Gun Jumping in Combination Regulations: Jet–Etihad

Gun Jumping in Combination Regulations: Jet–Etihad

Under the Competition Act, failure to notify CCI of a proposed combination attracts a penalty that can extend up to 1% of the total turnover, or the assets of the parties involved in the combination, whichever is higher.

Jet- Etihad is the first precedent in India where a penalty has been imposed on the acquirer for gun jumping.

Given that CCI has imposed a penalty on Etihad under Section 43A of the Act (Penalty for delayed filing).

Power to impose penalty for non-furnishing of information on combinations

[43A. If any person or enterprise who fails to give notice to the Commission under sub- section(2) of section 6, the Commission shall impose on such person or enterprise a penalty which may extend to one percent, of the total turnover or the assets, whichever is higher, of such a combination.]”

In Jet- Etihad, Etihad, the acquirer, on May 1, 2013,  notified CCI of its proposed acquisition of 24% equity stake in Jet. The transaction was approved by CCI on November 12, 2013. CCI, while approving the transaction, observed that:

(i) certain provisions of the commercial cooperation agreement (‘CCA’) had already been implemented; and

(ii) sale of certain landing/take off slots of Jet at the London Heathrow Airport (‘LHR Transaction’), had not been notified before consummation.

Upon hearing the parties, CCI limited the penalty due to certain mitigating factors, such as:

(i) the fact that parties had made full disclosure of all the other transaction agreements entered into between them, from which CCI had observed the non-compliance; 

(ii) the parties were under the impression that the LHR Transaction constituted an independent transaction; and

(iii) while CCA was notified to CCI within the statutory time frame, parts of it were implemented while approval from CCI was pending. Based on these mitigating factors, CCI limited the penalty to INR 10m.