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Background and Context
The Competition Commission of India in Express Industry Council of India vs Jet Airways & Ors has held three domestic airlines guilty of cartelization in levying Fuel Surcharge on air cargo.
The CCI by order dated 07.03.2018 found Jet Airways, IndiGo and SpiceJet in contravention of Section 3(3)(a) read with Section 3(1) of the Competition Act, 2002. The case arose from allegations that in May 2008, certain domestic airlines connived to introduce a 'Fuel Surcharge' for transporting cargo at a uniform rate of Rs. 5/Kg effective from 15.05.2008. The Informant, a non-profit company and apex body of express companies including Blue Dart, FedEx, DHL, alleged that although FSC was ostensibly to mitigate fuel price volatility, there was no legal provision for it. The core allegation was that FSC was levied at a uniform rate from the same date, increased uniformly in concert, and not reduced even when fuel prices declined. This, according to the Informant, constituted cartelization covered under Section 3 of the Act. The express industry argued that cargo customers were being forced to pay artificially inflated charges due to coordinated conduct of airlines who collectively held dominant share in domestic cargo market.
The Commission had to first deal with the issue of whether airlines acted in a concerted manner while fixing FSC. The DG had analyzed data from implementation till November 2012 and found striking similarities. For example, in May 2008 all three airlines implemented Rs. 5/kg from 16.05.2008. Again in Apr-Jun 2011, Jun 2012, Sep 2012 and Nov 2012, Jet, IndiGo and SpiceJet revised FSC to the exact same rates and within days of each other.
The Commission noted that cartel activities are usually clandestine and evidence must be inferred from coincidences and indicia. CCI relied on economic data, market structure, and timing of price changes to draw inference of agreement. The DG report was earlier set aside by COMPAT on 18.04.2016 and remanded back, after which fresh investigation was done.Jet Airways argued there was no evidence of agreement and that price parallelism was normal in an oligopolistic market. It submitted that fuel prices, demand-supply, and competitive dynamics led to similar pricing. IndiGo and SpiceJet took similar defense.
The Commission rejected this and held that the conduct of OP-1, OP-2 and OP-3 resulted in indirectly determining the rates of air cargo transport. The Commission did not proceed against OP-4 Air India and OP-5 as no contravention was found. CCI noted that absence of participation in uniform hikes showed independent conduct by those airlines. Finally, under Section 27, the CCI held that the impugned acts of Jet Airways, IndiGo and SpiceJet were in contravention of Section 3(3)(a) read with Section 3(1). The Commission directed them to cease and desist and found the case fit for imposition of penalty up to 10% of average turnover of last 3 years.
Conclusion
The order in Case No. 30 of 2013 reaffirms that parallel pricing alone is not enough, but parallel pricing plus other plus factors can establish cartel. As the law stands, airlines cannot uniformly fix surcharges without objective justification. For express companies and cargo customers, this judgment provides relief from coordinated price hikes. For airlines, it signals that FSC must be transparent and linked to actual cost indices. This case is now cited as key precedent for inference-based cartel detection in India.
