Rs 1 crore fine slapped on Etihad Airways in Jet Airways Rs 2,060 crore deal by CCI

Dec 19 2013, 21:10 IST
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Jet Airways and Etihad Airways contended that they were unaware of the requirement for certain disclosures. Reuters Jet Airways and Etihad Airways contended that they were unaware of the requirement for certain disclosures. Reuters
SummaryIndia punishes Etihad Airways for failing to adhere to rules in Jet Airways deal.

Act, entities proposing to enter into a combination are required to give notice to the Commission disclosing the details of the proposed combination, within the time prescribed therein.

"In the instant case, the parties consummated LHR Transaction without giving notice to the Commission," the order said.

According to the fair trade regulator, the parties agreed that CCA shall come into force on April 24, whereas the notice was given only on May 1.

Moreover, the parties even pursued certain actions, both before and after giving notice, that are in conjunction with the obligations envisaged under the CCA, without waiting for the approval of the Commission, it added.

"In view of the foregoing, it is concluded that Etihad Airways failed to give notice under sub-section (2) of Section 6 of the Act of LHR Transaction and CCA and the parties implemented LHR transaction and CCA without giving notice as well as without awaiting the approval of the Commission," the order said.

As per the Commission, the parties had been mending and changing transaction terms and conditions as per the the advise/requirements of different regulators from time to time.

"This fact is also evident that one of the parties to the combination was in dire need of financial support being provided by the other party to the combination and it seems to have shown its willingness and bona-fides by taking steps in accordance with CCA during pendency of approval itself," the order said.

In these kind of cases, the Commission can impose a penalty that may extend to one per cent of the total turnover or the assets, whichever is higher, of such a combination.

In this case, one percent of the combined value of turnover of the parties is more than Rs 400 crore and one percent of the combined value of asset of the parties is more than Rs 700 crore, the Commission said.

In a minority order, CCI member Anurag Goel said that CCA was not only a critical component of the combination from the transaction perspective, but was also a very important factor in the competition assessment of the proposed combination.

"To implement the CCA, without prior approval of the Commission is, therefore, a major and substantial aggravating factor in determining the penalty under Section 43A of the Act, and it amounts to a very grave deliberate failure to notify the Commission about extremely critical facts of the case, crucial in the process of competition assessment of the

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