CCI imposes fine on Jet, SpiceJet, IndiGo
In a bid to clamp down on cartelisation over fixing fuel surcharge on air cargo, Competition Commission of India (CCI) imposed penalties worth Rs.258 crore on three airlines. Jet Airways was fined Rs.151.69 crore, IndiGo was fined Rs.63.74 crore and a fine of Rs.42.48 crore was imposed on SpiceJet. Spokespersons of all fined companies said they may challenge the verdict in court.
What is CCI?
Competition Commission of India was established on 14 October 2003 as a Government of India body. It was responsible for enforcing the Competition Act 2002 throughout India. The act prohibits mergers and acquisitions which can cause an adverse effect on competition in India. It is the duty of the commission to protect the interests of customers and ensure freedom of trade in the market.
Difference in date of establishment and functioning
Though CCI was established in October 2003, it became fully functional only in May 2009 with Dhanendra Kumar as its first Chairman.
Few notable cases
In June 2012, CCI had imposed a fine of Rs.63.07 billion on 11 cement companies for fixing prices, controlling market share and holding back supply to earn illegal profits. In February 2013, CCI fined BCCI for Rs.522 million after finding out that the IPL team ownership agreements were unfair and discriminatory leaving franchises with no say in the contract.
What is cartelisation?
Cartelisation is an agreement between competing firms or countries to control prices or exclude entry of a new competitor in a market.
What was the case?
Express Industry Council of India (EICI) had filed a complaint alleging cartelisation by five-airlines which was in violation of section 3 of the Competition act. No penalty was imposed on AirIndia and GoAir as their conduct was not found to be in contravention with the act. The other three were fined for concerted action in fixing and revising Fuel Surcharge (FSC) for transporting cargo.
Such violations hurt India's economy: CCI
Criticizing the airlines, CCI said that such violations in the air cargo industry hurt the economic development of the country. CCI said that the basic concern was the overcharging of cargo freight under the garb of fuel surcharge. The commission said that such conduct does disservice to the consumers. It added airlines' insecure financial position was considered while imposing the fine.