MRTPC panel okays Jet-Sahara deal
It has not found violation of any provision of MRTPC Act in the Rs 2,300-cr buyout of Air Sahara by Jet Airways.india Updated: May 23, 2006 18:09 IST
MRTP Commission is all set to give a go-ahead to the biggest aviation deal in India with the Commission's investigating arm finding nothing wrong in the Rs 2,300-crore buyout of Air Sahara by Jet Airways.
According to highly-placed official sources, the Director General (Investigation and Registration) has not found violation of any provision of the MRTPC Act in the deal.
"No provision of the MRTPC has been violated in the Jet-Sahara deal and the DGIR report has been submitted to the MRTPC," the sources said.
The DGIR probe, they said, was in a way "restricted" as clauses relating to monopolies, mergers and acquisitions in the MRTP Act had been deleted in 1991.
"Sections 22-26 and Section 28-30 were deleted from the MRTP Act in 1991 and, therefore, the investigation of DGIR was restricted to the area of trade practices. However, since the merged entity is yet to function as one, the clause on trade practices is not applicable currently," the sources said.
They also pointed out to the growth in the Indian aviation sector over the last few years and said it had also minimised the possible threat of a monopoly or restrictive trade practice from the merged entity.
"While Jet enjoyed a market share of around 45 per cent three years back, the combined share of the merged entities today is lower than that," the sources said.
However, they added that if post-merger the combined entity was found to be engaging in restrictive trade practices, the matter could be investigated again.
Earlier, a Government committee had cleared the buy-out. The Aircraft Acquisition Committee cleared the 100 per cent transfer of all assets of Air Sahara to Jet Airways on March 30, including the transfer of properties as well as rights to parking bays and slots.
The MRTPC had swung into action after Prime Minister's Office intervened in the matter on a complaint of BJP MP Uday Singh who demanded a probe into the deal by the Commission.
Significantly, the Company Affairs Ministry had already given a green signal to the buyout under Section 108A of the Companies Act which provides for Union Government approval if the nominal value of equity shares intended to be acquired exceeds 25 per cent of the paid-up equity share capital of the company to be acquired.
Jet had acquired Sahara in January this year. However, the deal created factions among sections of the industry that it could lead to a monopolistic situation as Jet enjoyed a dominant position in the Indian aviation sector, which would further go up after merger with Sahara.