Express Industry Council of India Vs Jet Airways (India) Ltd. & Others.

Nature of Case: Inquiry under section 19(1)(a) Competition Act, 2002

Case No. 30 of 2013

Brief Summary:

The Competition Commission of India (“CCI”) imposed penalties totalling Rs 258 crores (INR 2.58 billion) on Jet Airways, IndiGo and SpiceJet for cartelisation in fixing fuel surcharge (“FSC”) for transporting cargo.

The inquiry was initiated against 5 airlines namely Jet Airways, IndiGo Airlines, Spice Jet, Air India, and Go Air based on a complaint filed by Express Industry Council of India under Section 19(1)(a) of the Competition Act, 2002 (“Act”) in May 2009 against the FSC for transporting cargo by Airline companies.

The principal issue was whether the Airlines had operated in a “concerted action” by overcharging for cargo freight. Though the enquiry conducted by the Director General (“DG”) found that the Airlines were not resorting to any collusion, the CCI rejected the DG’s findings and penalised three carriers, namely Jet Airways, InterGlobe Aviation Ltd and SpiceJet for concerted action in fixing and revising FSC for transporting cargo. However, no penalty was imposed on Air India Ltd as its conduct was not found to be parallel with other Airlines and Go Airlines (India) Ltd as it gave its cargo belly space to third party vendors with no control on any part of commercial aspects of cargo operations.

CCI was of the view that the 3 Airlines acted in “parallel” and in collusion for increasing the FSC on the basis of the following observations: 

1.     There was concerted action between the Airlines as there has been exchange of information between them, passively through agents;

2.     There was a coordinated course of action as can be seen by the increase in rates on same dates or nearby dates;

3.     There was no material evidence to support the appreciation in FSC by the Airlines;

In consideration of the precarious financial position of airlines, the penalty was imposed at the rate of one per cent of their average turnover of the last three financial years.

The 3 Airlines will be appealing against the order of CCI, as they contend that the appreciation of FSC was merely in pursuance of the oligopolistic nature of the market, whereby actions of one are mimicked by another and there was no collusion or concerted action. In addition the FSC rates do not form a substantial part of the revenue, thereby bore little incentive to cartelize or indulge in action in concert.