acting in parallel conduct and colluded to fix the Fuel Surcharge (FSC) rates. It concluded that such conduct of airlines was resulting in indirectly determining the rates of air cargo transport and thereby contravening provisions of Section 3(3) (a) of the Act. The airlines had claimed that FSC is linked to Air Turbine Fuel (ATF) and any increase in ATF leads to increase in FSC. However, CCI noted that often the FSC used to increase despite decrease in ATF price as well the dollar exchange rate. The opposite parties charged FSC at the rate of INR 5/kg in 2008. However, no methodology was supplied for arriving at this conclusion. There was a parallel increase to INR 9/kg in April-June 2011. In November 2012 the same was increased to INR 15/kg by Jet, Inter Globe and Spice Jet.
No penalty was imposed on Air India Ltd. as its conduct was not parallel with other airlines. Similarly, Go Airlines (India) Ltd. was also exonerated as it gave its cargo 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. The order is particularly notable as it is the first case where the DG Report finding no contravention has been rejected by the CCI and a finding of contravention has been given by the CCI.
(Source: Order dated November 17, 2015. For full text see CCI website-www.cci gov.in)