23rd January, 2012
The Competition Commission of India has ruled out the existence of anti-competitive conduct by Indian domestic airlines. Suo motu investigation was launched by CCI following reports in prominent dailies that domestic airlines had colluded to hike prices in early 2009 and late 2010. The CCI relied on the findings of the Director General, Investigation and Registration and held that price hikes had not been observed in all the airlines and were not uniform across all sectors.
Though the dissenting opinion observed that parallel pricing was a proof of concerted effort or raised presumption of collusion, the main order stated that the principle of ‘parallel pricing’ was followed by airlines to maintain competiveness and had resulted in identical movement of prices on account of market dynamics like date of booking by passengers and availability in peak season rather than collusion or existence of an anti-competitive agreement.
The commission observed that since the capacity on flights in case of the airlines is limited, increase in demand during peak seasons may also lead to peak period pricing. The order dated 10th January, 2012 also notes that prices rose in February 2009 in order to restore prices to pre-crisis levels of 2008 and business practices varied among low cost and full cost carriers and that the prices were not comparable.
The Competition Commission of India has ruled out the existence of anti-competitive conduct by Indian domestic airlines. Suo motu investigation was launched by CCI following reports in prominent dailies that domestic airlines had colluded to hike prices in early 2009 and late 2010. The CCI relied on the findings of the Director General, Investigation and Registration and held that price hikes had not been observed in all the airlines and were not uniform across all sectors.
Though the dissenting opinion observed that parallel pricing was a proof of concerted effort or raised presumption of collusion, the main order stated that the principle of ‘parallel pricing’ was followed by airlines to maintain competiveness and had resulted in identical movement of prices on account of market dynamics like date of booking by passengers and availability in peak season rather than collusion or existence of an anti-competitive agreement.
The commission observed that since the capacity on flights in case of the airlines is limited, increase in demand during peak seasons may also lead to peak period pricing. The order dated 10th January, 2012 also notes that prices rose in February 2009 in order to restore prices to pre-crisis levels of 2008 and business practices varied among low cost and full cost carriers and that the prices were not comparable.