Turbulence hits Air India-Vistara merger
The antitrust regulator Competition Commission of India (CCI) has decided to review the merger of Air India and Vistara, which may potentially delay the process.
People aware of the development said the CCI has not given expedited permission to the process and has instead sent a notice to the two airlines, asking why an investigation on the impact of the merger should not be conducted. "The process has moved to phase 2 which will entail more discussion between the parties and the CCI," an investigation.
If the CCI is unmoved by the response and decides to pursue an investigation, the Tatas have two choices—one, divest its stake in Vistara, and two, commit to “behavioural guidelines" that will not adversely impact competition in the aviation sector, said one of the persons cited above.
The Tatas sought the approval of CCI to merge Air India and Vistara, the group's joint venture with Singapore Airlines (SIA), in April.
CCI and Air India had no comment.
CCI approval is required for mergers and acquisitions of businesses that meet the asset and turnover thresholds fixed under Section 5 of the Competition Act.
CCI reviews merger proposals through two phases of investigation. Under the so-called Phase-1 investigation, it is required to form a prima facie opinion on whether a merger is likely to cause or has caused adverse effect on competition in a relevant market in India. The Phase-2 investigation is launched when the CCI sees a potential fallout on competition due to a merger.
Air India is represented by AZB & Partners, Mumbai and SIA by Shardul Amarchand Mangaldas & Co.
Tata will own 51% of the total issued and paid-up equity share capital of the merged entity and SIA will hold 25.1%, according to a filing before the CCI. The merger will not lead to a change in the competitive landscape or cause any adverse effect on competition in India, Tata said in the filing.
Tata announced the Air India-Vistara merger in November in a bid to take on IndiGo, which dominates Indian skies with a market share of more than 60%. Air India and Vistara together have a market share of 18.4%, according to the May traffic data collated by aviation regulator DGCA.
The government returned Air India, founded by JRD Tata in 1932 and nationalised in 1953, to the Tata fold in January 2022.
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