While giving its long-pending clearance, Singapore's fair trade watchdog has ruled that the alliance "by its nature" has potential to adversely impact competition in the country, but "on the balance" the efficiencies from the deal outweighs the anti-competitive effect.

Over a year after the deal being announced in April 2013, the Singapore regulator announced in June this year that it has launched a public scrutiny of Jet-Etihad alliance to probe any possible violation of competition laws in the country. The deal, which involved purchase of a 24 per cent stake in Naresh Goyal-led Jet for about Rs 2,060 crore by Etihad along with other tie-ups, went through turbulent times for months after being announced.

The deal finally got consummated late last year after clearance by various Indian regulators including fair trade watchdog CCI (Competition Commission of India) and capital markets regulator Sebi.

However, the deal came under scanner of the Competition Commission of Singapore (CCS), as the alliance "relates to the provision of international air passenger transport services (and associated support services), with a specific focus on the Singapore origin and destination city pairs".

After a public scrutiny and pursuant to submissions made by various stakeholders on filings made by the two carriers, CCS has now given its go-ahead to the deal. Incidentally, the CCS approval comes at a time when Jet Airways has reported a quarterly net profit on stand-alone basis for the first time since 2012, helped by a one-time income from sale of its loyalty programme to Etihad.

On consolidated basis also, Jet has managed to narrow its losses by about 96 per cent to Rs 43 crore in the quarter ended September 30, as against a whopping net loss of Rs 999 crore in the year-ago period.
Announcing its clearance, CCS said the alliance involves Jet and Etihad cooperating on route and schedule coordination, pricing, distribution and marketing, among other things.  CCS said that it examined the alliance in view of the markets for provision of international scheduled air passenger services and air freight services on the affected Singapore origin and destination city pairs.

"After reviewing submissions provided by the Parties and various stakeholders, CCS finds that the Proposed Commercial Alliance will, by its nature, have the object of preventing, restricting or distorting competition within Singapore.

"However, given that the Proposed Commercial Alliance has minimal adverse impact on competition in the Relevant Markets, CCS is satisfied that, on the balance, the efficiencies accrued from the Proposed Commercial Alliance outweighs the anti-competitive effect of the Proposed Commercial Alliance and therefore the Proposed Commercial Alliance is excluded from section 34 of the Act," it said in its 28-page order.

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