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   Vol. 16 No. 11
Wednesday February 1, 2017

India Agents CASS Smackdown


     The CASS (Cargo Accounts Settlement System) of International Air Transport Association (IATA) continues to be in the spotlight in India.
      FT readers might remember the heated controversy it created during an international air cargo show in Mumbai a few years ago.

IATA Competition Beef

      The controversy has taken many turns, with ACAAI (Air Cargo Agents Association of India), the apex body representing the air cargo industry in India, going to the Competition Commission of India (CCI) against IATA. Most recently, the Competition Appellate Tribunal (COMPAT) delivered an order asking for an investigation into the allegations that IATA was misusing its position and was active in anti-competitive practices in India.

ACAAI Speaks

      ACAAI sent out a release after the COMPAT order and it mentions that the air cargo agents association had filed “a complaint before the CCI in December 2012 against the anti-competitive activities and abuse of dominant position by IATA and its Indian affiliate, IATA India.” CCI, in its order dated June 4, 2015, ruled that IATA had not contravened any of the provisions of the Competition Act. ACAAI then went in appeal to the COMPAT in August 2015 against the order of CCI.
      The release goes on to say that Senior Advocate Jimmy F. Pochkhanawalla “argued before COMPAT that CCI’s order is seriously flawed and should therefore be set aside as the Director General (DG), CCI, had not discharged his statutory obligation to conduct a proper enquiry into all aspects of the complaint.”

Even More Agent Discord

      “Further, instead of recognizing this, CCI simply accepted the report of the DG verbatim,” the release stated.
      ACAAI argued that IATA comprised around 260 international airlines operating globally, and controlled the market in a manner that was “adverse to competition by virtue of its dominant position.” IATA, it was pointed out, had “appropriated to itself the right to accredit air cargo agents in India as well as in other countries. Without such accreditation, air cargo agents are unable to carry out their business with airlines, as most airlines globally are members of IATA.”
      It was demonstrated that, contrary to similar rules prevailing elsewhere, the CASS Rules as prescribed by IATA airlines were anti-competitive, “being unilateral and one-sided, and agents have no say in the same.” It was said that “IATA also unilaterally prescribes the criteria for accreditation of air cargo agents, including the imposition of many financial terms and conditions and untenable penalties. This clearly indicates abuse of dominant position by IATA.” The advocate additionally mentioned that “IATA has also abrogated to itself the status of a Self Regulated Organization (SRO) in India without sanction by any Indian authority.”

COMPAT Finds Considerable Force

      The two-member COMPAT Bench, according to its order of November 15, 2016, “found considerable force in ACCAI’s contention that neither the Director General nor the Competition Commission of India have applied their mind on the aspect of abuse of dominant position by IATA... COMPAT has set aside the findings of CCI and has ordered a fresh investigation by the Director General (DG) of CCI and has directed the Authority to consider all contentions raised by ACAAI, and to submit a fresh report to CCI within a period of 60 days from the date of receipt of the COMPAT order.”
      Readers might recall the fracas between ACAAI and IATA at Mumbai. The cause of that duel began when ACAAI filed a complaint with the CCI apprehending that “many of the working conditions of the International Air Transport Association which were forced upon the business of air cargo agents might fall under cartelization.”
      Subsequently, ACAAI submitted a formal petition on December 21, 2012, with ‘Information’ in its possession. The petition, inter alia, said, “in the light of the provisions of the Competition Act, 2002, the existing functioning and modalities of IATA in India could amount to complex phenomena of cartelization both on ‘micro’ and ‘macro’ economic operational processes and, hence, may be in violation of Section 3 and 4 of the Competition Act, 2002. ACAAI did not want to find itself in a situation where, for any reason, if IATA was found to be indulging in any anti-competitive practice in India, ACAAI would be construed as an unwitting collaborator acting in concert with such practices whether voluntarily or otherwise.”

Prejudice Concern

S. L. Sharma      ACAAI also sent a letter to CCI in which it said the association had, in addition to the cartelization charge, also found “IATA and IATA India were all set to introduce and implement a new Cargo Accounts Settlement System (CASS) in India.” ACAAI was concerned the “implementation of CASS would be prejudicial to the air cargo agents and thus ought to be stayed in the meanwhile by way of balance of convenience until CCI’s investigation was concluded, and the main application (of cartelization) was comprehensively decided by the CCI.”
      It may be mentioned that some ACAAI members had not accepted CASS and had gone to the CCI. In September 2013, then ACAAI Vice President S. L. Sharma, left, (he was later President) was quoted saying, “since 2006, when IATA first introduced CASS in India, ACAAI has maintained its view and many times asserted through various documents that the forwarders here have serious objections to the introduction of CASS in India since it is a unilateral decision of IATA, which was mooted and undertaken by it without any appropriate consultation with ACAAI. The association is of the concerted view that the terms and conditions of IATA are inequitable and unfair to the forwarders,” Sharma had said.
      IATA, however, said that “CASS was introduced under Resolution 851 and every change to the Resolution was discussed within the IATA/FIATA Consultative Council, of which ACAAI is a long-standing member.”

Looking Ahead

      Since then, the case has moved on with the latest order from COMPAT about an investigation to discover whether IATA was misusing its position or was indulging in anti-competitive practices in the country. Will the matter be resolved once the investigation report is submitted? Air cargo stakeholders are asking that question.
Tirthankar Ghosh

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