UNDER SECTION 26(6) OF THE COMPETITION ACT, 2002

Consequent upon the repeal of the MRTP Act, 1969, the present information has been received by transfer on 04.03.2010 from the DG (I & R), Monopolies and Restrictive Trade Practice Commission under Section 66(6) of the Competition Act, 2002 (the Act).

Factual Background

2. The MRTP Commission took Suo Moto Cognizance of the matter on the basis of an Article published in the newspaper viz., Economic Times on 17.01.2008 wherein it was reported that all the Airlines under the banner of Federation of Indian Airlines (hereinafter referred to as OP-1) have decided to charge a minimum fare of Rs. 500 to improve their bottom lines and as a result of this decision passengers have to pay at least Rs. 2025 for even short distances or even if the passenger wins a free ticket. As a result of fixing of minimum fare additional cost in terms of increased fare has been imposed on the consumer and competition in the airline industry has been reduced. It was also reported that the Federation of Indian Airlines with a view to enforce such fixing of minimum fare has decided to take action against those airlines who violate the said decision.

3. The MRTP Commission ordered a preliminary investigation into the matter by the DG (I & R) on 31.01.2008. DG (I & R) requested the OP-1 to furnish the comments on the allegations made in the news item. The FIA filed its reply on 12.03.2008 denying all the allegations made in the news item and also filed documents in support of its contentions. DG (I & R) also issued the letters to following airlines on 01.04.2008 for their comments on the allegations made against them in the news items;

(a)Air India Limited (hereinafter referred to as OP-2),

(b)Indian Airlines (hereinafter referred to as OP-3),

(c)Jet Airways India Pvt. Ltd. (hereinafter referred to as OP-4),

(d)Kingfisher Airlines Ltd (hereinafter referred to as OP-5),

(e)Sahara Airlines Ltd. (hereinafter referred to as OP-6),

(f)Deccan Airlines Pvt. Ltd. (hereinafter referred to as OP-7),

(g)Spice Jet Limited (hereinafter referred to as OP-8),

(h)Go Airlines (India) Pvt. Ltd. (hereinafter referred to as OP-9),

(i)Inter globe Aviation Ltd. (hereinafter referred to as OP-10),

(j)Paramount Airlines (Pvt.) Ltd. (hereinafter referred to as OP-11).

4. Replies from all the Opposite Parties (except Sahara Airlines) were received wherein they denied the allegations of fixing minimum fare. As Sahara Airlines was acquired by the Jet Airways and Indian Airlines and Air India were merged into a single entity called National Aviation Company Ltd., hence, single reply from each was received.

5. DG (I & R) also sought additional information from the opposite parties. In response to the probe letters replies from OP-1, OP-2, OP-4, OP-5 (including erstwhile OP-7), OP-11, OP-10 and OP-9 were received. OP-8 did not file its reply. DG (I & R) could not submit the preliminary investigation report in the matter till 01.09.2009 the date on which MRTPC Act, 1969 was repealed. Accordingly, the matter was transferred to this Commission under Section 66 of the Act.

Reference by Commission to DG under Section 26(1) of the Act

6. The matter was considered by the Commission in its meeting held onl6.06.2010. After forming an opinion that there exists a prima facie case the Director General was directed to investigate the matter and submit his report within 45 days.

7. The DG; during the course of investigation, sought information from FIA regarding its functioning, details of special committees, minutes of its meetings etc. As the airlines had already filed their replies before DG (I & R), MRTPC the DG did not find it necessary to call for any additional information from them.

8. In the meanwhile OP-1 and OP-10 filed writ petitions before the Hon'ble High Court of Delhi challenging the order dated 16.06.2010 passed by the Commission directing the DG to investigate into the matter. The above writ petitions were dismissed by the Hon'ble High Court by its o