The Competition Commission of India (CCI) on Friday approved the merger of Tata SIA Airlines into Air India, subject to certain conditions.
The long pending merger of fully owned Tata airline Air India and sister airline Vistara, came through weeks after the watchdog raised concerns about market power.
The CCI was scrutinising the planned merger of Air India, which Tata Group took over last year, with Vistara, a 51: 49 joint venture between Tata and Singapore Airlines.
The merged airline may pose a challenge to local rival and market leader, IndiGo. The said consolidation will make Air India, India’s leading domestic and international carrier with a combined fleet of 218 aircraft, making it India’s largest international carrier and second largest domestic carrier, the airline said in an announcement relating to the merger.
"As part of the merger transaction, SIA shall also invest Rs 2,059 crore in Air India. Post the consolidation, SIA shall hold 25.1% shareholding in Air India," the Tata group said during the merger announcement.
CCI had not given expideted approval to the merger and had instead asked both the companies to clarify how it will not hurt competition on domestic and international routes.
The competition watchdog's concerns with regard to the merger were that the market share of the Tata Group could be more than 50% in at least seven domestic markets, raising competition concerns.
Phase 1 approval is given by CCI within 30 days if it finds that the transaction is unlikely to cause an adverse effect on competition. If the body forms an opinion that the merger or acquisition is likely to cause an adverse impact on the competition scenario in the sector it sends show cause notice on further review which may take up to 210 working days. On April 19, the Tata owned airlines Air India had approached for a merger.
01/09/2023 Economic Times
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