India: CCI Dismisses Allegation Of IATA Of Cartelization Against Air Cargo Agents Association Of India

Last Updated: 29 September 2017

Article by MM Sharma, Head Competition Law & Policy Practice, Vaish Associates, Advocates, New Delhi, India

The Competition Commission of India (CCI) vide order dated 12.09.2017 has dismissed allegations of cartelization against the Air Cargo Agents Association of India.

The Informant, the International Air Transport Association (IATA) is an international non-profit trade association headquartered in Montreal, Canada comprising of 265 member airlines belonging to 118 nations across the globe.

It was alleged that the OPs, which is a national trade association representing the air cargo industry in India are actively encouraging and pressurizing member cargo agents to collectively boycott businesses of airlines that seek to implement the Cargo Accounts Settlement System (CASS) in India. It was alleged that the OPs, in order to derail the implementation of CASS, are also persuading airlines to refrain from asking agents to join CASS in India. It was alleged that such conduct of the OPs limits the supply of air cargo transportation services in India in violation of Section 3(3)(b) of the Competition Act, 2002 (Act). It was also alleged that such conduct affects the end consumer and therefore has an appreciable adverse effect on competition in India.

By way of evidence, the Informant produced an e-mail dated May, 2014 by which the OP allegedly persuaded its member agents to send a letter to a member airline of the Informant and sought confirmation from member agents in this regard. It was alleged that by requiring a confirmation from its member agents, OP 1 is exerting its influence and putting pressure on its member agents not only to send such letters to airlines but also to boycott any business relationship with them.

The Informant also referred to another email dated 07.05.2014 sent by OP 1 to its members in relation to an email received by cargo members from its member airlines for implementation of CASS. Vide the said email, OP 1 circulated to its member agents a draft letter which was sent to the member airline of the Informant who sought to implement the CASS. It was alleged by the Informant that by circulating such draft letter, OP 1 is encouraging its member agents to collectively boycott the Informant's meetings relating to CASS. The Informant also alleged that OP 1 is consistently urging its members to boycott the Informant's meetings relating to CASS for which reliance was placed on another email circulated by OP 1 to its members.

CCI's decision

The CCI upon perusal of the emails and letters produced by the Informant observed that OP 1 is not forcing its decision on the member agents and they are free to make independent decision concerning their participation in the implementation of CASS by the airlines. It was observed that the decision of the OP 1 only seems to be recommendatory for its members.

The CCI further observes that the Informant has not produced any evidence to establish that OP 1 has taken coercive action against any of its members who have agreed to participate in the CASS implementation. Further, the CCI observed that the Informant has itself admitted that there is an overwhelming response from member agents of OP 1 in support of introduction of CASS and that various cargo agents came forward voluntarily to get their enrolment done for the training program. Further, the Informant has itself stated that after the introduction of CASS on 01.06.2015, there has been a phenomenal increase in the number of participating cargo agents with more airlines and agents actively participating in CASS out of their own volition.

These instances were considered by the CCI to indicate that there is no collective boycott on the part of the member agents of OP 1 and that member agents are taking independent commercial decisions to participate/not to participate in the CASS program.

Further, the CCI observes that although three members of OP 1 wrote similar letters to the airlines, incorporating the language of the letter circulated by OP 1, no additional evidence was produced by the Informant to establish that it is a result of any concerted action on their part. The CCI observed that OP 1 is not forcing its member agents to send the emails but has left the decision to the free will of the member agents. On the basis of available documents, it cannot be concluded that the letters written by member cargo agents of OP 1 was the result of a collective decision.

Further, the CCI noted that the Informant has not furnished any data showing the negative impact on the business of the two member airlines of the Informant which can be attributed to the activities of the OPs.

Accordingly, citing lack of evidence to prima facie suggest an agreement amongst the OPs in contravention of Section 3(3) (b) read with Section 3(1) of the Act, the CCI closed the case under Section 26(2) of the Act.

Comment:

This is the second time that the parties have faced off over implementation of CASS by the IATA in the CCI. In an earlier order dated 04.06.2015, the CCI has dismissed allegations by the Air Cargo Association of India that the implementation of CASS is violative of Section 3(3) (b) of the Act. The CCI held that that the introduction of CASS by IATA is not anti-competitive on account of the fact that it is an efficient system and because it is not fully functional in India and still in the pilot stage. However, the CCI's order dated 04.06.2015 has been subsequently overturned by the Competition Appellate Tribunal (COMPAT) vide its decision dated 15.11.2016 in Appeal No. 98/2015. The COMPAT vide this order has directed the DG to investigate the matter with regard to the allegation of abuse of dominant position by IATA.

Specific Questions relating to this article should be addressed directly to the author.

© 2017, Vaish Associates Advocates,
All rights reserved
Advocates, 1st & 11th Floors, Mohan Dev Building 13, Tolstoy Marg New Delhi-110001 (India).

The content of this article is intended to provide a general guide to the subject matter. Specialist professional advice should be sought about your specific circumstances. The views expressed in this article are solely of the authors of this article.

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