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India – Luthra & Luthra Represents Lufthansa and Austrian Airlines, before the Competition Commission.

2 November, 2011

 

 

Luthra & Luthra Law Offices represented Lufthansa German Airlines and Austrian Airlines, in a matter before the Competition Commission of India (CCI). Information was filed by the Travel Agents Association of India (TAAI), Mumbai/New Delhi on 14.09.2009 under Section 19 of the Competition Act, 2002 (the Act) alleging contravention of the provisions of the Act by Lufthansa German Airlines, Austrian Airlines and seven other foreign airlines (the opposite parties). It was alleged that the opposite parties have formed a cartel and decided in tandem to discontinue with the prevailing system of paying commission to travel agents and announced that with effect from 1.11.2008, no commission shall be payable to travel agents on air tickets. It was further alleged that the foreign airlines intentionally decided not to enforce the ‘transaction fee’ system as pronounced earlier and from 1.11.2008, have neither been paying commission on earlier rates nor transaction fees to the travel agents.

 

The Information further alleged that the foreign airlines abused their dominant position in joining together and imposing unfair and discriminatory conditions for sale of their air tickets which is detrimental to the interests of the economy of the country by adversely effecting competition in India. The matter was referred to the Director General (DG) for investigation, who in his report gave findings in favor of the opposite parties.

 

Before the CCI, the matter was argued vehemently by Luthra & Luthra Law Offices representing Lufthansa German Airlines and Austrian Airlines. On behalf of Lufthansa Airlines, Luthra & Luthra submitted inter-alia the latest order of DGCA dated 28.07.2011 stating that the role of DGCA is that of a regulator and intervention in the commercial agreements between the two private parties is beyond its jurisdiction. On 1.11.2011, the CCI passed an order where it observed that all airlines have taken independent decisions to abolish the system of commission and there is no evidence of the meeting of minds.

 

The CCI did not find any contravention of Sections 3 or 4 of the Act.  The CCI, while stating that “There is no material on record to show that subsequent to the abolition of the commission, the prices of the air tickets of opposite parties have gone up”, noted that no harm has been caused to the end consumers by abolishing the system of payment of commission to the travel agents by the opposite parties.

 

The matter was led by Partner, Mr. G. R. Bhatia and his team which consisted of Managing Associate, Ravisekhar Nair, Senior Associate, Karan S. Chandhiok and Associates Nidhi Singh and Vikram Sobti.

 

 

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