According to a report, CCI will look at how the merger of Air India and Vistara may impact market competition
The Air India proposal to Vistara is being investigated by the Competition Commission of India (CCI), which has sent a show-cause notice to the Tata Group-owned airline.
According to LiveMint, Tata Group has 30 days to react to the CCI notice in order to avoid an inquiry and get permission for the merger.
The report cites a person familiar with the situation as saying that if the fair-trade regulator is not satisfied with the response and decides to open an investigation, the Tata Group has two options: sell its stake in Vistara or agree to “behavioural guidelines” that won’t negatively affect competition in the aviation sector.
The merger of Air India with full-service airline Vistara, a joint venture with Singapore Airlines (SIA), was proposed by the Tatas to CCI in April. Tata Sons owns 51% of Vistara, while Singapore Airlines is the owner of the other 49%.
Following the transaction, SIA will own a minority 25.1% share in the company.
Business mergers and acquisitions that fulfil the asset and turnover requirements are subject to CCI clearance under Section 5 of the Competition Act.
Through two stages of study, CCI evaluates mergers and proposals. Forming a prima facie conclusion on whether a merger is likely to cause or has already created negative effects on competition in a relevant market in India is required as part of Phase 1 of the examination.
When the regulator anticipates probable negative effects on competition from a merger, the Phase-2 examination is conducted.
According to a LiveMint article, Tata Group said in a filing that the combination won’t alter the competitive environment or have a negative impact on competition in India.
Earlier this month, CCI gave its approval for Air India Ltd. to purchase all of the shares of Air Asia India Ltd.
A joint venture between TSPL and Air Asia Investment Limited (AAIL), in which TSPL now owns 83.67 percent and AAIL 16.33 percent, is called Air Asia India.
