Competition Commission Order on Airport Parking and Lounge Services

COMPETITION COMMISSION OF INDIA

Case No. 12 of 2024

In Re:

Fight Against Corruption (NGO) (Through its Trustee - Deepak Vashist) Basement, Plot 128, Pocket 10, Sector 23B Dwarka, New Delhi- 110077

Informant No.1

Contractor Council of India (Through its President - Ajit Singh Gaur) R/o 990 A, Shahbad Mohammad Pur, Swami Chowk, Bijawasan, Southwest Delhi-110061

Informant No.2

And

Airports Authority of India (Through Secretary) Rajiv Gandhi Bhawan, Safdarjung Airport, New Delhi - 110003

Opposite Party No.1

Ministry of Civil Aviation (Through Secretary) Rajiv Gandhi Bhawan, Block B, Jorbagh Safdarjung Airport Area, New Delhi – 110003

Opposite Party No.2

Delhi International Airport Limited (Through its Chairman) New Udaan Bhawan, Aerocity, Delhi – 110037 (Opposite Terminal)

Opposite Party No.3

GMR Airports Limited (Through its Chairman) New Udaan Bhawan, Opposite Terminal 3 Indira Gandhi International Airport New Delhi - 110037

Opposite Party No.4

Fraport AG Frankfurt Airport Services Worldwide (Through Director in DIAL) New Udaan Bhawan, Opposite Terminal-3 Indira Gandhi International Airport, New Delhi- 110037

Opposite Party No.5

CORAM

Ms. Ravneet Kaur Chairperson

Mr. Anil Agrawal Member

Ms. Sweta Kakkad Member

Mr. Deepak Anurag Member

Order under Section 26(2) of the Competition Act, 2002

1. The present Information has been filed under Section 19(1)(a) of the Competition Act, 2002 (‘Act’) by Fight Against Corruption (‘Informant No.1’) and Contractor Council of India (‘Informant No.2’) (collectively referred herein as ‘Informants’) against Airports Authority of India (‘OP-1’/‘AAI’), Ministry of Civil Aviation (‘OP-2’/ ‘MoCA’), Delhi International Airport Limited (‘OP-3’/‘DIAL’), GMR Airports Limited (‘OP-4’/ formerly known as GMR Airports Infrastructure Limited or ‘GIL’ ) and Fraport AG Frankfurt Airport Services Worldwide (‘OP-5’/‘Fraport AG’) (collectively referred herein as ‘Opposite Parties’) alleging contravention of the provisions of Section 4 of the Act.

2. As per the Information, Informant No.1 is an NGO working in the field of curbing corruption under the name ‘Fight against Corruption’ represented by its trustee Shri Deepak Vashisht. Informant No.2 is stated to be a group of contractors’ with the name ‘Contractor Council of India’ represented by its President Shri Ajit Singh Gaur. It claims to be a third-party service provider engaged in providing construction services at Delhi and Indore airports.

3. As stated in the Information, OP-3/DIAL is a joint venture, formed as a consortium between GMR Airports Limited, Airports Authority of India and Fraport AG Frankfurt Airport Services Worldwide. OP-4/GIL is a leading global airport platform company with over two decades of experience in designing, constructing, and operating world-class sustainable airports. OP-5/Fraport AG Frankfurt Airport Services Worldwide, is a German transport company which operates Frankfurt Airport in Frankfurt am Main and holds interests in the operation of several other airports around the world.

4. As per the Informants, OP-4 entered into a joint sector agreement (‘JSA’) with the Government of India through the Secretary, MoCA for development, construction, operation and maintenance of Indira Gandhi International Airport, New Delhi (‘IGI’) vide Concessionaire Agreement dated 04.04.2006 for 30 years and the said Concessionaire Agreement is extendable by another 30 years at the option of OP-4, making it the sole concessionaire for operating IGI. It is also stated that a group consortium known as DIAL was formed with OP-4 and OP-1 and had the following shareholding as given in the shareholding document obtained from the Ministry of Corporate Affairs website:

List of Shareholders of OP-3 as on 31.03.2022

5. As per the Information, OP-4 through OP-3 has the right to maintain, manage and operate IGI as per the Operation, Management and Development Agreement (‘OMDA’) between OP-4 and OP-1 & OP-2, which includes the use of its discretion in respect of provision of services by third parties at IGI with prior consent of its shareholder including OP-1. It is stated that OP-4 entered into agreements to give space to business entities, hotels and business houses which were desirous of operating from the airport premises.

6. It has been alleged that OP-4, in its capacity as a major shareholder in OP-3, is exploiting its dominant position and failing to comply with the stipulated competitive bidding process, as mandated by Clause 8.5.7 of the Concessionaire Agreement. It has also been alleged that OP-4 charges a fee of 13% or any other fee on all tenders for operating and doing work at Delhi Airport, specifically those related to Annual Maintenance Contracts (‘AMC’) subject to obtaining the No Objection Certificate (‘NOC’) from GMR itself. The Informants assert that such fees, particularly on AMC tenders, have a direct adverse impact on the profit margin of other industry players.

7. OP-4 is also alleged to be aligning with particular players and facilitating the victory of the aligned entity in tenders floated by OP-3. It is stated that OP-4, in collaboration with Tenaga Parking Services (India) Pvt. Ltd. (‘TPSPL’), has established a new company named Delhi Airport Parking Services Private Limited (‘DAPSL’) for the purpose of leveraging the name and experience of Tenaga Parking Services and also meeting the criteria set by OP-4 itself for parking tenders. Formation of DAPSL is stated to have occurred without following any competitive bidding process to favor OP-4 as one of the major stakeholders of DAPSL. In this regard, it is further stated that the shareholding structure of DAPSL, indicates that TPSPL holds only a 10% stake, while the majority shareholding 49.90% and 40% is retained by OP-3 and OP-4, respectively. This shareholding structure is alleged to be a mechanism that inhibits other players from entering the market. It has also been alleged that the Concessionaire Agreement has been violated by depriving due profits from OP-4 to Government of India and creating losses to public money where OP-4 holds 40% extra share on top of its stake in OP-3.

8. The Informant No.1 also annexed a letter dated 16.12.2023 addressed to the Prime Minister Office (‘PMO’), stating that Encalm, an entity responsible for providing lounges at the airport, is purportedly owned and operated by individuals who concurrently hold positions on the board of directors in GMR. This interconnection is stated to have raised concerns about potential conflicts of interest that may affect fair competition and the participation of regular vendors in offering lounge services.

9. In view of the above, the Informant have levelled the following allegations against OP-4, in the present matter:

• (i) Creating a monopolistic environment, enabling it to operate without competitive restraints, which may result in imposition of exorbitant charges on customers (Airline), thereby increasing costs for end customers and potentially violating Section 4(2)(a)(i) of the Act.
• (ii) Limiting the provision of services in the airport market of Delhi, by ousting the other prospective contractors through the establishment of its own companies, in contravention of Section 4(2)(b)(i) of the Act.
• (iii) Utilizing its dominant position to selectively award contracts to its own formed companies by manipulating tender conditions and in some instances, not following the competitive bidding process, leading to denial of market access, in contravention of Section 4(2)(c) of the Act.
• (iv) Leveraging its dominant position in the upstream market to engage in exclusionary practices, restricting the provision of services in the downstream market, in contravention of Section 4(2)(e) of the Act.

10. Based on the aforesaid facts, the Informants have inter-alia prayed to the Commission to order an investigation to be made in the matter, along with an interim relief under Section 33 of the Act, by way of restraining OP-4 through OP-3 from taking any coercive action against the Informants, and seeking early listing of the matter.

11. In its ordinary meeting held on 04.09.2024, the Commission considered the Information and decided to seek comments/reply from OP-3 and OP-4, on the Information. Additionally, the Commission also decided to seek comments/responses of OP-3 and OP-4, on the following specific questions:

• a. When was DAPSL awarded with the contract to operate and maintain the car parking facility at the IGI Airport in Delhi by OP-3/OP-4?
• b. When was the lounge business provided to Encalm at the IGI Airport in Delhi by OP-3/OP-4?
• c. On what basis DAPSL and Encalm were awarded with the contract to operate and maintain parking services and for providing lounge services respectively by OP-3/OP-4? Was there any requirement of competitive bidding to be followed by OP-3/OP-4 for provisioning of these services by DAPSL and Encalm under any law/agreement specifically under clause 8.5.7(i)(c) of the Concessionaire Agreement dated 04.04.2006?
• d. If the above-mentioned contracts/works were awarded to DAPSL and Encalm through competitive bidding, then provide the details of the concerned tender(s) along with list of participants/bidders and their respective quotes.
• e. Does the value of the contracts/agreements which awarded the provision of parking services and the lounge facilities/services at IGI Airport exceeded Rs. 50,00,00,000/- (Rupees Fifty Crores Only)?
• f. Any other relevant information for the instant matter.

12. OP-3 and OP-4 filed Interim Application (‘I.A.’) Nos. 287 and 286 of 2024 dated 08.10.2024 respectively wherein request was made for an extension of time to file comments/responses sought vide order dated 04.09.2024. The Commission considered the respective I.A.s and for the reasons mentioned therein, granted time till 22.11.2024 to file responses/comments in the matter.

13. OP-3 and OP-4 filed their respective responses dated 22.11.2024, in confidential and non-confidential versions. OP-3, in its response, stated that GMR group was selected by AAI/OP-1, pursuant to a global competitive bidding process. As an outcome of the bid process, AAI allowed GMR group led consortium members to acquire 74% shareholding in DIAL, and also executed OMDA in favour of DIAL, which gives DIAL the exclusive right and authority to maintain IGI airport. It was also submitted that while the Information arrays ‘GMR’ as OP-4, there is no entity by that name. It was further submitted that no parent company of OP-3 has any involvement in the process of grant of contracts and OP-3 undertakes its business activities independently.

14. OP-3 submitted that it complied with the prescribed process of Article 8.5.7 and Schedule 12 of OMDA and called for competitive proposals/bids from eligible parties where the estimated contract value was above INR 50 crores for parking and lounge facility.

15. The rest of the arguments submitted by OP-3 are summarized as under:

• i. The Informants (both NGO and the alleged association/company/trust) are serial and proxy litigants, which are being used by private interested parties (such as Swami Contractors and Mr. Ajit Swami alias Ajit Singh Gaur) under the garb of public interest and are abusing the process of law seeking identical / similar relief for their personal interest, through multiple litigations. Moreover, under Regulation 10(2)(da) of the Competition Commission of India (General) Regulations, 2009 [as well as under Regulation 10(2)(g) of Competition Commission of India (General) Regulations 2024], it is mandatory requirement for the information to provide “details of litigation or dispute pending, if any, between the Informant and parties before any court, tribunal, statutory authority or arbitrator in respect of the subject matter of information”. However, despite this mandatory legal requirement, the Informants have not disclosed any of the above litigations in the Information. On this ground alone, the Information is liable to be dismissed under Section 26(2) of the Act.
• ii. The present Information is not maintainable as the award of contract was well beyond the three years limitation period under the proviso to Section 19(1) of the Act. Further, the Informants have also failed to justify or provide an explanation to satisfy the Commission with a sufficient cause to entertain a time barred information and thus a closure under Section 26(2) of the Act should be passed by the Commission on this ground alone.
• iii. The interim relief prayed by the Informant in form of an order under Section 33 of the Act, cannot be granted as the Informants have not made any submissions to establish any mandatory requirements laid down by the Hon’ble Supreme Court in Competition Commission of India v. Steel Authority of India Limited & Anr., Civil Appeal No. 7779 of 2010 to invoke the powers of the Commission under Section 33 of the Act. Moreover, such relief can also not be granted as the Informants have not filed a separate application seeking an interim relief under Section 33 of the Act enlisting reasons/impact on market before the Commission.
• iv. The Information does not have a supporting affidavit under erstwhile Section 65B of the Indian Evidence Act, 1872 or current Section 63 of the Bharatiya Sakshya Adhiniyam 2023, with respect to the e-acknowledgement for submission of the letter dated 16.12.2023, addressed to the Hon’ble Prime Minister and copy to AAI, Secretary, MoCA and Central Vigilance Commission, New Delhi, in absence of which, the reference letter does not meet the evidentiary standards required for digital documents and should not be admitted.
• v. All allegations made in the Information are denied as they lack factual and legal basis and hence merit a dismissal at the prima facie stage itself. Allegations raised by the Informants apart from being unsubstantiated, do not make out a prima facie case of any wrongdoing on part of OP-3 given that all the requisite requirements for award of contracts were duly followed by OP-3 in compliance with the OMDA. The Informants have also not met the legal and procedural requirements of the Act to make out a case against OP-3, and accordingly the Information deserves to be closed. The Informants have neither defined the relevant market nor addressed the issue of OP-3’s dominance. Instead, the Informants have merely cited provisions, without substantiating the facts, to claim abuse of dominance.
• vi. The scope of grant under Article 2 of the OMDA recognizes the exclusive right of OP-3 to contract and/or subcontract with third parties to undertake functions on behalf of OP-3. Article 8.5.1 of the OMDA provides that “the JVC shall at all times provide at the Airport, Aeronautical Services, Non-Aeronautical Services and Essential Services at the Airport for the Term”. OMDA defines ‘non-aeronautical services’ to mean services listed in Part I and II of Schedule 6 of the OMDA, like airline lounges, vehicle parking etc. OP-3 has the right under OMDA to contract and/or sub-contract with third parties to undertake such functions on its behalf in accordance with Article 8.5.7. Such third party can also be subsidiaries/joint ventures of OP-3 as permitted in Article 2.3 of the OMDA. Further, in terms of Article 8.5.7 (i)(c)(aa), OP-3 is required to comply with the procedure of competitive bidding for (i) award of contracts in the field of public works concessions, and (ii) for every contract whose value exceeds INR 50 crores; and OP-3 complies with this requirement.
• vii. Article 8.5.7 (i)(d) of OMDA states that every contract entered into by OP-3 shall be on an arms-length basis, and shall contain an express provision allowing the transfer of the rights and obligations of OP-3 under such contract to AAI, in the event of termination or expiry of OMDA. The Article 8.5.7 (i)(d) read with Article 8.5.7(i)(f) contemplates the entering of contracts with Group Entity of OP-3 (related party transactions). For entering into such contracts AAI checks that (i) OP-3 has adopted the procedure set out in Schedule 12 of the OMDA; (ii) the terms of the contract are on arms-length, equitable and are not inconsistent with or contrary to the letter and spirit of OMDA. Thus, OP-1 checks and once it confirms the compliance by OP-3 of such aspects, the matter is placed before the Board of Directors for its consideration and approval. Hence, the necessary checks and balances are provided in and adhered to by DIAL in these related party transactions. Furthermore, OP-3 on periodic basis, submits the details of the executed contracts and shareholding pattern of the counter parties of such contracts to OP-1. It is submitted that OP-1 was duly