The Competition Commission of India (CCI) has shot down Jet’s plea that the Commission’s order regarding the total board size of the airline after Etihad acquires a 24 per cent share in it was incorrect.
In its plea before the Commission, Jet and Etihad submitted that the total board size of Jet, after the deal will be 12 directors and not six shareholder directors as the order incorrectly stated.
In its November 12 order, CCI had said, “In such a case, Etihad’s acquisition of 24 per cent equity stake and the right to nominate two directors, out of the six shareholder directors, including the Vice-Chairman, in the Board of Directors of Jet, is considered as significant in terms of Etihad’s ability to participate in the managerial affairs of Jet.”
Board members
In their submission before the Commission the two airlines said that while Jet has the right to appoint four directors, Etihad only retains the right to appoint two directors on the board, with the remaining six being independent directors. The airlines had also stated that the Chairman will be a Jet nominee (appointed by the promoter) and will have the casting vote.
Jet control
Therefore, Jet will continue to retain control over the board, including the right to nominate individuals as independent directors.
This will not have any impact on the earlier CCI order passed on November 12 which said that the Jet-Etihad deal did not pose any threat to competition.
The deal, valued at over Rs 2,000 crore was announced in April but could be completed only earlier this month following objections raised by various bodies including the Securities and Exchange Board of India (SEBI) and the Foreign Investment Promotion Board (FIPB).
The two airlines made changes in the shareholder agreement to clear the objections raised by SEBI and FIPB and also got clearance from the Cabinet Committee on Economic Affairs before sealing the deal.