Airlines Cleared: No Cartel Found on International Routes; Competition Remains Healthy in Indian Air Travel Market.

Travel Agents Association of India Versus Lufthansa German Airlines

Travel Agents Association of India Versus Lufthansa German Airlines - TMI Issues Involved:
1. Relevant Market Determination
2. Alleged Cartel Formation
3. Abuse of Dominant Position
4. Procedural Discipline in Investigation
5. Impact on Competition and Consumers

Issue-wise Detailed Analysis:

1. Relevant Market Determination:
The appellant argued that the relevant market should be based on specific routes operated by individual airlines. However, the CCI concluded that the relevant market was the international routes to and from India, not specific routes. The CCI reasoned that routes are substitutable as long as the consumer reaches the destination, making the whole of India the relevant geographic market. The Tribunal upheld this view, stating that it would be incorrect to consider a single route as the relevant market for a particular airline.

2. Alleged Cartel Formation:
The appellant claimed that the airlines had formed a cartel to stop paying commissions to travel agents. The Director General's investigation found no evidence of cartelization. It was noted that cartels are usually formed among competing enterprises, but the respondents were not competitors as they served different destinations. There was no meeting of minds to form a cartel, as decisions to reduce commissions were made independently and on different dates. The Tribunal agreed with this finding, noting the lack of evidence for any interaction or agreement among the airlines to form a cartel.

3. Abuse of Dominant Position:
The appellant alleged that the airlines, collectively holding 90% market share, were in a dominant position and abused it by imposing unfair conditions. The Director General found that none of the respondents individually held a market share exceeding 5-6% in the international traffic. The CCI upheld this finding, stating that dominance under Section 4 pertains to a single enterprise or group of enterprises, and there was no evidence of any single airline or group holding a dominant position. The Tribunal concurred, emphasizing the lack of substantial market share by any individual airline.

4. Procedural Discipline in Investigation:
The appellant contended that the investigation process lacked procedural discipline. However, the CCI and the Tribunal found that the Director General conducted an extensive investigation, considering data from credible sources like DGCA and CAPA. The Tribunal noted that the appellant failed to provide specific statistics to counter the findings of the Director General. The investigation was deemed thorough and procedurally sound.

5. Impact on Competition and Consumers:
The appellant argued that the abolition of commissions had an appreciable adverse effect on competition and harmed consumers. The Director General's report, supported by the CCI, found no evidence of increased air ticket prices or reduced competition. It was noted that the number of IATA travel agents had increased, and the transition to the Net Fare Model was in line with global trends. The Tribunal agreed, stating that consumers were not harmed, and the market remained competitive.

Conclusion:
The Tribunal dismissed the appeal, affirming the CCI's findings:
1. The relevant market was correctly determined as the international routes to and from India.
2. There was no evidence of cartel formation among the airlines.
3. None of the airlines held a dominant position in the relevant market.
4. The investigation was procedurally sound.
5. There was no adverse impact on competition or consumers.