Vistara-Air India Deal: CCI issues notice on merger, asked why investigation should not be done?
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In November, both the parties had announced plans to merge the airlines. Tata Group and Singapore Airlines hold 51.49 per cent stake in Vistara. Both the parties expect the deal to be completed by March 2024.
Air India is a fully owned airline by Tata Sons. It is the main airline of the country. Tata Sons bought 100 per cent stake in Air India on 27 January 2022. At the same time, Vistara is currently a joint venture between Tata Sons and Singapore Airlines Limited. It was established in the year 2013. It is India’s leading full-service airline with international operations in the Middle East, Asia and Europe. The Tata group also holds 83.67 per cent stake in AirAsia India. The remaining 16.33 per cent stake is held by Malaysian conglomerate AirAsia. In November, both the parties had announced plans to merge the airlines. Tata Group and Singapore Airlines hold 51.49 per cent stake in Vistara. Under the merger deal, Singapore Airlines has decided to invest Rs 2,059 crore in the share capital of Air India for a 25.1 per cent stake. The Tata group will continue to hold the remaining stake. Both the parties expect the deal to be completed by March 2024.
The national antitrust body is probing the planned merger of Air India with Vistara and has asked the company why it should not be probed further on competition concerns. This is a new challenge for the former state-owned Air India, which was taken over by the Tata group last year. The airline has ambitious plans to modernize its fleet, operational systems and revenue management. Tata Sons and Singapore Airlines have referred to the Competition Commission of India (CCI). Tata has said in its application that the merger of Vistara and Air India will not change the competitive landscape. The application was submitted on Monday.
Earlier, the CCI had issued notices to both the airlines seeking cause as to why investigation into the effect of the merger should not be initiated. As per the competition law, the antitrust body has the power to conduct a thorough investigation before giving the go-ahead for a merger or acquisition if there are concerns about potential anti-competitive practices in the deal. If the deal is successful, it would make Air India the country’s largest international carrier and second largest domestic airline. Air India, which was acquired by the Tata group last year, is looking to modernize its fleet, operational systems and revenue management. CCI approval for any such transaction goes through various stages. The first stage of approval is given within 30 days in which it finds that the merger is not likely to reduce competition. Once the review process enters the next stage, CCI sends a notice to the concerned stakeholder for further review. According to reports, the Tata group has 30 days to respond to the notice.
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