Case No. 66/2010. Case: Flyington Freighters Private Limited Vs Airbus S.A.S.. Competition Commision of India

Case Number:Case No. 66/2010
Party Name:Flyington Freighters Private Limited Vs Airbus S.A.S.
Issue:Competition Act, 2002 - Sections 3, 3(1), 3(4), 4, 4(2), 19, 19(3) and 26(2)
Judgement Date:April 28, 2011
Court:Competition Commision of India
 
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Order:

  1. The present information has been filed before the Competition Commission of India ('the Commission') under Section 19 of the Competition Act, 2002 ('the Act'). The brief facts of the matter are as follows:

  2. Flyington Freighters Private Limited ('the Informant') has stated in the information that it intended to commence a cargo airline business and to develop an air cargo hub at Hyderabad. It is further stated that the Informant planned to start commercial operations by 2007, initially by taking used aircraft on lease and subsequently transitioning to new freighter aircraft.

  3. As per the information, the Informant entered into an agreement with Boeing ('the Boeing Agreement') for the supply of aircraft. Boeing also facilitated an agreement between the Informant and Avion for acquiring pre-owned Airbus aircraft ('Pre-owned Aircraft') to assist the Informant to commence its air cargo business immediately, without waiting for delivery of the new aircraft from Boeing.

  4. It is alleged by the Informant that pursuant to the public announcement of the Boeing Agreement, Airbus S.A.S. ('the Opposite Party') made a lucrative offer to supply aircraft to the Informant with substantial discounts and subsidies. It is alleged that the above offer was made by the Opposite Party with the intention of (a) ousting Boeing from the Indian market; and (b) to gain an advantage in the United States Defense Department for the Provision of KC-X military tanker aircraft ('the USAF Bid') by showing the Informant as a launch customer and to weaken Boeing's prospects in the USAF Bid.

  5. It is alleged that on being misled by the Opposite Party's luring tactics, the Informant cancelled the Boeing Agreement and signed a purchase agreement with the Opposite Party for six aircraft ('the Purchase Agreement'). It is further averred that the Informant was again lured by the Opposite Party to increase the number of aircraft to twelve.

  6. It is also stated in the information that the Opposite Party imposed discriminatory and onerous conditions while giving its consent for the financing of aircraft and also delayed its consent in some cases to prevent the Informant from obtaining timely financing for the aircraft and thereby creating a default situation for the Informant. It has been submitted that as a result of the Opposite Party's failure to perform, the Informant has not been able to commence its cargo business in India.

  7. The Informant has further stated that the Opposite Party had made reckless commitments on the delivery of the aircraft without proper regard to its own capacity to fulfill its obligations. It is alleged that in order to step back from its own commitments, the Opposite Party forced not only various amendments to the Purchase Agreement which resulted in postponement of delivery of aircraft but also alterations to the entire commercial terms, which amount to placing unfair condition in sale of aircraft. It is also alleged that the Opposite Party, by not supplying the aircraft to the Informant, preserved the Indian market for Etihad and MNG who are allegedly the Opposite Party's largest customers.

  8. It is alleged that the Purchase Agreement has been a barrier and hindrance for the Informant's entry into the Indian market, and has resulted in foreclosure of competition between the...

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