Cartelisation in cargo: Competition panel slaps Rs 258 cr fine on Jet, IndiGo, SpiceJet

New Delhi: Clamping down on cartelisation in fixing fuel surcharge on air cargo, the Competition Commission today imposed penalties totalling Rs 258 crore on Jet Airways, IndiGo and SpiceJet -- an order that is likely to be challenged by the carriers.Passing an order on a complaint filed way back in 2013 against five carriers, the fair trade regulator, however, did not impose any fine on Air India and private carrier GoAir.[caption id="attachment_2510586" align="alignleft" width="380"] Facing CCI ire. Reuters[/caption]While a penalty of Rs 151.69 crore has been imposed on Jet Airways, the fines slapped on InterGlobe and SpiceJet are Rs 63.74 crore and Rs 42.48 crore, respectively. InterGlobe Aviation operates no-frills carrier IndiGo. "Jet Airways is not in contravention of the provisions of the Competition Act and it shall pursue all available legal steps to defend its position," a Jet Airways spokesperson said about the Competition Commission of India (CCI) order. SpiceJet's corporate affairs general Manager Ajay Jasra said, "We are examining the order. We are likely to challenge this verdict."Response from IndiGo was awaited.CCI has penalised three carriers -- Jet Airways, InterGlobe Aviation Ltd and SpiceJet -- for "concerted action in fixing and revising Fuel Surcharge (FSC) for transporting cargo", an official release said. These carriers have also been directed to cease and desist from indulging in anti-competitive practices.The ruling has come on a complaint filed by Express Industry Council of India, which alleged that the fiveairlines indulged in anti-competitive practices. The grouping said the latest CCI order would deter entities from indulging in unfair business practices.CCI said the three carriers colluded in fixing FSC rates. Such conduct was found to have resulted in indirectly determining the rates of air cargo transport and thereby contravening Section 3 of the Competition Act. This section pertains to anti-competitive agreements, the release said."No penalty, however, was imposed upon Air India Ltd as its conduct was not found to be parallel with other airlines. "Similarly, no penalty was imposed upon Go Airlines (India) Ltd 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," the release said. PTI RAM IASCCI referred the complaint to its probe arm Director General for a detailed investigation in September 2013 and DG submitted the report in February this year. While the DG did not find evidence of collusion during the course of investigation, it said the behaviour of airlines with respect to imposition of FSC was not to be in conformity with market conditions where the domestic players were actively competing.Expressing happiness over the CCI order, EICI's chief operating officer Vijay Kumar said the verdict would go a long way in ensuring consumers' interest."The cartelisation was detrimental to the country's economy. It will also deter people from indulging in unfair business practices," he added.In its 51-page order, CCI said such anti-competitive ways in the air cargo industry undermines economic development of the country and ultimately acts to the detriment of end-consumers."However, considering the precarious financial position of airlines, the penalty was imposed by the Commission at the rate of one per cent of their average turnover of the last three financial years," the release said.In this case, CCI said the basic concern in the present case is the overcharging of cargo freight, in the garb of fuel surcharge, by the air cargo transport operators which adversely affect consumers beside stifling economic development of the country.Coming down heavily on such cartels, the watchdog said it was 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 firms steps in this direction. "Else, the fuel surcharge, which was essentially introduced to mitigate the fuel price volatility, willcontinue to be used as a pricing tool to the detriment of the users who include express companies, freight forwarders and ultimately the end users and thereby will also harm the competition," the regulator noted.However, while deciding on the quantum of penalties, the Commission took into consideration that airlines are incurring losses besides groaning under accumulated debts.PTI