The Competition and Consumer Commission of Singapore (CCCS) has expressed concerns over Tatas acquiring Air India (AI) as three related entities now have a major presence on “overlapping passenger routes” - Delhi-Singapore and Mumbai-Singapore - apart from “overlapping cargo routes” between India and the city state. Singapore Airlines (SIA) is a 49% stakeholder in Vistara, which is 51% owned by the Tatas. Now Tatas own 100% of AI. Together, these three have a major presence on the India-Singapore sector.
CCCS says it “needs to assess further whether the competitive constraint from other (unrelated) airlines, such as IndiGo, would be sufficient after the transaction. Accordingly, CCCS needs to further review the competition effects of the transaction in greater detail.”
The commission had this January accepted an application from Talaca, the Tata entity formed for acquiring AI, to decide “whether the transaction infringes (Singapore’s) Competition Act 2004, which prohibits mergers that have resulted, or may be expected to result, in a substantial lessening of competition. …”
“CCCS has raised competition concerns with Talace on the transaction… In particular, AI and Vistara are two of the three key market players along the overlapping Air Passenger Transport Routes (meaning Singapore-Delhi and Singapore-Mumbai), and both airlines are likely to be each other’s close (if not the closest) competitor,” the CCCS website said in a communique.
“Third party feedback also suggests the presence of SIA as a significant competitor of AI and Vistara along the Overlapping Air Passenger Transport Routes and the Overlapping Air Cargo Transport Routes. However, CCCS needs to assess further the extent to which SIA competes with the merged entity along these routes, given that SIA is a JV partner with Tata Sons in Vistara…” says CCCS. At this stage, “the parties may offer commitments to address the potential competition concerns of the Transaction raised by CCCS. Otherwise, the merger will proceed to a detailed further review”, it adds.
