Aneesh Phadnis & Samie Modak | Mumbai December 12, 2013 Last Updated at 17:45 IST
Fresh turbulance for Jet-Etihad deal
Former Air India ED challenges CCI clearance; BJP MP Subramanian Swamy asks Sebi to direct Etihad to make an open offer
The recently-concluded Rs 2,060 crore-deal between Jet Airways and Abu Dhabi-based Etihad Airways is facing fresh legal challenges.
Air India's former executive director Jitender Bhargava has appealed against the Competition Commission of India (CCI) clearance to the deal arguing that the commission failed to assess adverse effects on the competition.
Separately, BJP MP Subramanian Swamy, who has filed a writ petition against the liberal grant in traffic rights to Abu Dhabi, has demanded that that stock market Securities and Exchange Board of India (Sebi) consider the deal to be ‘null and void’ till the time an open offer is announced by Etihad.
Last month, Abu Dhabi-based airline concluded its investment in the Mumbai-based Jet after receiving the CCI clearance.
Anurag Goel, a commission member, had however, dissented against the majority order.
Bhargava in his appeal to the competition appellate tribunal has demanded that the clearance be set aside as the commission did not follow the due process while approving the deal. The appeal says the commission should have conducted an inquiry as the commercial agreement signed by the two airlines is anti-competitive in nature.
" Further, the concerns expressed by Air India, the only airline from which Respondent No.1 (CCI) sought comments to the Proposed Combination, have only partially been considered.The failure to conduct a complete analysis of whether the Proposed Combination results in AAEC renders the unconditional approval granted by Respondent No.1 in its Impugned Order void, '' it said.
Bhargava has also questioned the clearance claiming that the commission's assessment of the market was based on "assumptions and surmises.''
"By simply assuming that all Indian passengers are generally price sensitive (and not time-sensitive), Respondent No.1 has concluded that direct and indirect flights are substitutable with one another and on this basis completely failed to carry out a separate analysis for the two relevant markets. Further, Respondent No. 1 failed to consider the ‘market for air cargo transportation’, in which the Parties effectively compete....Consequently, the unconditional approval granted by Respondent No.1 is deeply flawed and the Impugned Order should be set aside,'' says the appeal.
Meanwhile, Swamy has argued that Jet promoter Naresh Goyal is ceding from an absolute control to a joint control with Etihad, which Sebi has taken cognizance of by not allowing Etihad investment until the Indian promoters diluted their stake.
“This is clear of a person (Naresh Goyal) who had absolute/significant control over Jet ceding the same to a PAC i.e Etihad by several actions pre agreed between them and documented through the agreements that was available to Sebi but wrongly adjudicated,” he said in a letter to UK, Sinha, chairman, Sebi.
The BJP MP has also written in the letter that he would further agitate if the market regulator “does not withdraw approvals granted or opinions expressed in this regard to support Etihad to invest in Jet in contravention of the said regulations.”
Market regulator Sebi had initially expressed concerns over the original deal structure between the two airlines. But had cleared a revised deal structure, in September, stating that Jet and Etihad won’t be treated as persons acting in concert (PACs) and the deal won’t trigger an open offer.
Air India's former executive director Jitender Bhargava has appealed against the Competition Commission of India (CCI) clearance to the deal arguing that the commission failed to assess adverse effects on the competition.
Separately, BJP MP Subramanian Swamy, who has filed a writ petition against the liberal grant in traffic rights to Abu Dhabi, has demanded that that stock market Securities and Exchange Board of India (Sebi) consider the deal to be ‘null and void’ till the time an open offer is announced by Etihad.
Last month, Abu Dhabi-based airline concluded its investment in the Mumbai-based Jet after receiving the CCI clearance.
Anurag Goel, a commission member, had however, dissented against the majority order.
Bhargava in his appeal to the competition appellate tribunal has demanded that the clearance be set aside as the commission did not follow the due process while approving the deal. The appeal says the commission should have conducted an inquiry as the commercial agreement signed by the two airlines is anti-competitive in nature.
" Further, the concerns expressed by Air India, the only airline from which Respondent No.1 (CCI) sought comments to the Proposed Combination, have only partially been considered.The failure to conduct a complete analysis of whether the Proposed Combination results in AAEC renders the unconditional approval granted by Respondent No.1 in its Impugned Order void, '' it said.
Bhargava has also questioned the clearance claiming that the commission's assessment of the market was based on "assumptions and surmises.''
"By simply assuming that all Indian passengers are generally price sensitive (and not time-sensitive), Respondent No.1 has concluded that direct and indirect flights are substitutable with one another and on this basis completely failed to carry out a separate analysis for the two relevant markets. Further, Respondent No. 1 failed to consider the ‘market for air cargo transportation’, in which the Parties effectively compete....Consequently, the unconditional approval granted by Respondent No.1 is deeply flawed and the Impugned Order should be set aside,'' says the appeal.
Meanwhile, Swamy has argued that Jet promoter Naresh Goyal is ceding from an absolute control to a joint control with Etihad, which Sebi has taken cognizance of by not allowing Etihad investment until the Indian promoters diluted their stake.
“This is clear of a person (Naresh Goyal) who had absolute/significant control over Jet ceding the same to a PAC i.e Etihad by several actions pre agreed between them and documented through the agreements that was available to Sebi but wrongly adjudicated,” he said in a letter to UK, Sinha, chairman, Sebi.
The BJP MP has also written in the letter that he would further agitate if the market regulator “does not withdraw approvals granted or opinions expressed in this regard to support Etihad to invest in Jet in contravention of the said regulations.”
Market regulator Sebi had initially expressed concerns over the original deal structure between the two airlines. But had cleared a revised deal structure, in September, stating that Jet and Etihad won’t be treated as persons acting in concert (PACs) and the deal won’t trigger an open offer.