Kingfisher moves Bombay HC against inquiry

The Bombay high court on Friday will hear the first petition filed under the Competition Act, 2002. Certain sections of the act have been enforced in May this year.

The petition has been filed by Kingfisher Airlines and its chairman Vijay Mallya against the Competition Commission of India (CCI) that had ordered a preliminary inquiry against the alliance between the airlines and Jet Airways, announced in October 2008 to help them rationalise their rates and provide improved standards of service.

“This is the first time in the country that a petition has been filed under the Competition Act,” central government counsel Advait Sethna said. An affidavit filed on behalf of the corporate affairs ministry says the Parliament had enacted the Competition Act to set up a commission to prevent anti-competitive practices. “All over the world, in order to regulate fair economic development, it has become necessary to be vigilant about anti-competitive and anti-trust practices which are indulged in industry,” according to the affidavit.

The CCI in August asked for an inquiry against the alliance between the two airlines based on a preliminary report observing, “there exists a prima facie case and hence the matter should be referred to the director general, investigations and registrations”.

A resident of Delhi had approached the CCI in July opposing the alliance and asking that the airlines should “cease and desist from acting in a cartel like manner”. He said the alliance would affect the competition in the airline sector and hold the government to ransom. This was illustrated by their — Kingfisher and Jet — joint threat to go on strike, the CCI was told.

Kingfisher, in its petition before the high court, has questioned the jurisdiction of the CCI saying it was set up in May this year whereas the alliance between the two airlines was formed in October last year. Kingfisher has urged the high court to call for the records and determine the legality of the CCI’s order of inquiry.

Kingfisher has contended that sections 3, 4, 19, 36, 42, and 43 enforced in May that refer to the CCI’s power to regulate its own procedures, barring of anti-competitive agreements, and inquiring into agreements and dominant position of an enterprise, be termed
ultra vires.