Appeal No. 98 of 2015. Case: The Air Cargo Agents Association of India Vs Competition Commission of India, Hindustan Times House and Ors.. COMPAT (Competition Appellate Tribunal)
| Case Number | Appeal No. 98 of 2015 |
| Counsel | For Appellant: Jimmy F. Pochkhanawalla, Senior Advocate assisted by M.M. Sharma, Deepika Rajpal and Danish Khan, Advocates and For Respondents: Abhishek Malhotra, Angad Singh Dugal and Nishita Chaturvedi, Advocates |
| Judges | G.S. Singhvi, J. (Chairman) and Rajeev Kher, Member |
| Issue | Competition Act, 2002 - Sections 18, 19, 19 (1), 19(1), 19(1)(a), 19(1)(b), 19(3), 19(6), 19(7), 2(c), 2(h), 26, 26(1), 26(2), 26(3), 26(6), 3, 3(1), 3(2), 3(3(b), 3(3), 3(3)(a), 3(3)(b), 3(4)(b), 36(2), 4, 4(1), 4(2),4(2)(a), 4(2)(e), 41, 41(1), 41(2), 48, 5, 53A(1), 53B(2), 6; Indian Evidence Act, 1872 - Section 115 |
| Judgement Date | November 15, 2016 |
| Court | COMPAT (Competition Appellate Tribunal) |
Order:
G.S. Singhvi, J. (Chairman)
-
Whether in the absence of express negation by the Competition Commission of India (for short, 'the Commission') at the threshold i.e. at the stage of passing an order under Section 26(1) of the Competition Act, 2002 (for short 'the Act') of the allegation of abuse of dominant position and consequential contravention of Section 4(2) levelled by the appellant against Respondents Nos. 2 and 3, the Director General (DG), who is entrusted with the investigation, is duty bound to record a finding on that allegation under clause (4) of Regulation 20 of the Competition Commission of India (General) Regulations, 2009 (for short, 'the Regulations') is the question which arises for consideration in this appeal filed against order dated 04.06.2015 passed by the Commission under Section 26(6) of the Act in Case No. 79 of 2012, whereby it held that the respondents have not contravened the provisions of Section 3(3) read with Section 3(1) of the Act.
-
Appellant - The Air Cargo Agents Association of India is a company incorporated under the Companies Act, 1956. As on date, it has 281 active International Air Transport Association approved cargo agents, 298 associate members and 42 allied and commercial members. The appellant is recognised by the Ministry of Civil Aviation, Commerce and Finance and also by various commercial organisations and trade associations. Respondent No. 2 - International Air Transport Association (IATA) represents 260 airlines across the globe. It accredits air cargo agents in all the countries. Respondent No. 3-International Air Transport Association (India) Private Limited is affiliated to Respondent No. 2.
-
The appellant filed an information dated 21.12.2015 through its President under Section 19(1)(a) of the Act alleging that Respondent Nos. 2 and 3 are guilty of anti-competitive conduct and prayed that an investigation may be ordered under the Act. The information was accompanied by detailed written submissions. For the sake of reference, the covering letter of the information and paragraphs 5(iv) and (v) thereof as also paragraphs 2.2, 2.3, 3.2.1, 3.2.14, 3.3.3 and 4.2 to 4.2.3 of the written submissions, which formed part of the information, are reproduced below:
Dated: 21st December, 2012
To
The Secretary
The Competition Commission of India
New Delhi.Sub: Filing of Information under Section 19(1)(a) read with Section 3 and 4 of the Competition Act, 2002.
Dear Sir,
Please find enclosed herewith the Information filed by the Air Cargo Agents Association of India (ACAAI) against the International Air Transport Association (IATA) on violation of the Competition Act, 2002.
Thanking you,
The President
The Air Cargo Agents Association of India_________________________________________________
"5. Details of the Information:
(i) to (iii) xx xx xx
(iv) Allegations against IATA At the outset the Informant submits that any allegations of anti-competitiveness against IATA India are also allegations against Airlines who constitute IATA. IATA unilaterally prescribes the regulatory system arrogating to itself self-generated regulatory power for registering, accrediting and regulating the engagement of Cargo Agents by Airlines of India and without any authority in law by any legal provision runs the licensing system for the IATA registered Cargo Agents by virtue of its Resolutions 801 inter alia prescribing various registration and accreditation requirements for India Cargo Agents and also enforcing many of the financial, functional and terms and conditions on Cargo Agents of India who are the members of ACAAI. A copy of IATA Resolution 801 is hereby produced and annexed as Annexure No. 2.
IATA has three kinds of conferences which govern the relationship of members of ACAAI and IATA namely:-
Agency Conference: Agency Conference which accredits Cargo Agents to IATA.
Service Conference: Service Conference which prescribes the Rules relating to the services to be provided by Cargo Agents.
Tariff Conference: Tariff Conference which prescribes the Terms and Conditions of the tariff/omission to be payable to Cargo Agents.
It is pertinent to note that these conferences in the nature of resolutions between the members airlines but impose conditions on the Cargo Agents. The above mentioned unilateral actions and decisions of IATA prejudice the functions, market practices and interest of members of ACAAI i.e. Cargo Agents.
In addition, the Informant submits that, whenever there is an increase in price of Air Fuel, IATA deliberately mandates the Cargo Agents to collect the increased or extra price under the head of "surcharge". As a consequence the Cargo Agents suffers the loss of commission.
With the enforcement of Competition Act in India on and from 2009 specific to provision on anti-competitive practice (Sec. 3) and abuse of dominant position (Sec. 4). ACAAI was doubtful about the legal position of the Resolutions relating to Freight Forwarding Air Cargo agents and made a submission to the Competition Commission of India as a whistleblower vide its letter dated 22nd July 2010 and a copy of the same has been produced herewith as Annexure No. 3.
IATA is now about to unilaterality introduce a Cargo Accounts Settlement System (CASS) in India under Resolution 801. CASS is the Cargo Amounts Settlement System run by IATA under which agents are billed and are required to make full payments on stipulated due dates for their freight and other dues to all airlines by paying the IATA CASS office, which in turn disperses relevant amounts to each individual airline. CASS Rules are exhaustive and are so worded that ACAAI apprehends that these would come within the mischief of anti-competitive activity. A copy of the said IATA CASS is hereby produced and annexed as Annexure No. 4.
The unilateral introduction of a CASS in India under Resolution 801 will have the direct effect of negating two specific Reservations of the Government of India pertaining to established market practices which have stood the test of time.
Albeit these reservations were expressed by the Government as conditions for the implementation of Resolution 815 meant for Indian Cargo Agents Program which was never implemented. However, the apprehensions, graveman, pith and substance remain constant as far as the Indian air cargo industry is concerned. ACAAI is of the view that introduction of CASS may be a circumvention of these reservations by IATA. A copy of Resolution 815 is hereby produced and annexed as Annexure No. 5. The Informant believes that such a unilateral action shall prejudicially affect the Indian Air Cargo Agents' interest by altering the present market practices. Further, AIR INDIA vide its letter dated 3rd December, 2007 to IATA had communicated the approval of Resolution 815 with the reservations. Copies of the Indian Government Reservation and letter from Air India are collectively hereby produced and annexed as Annexure No. 6.
Further, it is pertinent to submit that IATA under Resolution 016aa prescribes the rate of commission to the Cargo Agents. Such prescription of financial term is anti-competitive and affects the interest at Cargo Agents. A copy of Resolution 016aa is produced herewith and annexed as Annexure No. 7.
Members of ACAAI are also concerned with some of the provisions of Conferences and Resolutions of IATA that might attract the notice of Competition Commission of India for enquiry into an alleged act of anti-competitive practice, especially in View of the observations of Department of Transportation, United States of America in its order dated 30th March 2007. The EU Commission has in fact inter alia observed that IATA Conventions and Resolutions on certain issues are not free from anti-competitive practices and hence directed IATA not to Indulge In such practices.
Provisions for the conduct of the IATA Traffic Conferences are laid down in three Conferences, namely, Cargo Service Conference, Cargo Agency Conference and Cargo Tariff Coordinating Conference. Besides, through Resolution 801, IATA unilaterally prescribes Cargo Agency Rules, inter alia, including, license for trade, basis of commission both online and interline, agency fees, Air way bill transmittals, billings, remittances and collection in Cargo Accounts Settlement System (CASS) etc.
Similarly, the Composite meeting of Cargo Tariff Conferences takes action on the matters and practices relating to rate construction and currency rules (other than those which by their own terms are applicable only to one Cargo Tariff Conference), remuneration levels of intermediaries engaged in the same and/or processing of international air cargo and such other matters as may be referred to it by any Cargo Tariff Conference.
ACAAI are of the uncomfortable view that all of the above Conferences, Rules have the nature of anti-competitiveness and therefore further feel that such Conferences. Rules which are in the nature of agreement between ACAAI and IATA are required to be scrutinised by the Competition Commission of India. ACAAI cannot take any responsibility for any of the transactions if directed as cartelization and/or anti-competitive either as accomplice or in any way aiding or abetting in to such offences. Therefore, we hereby file this information under Section 19 (1) of the Competition Commission of India Act, 2002 to investigate and accordingly decide whether the said Rules and conferences are anti-competitive or not and if so, to pass suitable orders.
(v) Relief sought
Since unilateral introduction of CASS under Resolution 801 by IATA is likely to affect adversely the interest of the Indian Air Cargo Agents by unilaterally altering the financial relations as well as unilaterally violating the long prevailing market practices and since the introduction of CASS is threatened by IATA as evident in the enclosed email from the authority of IATA respectively dated 15th November 2012. Copies of the email dated 15th...
To continue reading
Request your trial