Disposed

Mr. Yeshwanth Shenoy v. Air India, Alliance Air and Air India Express & Others

CCI6 Jan 201698/2015

Case brief

AI extract

What is this about?

The Competition Commission closed the case filed by an informant against Air India and_OP 1_, alleging abuse of dominant position due to Government of India's policy directives favoring the airline. The Commission held that the Government, acting as a consumer under the LTC Scheme, exercised free choice and could not be liable under the Act.

What the court decided

AI extract

Mr. Yeshwanth Shenoy vs Air India, Alliance Air and Air India… — Company and Corporate | CCI (2016)

¶1

COMPETITION COMMISSION OF INDIA Case No. 98 of 2015

¶2

In Re:

¶3

Mr. Yeshwanth Shenoy
“Priyadarshini”, Veekshnam Road
Ernakulam, Kerala	Informant
And
1. Air India, Alliance Air and Air India Express
Airlines House, 113, Gurudwara Rakabganj Road
New Delhi - 110001	Opposite Party No. 1
2. Union of India
(Through the Secretary, Ministry of Civil Aviation
and the Secretary, Ministry of Finance)	Opposite Party No. 2
3. Jet Airways
Siroya Centre, Sahar Airport Road
Andheri (East), Mumbai - 400029	Opposite Party No. 3
4. Spicejet Airlines
Kamaraj Domestic Terminal
Chennai Airport, Chennai- 600027	Opposite Party No. 4
5. Indigo Airlines
Indigo, Central Wing, Thaper House
124, Janpath, New Delhi- 110001	Opposite Party No. 5
*Case No. 98 of 2015*	*Page 1 of 6*

¶4

6. Go Air Airlines

¶5

1^st Floor, C-1, Wadia International Centre Pandurang Budhkar Marg Worli, Mumbai - 400025 Opposite Party No. 6

¶6

7. Vistara Airlines

¶7

TATA SIA Airlines Ltd. Jeevan Bharti Tower 1, 10^th Floor, 124 Connaught Circus, New Delhi – 110001

¶8

Opposite Party No. 7

¶9

CORAM:

¶10

Mr. S. L. Bunker Member

¶11

Mr. Sudhir Mital Member

¶12

Mr. Augustine Peter Member

¶13

Mr. U. C. Nahta Member

¶14

Mr. M. S. Sahoo Member

¶15

Justice G. P. Mittal Member

¶16

Case No. 98 of 2015

¶17

Page 2 of 6

¶18

Order under Section 26(2) of the Competition Act, 2002

¶19

The information in the present case has been filed by Mr. Yeshwanth Shenoy (hereinafter, the ‘ Informant ’) against Air India and its subsidiaries such as Alliance Air and Air India Express (hereinafter, ‘ OP 1 ’), the Union of India represented by the Secretary, Ministry of Civil Aviation and the Secretary, Ministry of Finance (hereinafter, ‘ OP 2 ’), Jet Airways (hereinafter, ‘ OP 3 ’), Spicejet Airlines (hereinafter, ‘ OP 4 ’), Indigo Airlines (hereinafter, ‘ OP 5 ’), Go Air Airlines (hereinafter, ‘ OP 6 ’) and Vistara Airlines (hereinafter, ‘ OP 7 ’) under section 19(1)(a) of the Competition Act, 2002 (hereinafter, the ‘ Act ’) alleging, inter alia , contravention of the provisions of sections 3 and 4 of the Act.

¶20

OP 1, OP 3, OP 4, OP 5, OP 6 and OP 7 are different airlines based in India and OP 2 is the Government of India. It is further stated that OP 2 is the main shareholder of OP 1 and as such OP 2 funds OP 1’s operations by investing huge sums of money.

¶21

As per the Informant, as a consultant with different ministries to the Government of India, he was forced by OP 2, through its policy directives/ office orders, to avail the air travel services offered by OP 1 at a price which was much higher than those offered by its competitors in the market. It has been alleged that in addition to direct financial assistance, OP 2 also provides indirect financial support to OP 1 through its various office orders mandating its employees to exclusively use the air travel services provided by OP 1 with exception in the routes where OP 1 has no operations. The Informant has alleged that OP 2, through its policy initiatives, has ensured that OP 1 enjoys the benefits of having a captive customer base comprising of the government employees together with their dependants who undertake air travel under Leave Travel Concession (‘ LTC ’) Scheme of OP 2, the government

¶22

Case No. 98 of 2015 Page 3 of 6

¶23

employees on official tour, and the private individuals travelling on government invitation. This, according to the Informant, has placed OP 1 in a dominant position as it is the only air travel service provider that caters to this huge customer base.

¶24

Further, the Informant has alleged that taking advantage of the policy directives of OP 2, OP 1 engages in an unfair and discriminatory practice by charging a higher price for the tickets booked under LTC Scheme. It is alleged that OP 1 charges a higher price for the tickets booked under LTC Scheme in comparison to the tickets available in non-concession category. In this regard, the Informant has alleged that OP 1’s software, which manages online ticket bookings under the said concession category, is programmed in a manner that at the time of reservation ticket prices in the concession category first increase and then decrease. The Informant has also stated that, despite being conscious of the above said anti-competitive practices of OP 1, OP 3 to OP 7 have remained silent which may be attributed to a cartel amongst them or because of the fear of a regulatory backlash from OP 2. It is alleged that the air travel services provided by OP 1 are quite unsafe. As such, compelling the government employees to avail the air travel services under LTC Scheme or under other Government of India sponsored air travel facilities provided by OP 1 only are violative of their fundamental rights guaranteed under the Constitution of India.

¶25

In view of the above, the Informant has prayed before the Commission to inter alia impose penalties on OP 1 for engaging in abuse of dominant position, direct OP 2 to discontinue its present practices of favouring OP 1 and pass any other appropriate orders.

¶26

The Commission considered this matter in the ordinary meeting dated 03.11.2015. The Commission has perused the entire case records and

¶27

Case No. 98 of 2015

¶28

Page 4 of 6

¶29

considered the allegations of the Informant together with the material available with the information.

¶30

The Commission notes that although no specific allegations have been brought against OP 2, the Informant has complained that OP 2’s policy directives have been specifically designed to favour OP 1 over other airlines. In this regard, it may be pointed out that allegations of somewhat similar nature against OP 2 were examined by the Commission in the case of Travel Agents Association of India v. Balmer Lawries & Co. Ltd. & Anr. (Case No. 39 of 2010) wherein the Commission closed the case at the prima facie stage observing, inter alia, that the Government of India was the consumer of air ticketing services and a consumer is free to make a choice as far as selection of goods or services are concerned. In that case the Commission also observed that the Department of Expenditure, Ministry of Finance, Government of India was not an enterprise under the provisions of section 2(h) of the Act. Going by the same logic in the present case, the Commission is of the view that OP 2 is the consumer of air travel services as the tickets purchased under the LTC Scheme are funded by OP 2. Further, as a consumer of air travel services, OP 2 enjoys the liberty to exercise its choice even if such exercise of choice causes a favourable treatment for OP 1 or other player operating in the market. Thus, no case is made out against OP 2 under any of the provisions of the Act. Furthermore, once the OP 2 has exercised its free choice to avail the services of OP 1 the allegation of abuse for charging excessive (unfair) price against OP 1 also does not hold.

¶31

In light of the above, the Commission finds that no case of contravention of the provisions of either section 3 or 4 of the Act is made out against the Opposite Parties. Accordingly, the Commission decides to close the matter under the provisions of section 26(2) of the Act.

¶32

Case No. 98 of 2015

¶33

Page 5 of 6

¶34

The Secretary is directed to inform the parties accordingly.

¶35

Sd/(S. L. Bunker) Member Sd/(Sudhir Mital) Member Sd/(Augustine Peter) Member Sd/(U. C. Nahta) Member Sd/(M. S. Sahoo) Member Sd/New Delhi (Justice G. P. Mittal) Date:06.01.2016 Member

¶36

Case No. 98 of 2015

¶37

Page 6 of 6

Mr. Yeshwanth Shenoy v. Air India, Alliance Air and Air India Express & Others

Case brief

What is this about?

What the court decided

Mr. Yeshwanth Shenoy v. Air India, Alliance Air and Air India Express & Others

Case brief

What is this about?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases