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CCI imposed penalties on 3 Airlines for concerted action in Fixing Fuel Surcharge

Nov 18, 2015 12:01 IST

The Competition Commission of India (CCI) on 17 November 2015 imposed penalties upon 3 Airlines for concerted action in fixing and revising Fuel Surcharge (FSC) for transporting cargo.  These 3 Airlines are Jet Airways (India) Ltd, InterGlobe Aviation Limited and Spice Jet Limited.

The matter 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 Limited and Go Airlines (India) Limited alleging contravention of the provisions of section 3 of the Act which deals with anti-competitive agreements.

Highlights of the order passed by CCI
• The Commission noted that the Airlines acted in parallel in collusion in fixing FSC rates.
• Such conduct was found to have resulted in indirectly determining the rates of air cargo transport and thereby in contravention of the provisions of section 3(1) read with section 3(3)(a) of the Competition Act, 2002.
• Accordingly, penalties of 151.69 crore rupees, 63.74 crore rupees and 42.48 crore rupees were imposed upon Jet Airways (India) Ltd., InterGlobe Aviation Limited and Spice Jet Limited respectively.
• Besides, cease and desist order was also issued against the Airlines.
• No penalty 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) Limited 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.
• Considering the precarious financial position of Airlines, the penalty was imposed by the Commission @ 1 percent of their average turnover of the last three financial years.
• The Commission also noted that such conduct in the air cargo industry undermines economic development of the country and ultimately acts to the detriment of end-consumers.

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