The Competition Commission of India (“CCI”) in its order dated March 7, 2018 has imposed penalties of Rs. 39.81 crore, Rs. 9.45 crore and Rs. 5.10 crore upon Jet Airways (India) Ltd., InterGlobe Aviation Limited and Spice Jet Limited (together, the “Airlines”) respectively for their concerted action in fixing and revising fuel surcharge and contravening the provisions of section 3 (3) (a) read with section 3(1) of The Competition Act, 2002 (“Competition Act”).
It may be noted that section 3(1) of the Competition Act prohibits enterprises, association of enterprises, persons or association of persons from entering into any agreement in respect of provision of goods and services, which causes or is likely to cause an appreciable adverse effect on competition within India. Also, under section 3(3)(a) of the Competition Act, any agreement executed or any decision taken by enterprises engaged in identical or similar trade of goods or provision of services, which directly determines purchase or sale prices, is void.
In this present case, the Airlines were involved in the act of overcharging of cargo freight, in the garb of fuel surcharge. CCI in its order stated the following:
“It is important for the growth of the market that these cartels be broken and more transparency be brought in price fixing by the airlines by taking firm steps in this direction. Else, the fuel surcharge, which was essentially introduced to mitigate the fuel price volatility, will continue to be used as a pricing tool to the detriment of the users which include express companies, freight forwarders as well as the end users and thereby will harm the competition.”
CCI applied the principle of “relevant turnover” and considered the revenue generated from cargo handling operations for quantifying the penalties on the Airlines as the infringing product in this case was a provision of air cargo transport services.
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