Millennium Post

CCI slaps Rs 1-crore fine on Etihad for non-disclosure of Jet deal info

The Rs 2,060 crore deal has been facing turbulence ever since it was announced in April. Earlier on Thursday, the Competition Appellate Tribunal (COMPAT) issued notices to the Competition Commission of India and Jet on a plea challenging the competition watchdog’s clearance.

The penalty would not have any impact on the approval for the deal given by CCI last month. The competition regulator said it kept the quantum of fine low at Rs 1 crore after Jet and Etihad contended that they were unaware of the requirement for certain disclosures.

Dissenting with majority view, CCI member Anurag Goel in a separate order said the fine should be Rs 10 crore.

The CCI fine of Rs 1 crore relates to pacts entered into between the two carriers on 26 February for sale of three landing/take-off slots of Jet at London Heathrow Airport to Etihad (LHR transaction). It also includes the lease of the same slots back to Jet.

Keeping in view the facts and circumstances, the Commission said it was imposing a penalty of Rs 1 crore on Etihad, which according to the regulator had the obligation to give notice to it regarding the deal. Etihad is required to pay the fine within 60 days. The regulator said the parties made disclosure of all the agreements entered into between them, including LHR transaction and CCA (commercial cooperation agreement). Noting that it is apparent that there was no effort by the parties to conceal the transactions, the CCI observed that contention of the parties is that they were under an impression that LHR was an independent transaction.

‘This contention has not found favour with this commission but the fact remains that the party was under an impression, though wrongly, that LHR transaction was an independent transaction and the party consummated LHR transaction,’ the order said.

The airlines sought CCI nod for the Rs 2,060-crore deal on 1 May. The parties approached the commission pursuant to an investment agreement (IA), a shareholder’s agreement (SHA) and a commercial CCA. These were executed on 24 April.

Under the Competition 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 24 April, whereas the notice was given only on 1 May. 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.
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