The Competition Commission of India (CCI) has issued a show-cause notice to Air India, asking why its proposed merger with Vistara should not be probed over concerns about competition in the aviation sector, airline sources said on Tuesday.
The CCI has given Air India 30 days to respond, the sources said. The airline, however, did not respond to queries sent by Business Standard on the matter.
Tata Sons and Singapore Airlines (SIA) had filed a merger application with the antitrust body in April, stating that the amalgamation of Vistara with Air India would not lead to any change in the competitive landscape or cause any appreciable adverse effect on competition in India. They had expressed hope to conclude the merger by March 2024.
Air India is wholly owned by Tata Sons, while Vistara is a 51:49 joint venture between Tata Sons and SIA
“The CCI issues a show-cause notice in limited cases – in less than 5 per cent of the total notified deals to date. If the CCI is not convinced with the response of the parties or the remedies offered by them, the matter will go to Phase II -- a detailed investigation stage, where the CCI will seek comments/objections from stakeholders,” Vaibhav Choukse, partner & head of competition practice, JSA, told Business Standard.
In November last year, Tata Sons and SIA had announced the merger of the two airlines. As a part of the deal, SIA would invest Rs. 2,059 crore in the expanded share capital of Air India for a 25.1 per cent stake. Tata Sons would have the remaining 74.9 per cent stake in the combined entity.