COMPAT overrules CCI fine in Thomas Cook case

The Competition Appellate Tribunal (COMPAT), in an order dated 26 August, set aside the penalty order of the Competition Commission of India (CCI) under section 43A of the Competition Act, 2002, against Thomas Cook (India) Limited (TCIL), Thomas Cook Insurance Services (India) Limited (TCISIL) and Sterling Holiday Resorts (India) Limited (Sterling).

TCIL, TCISIL and Sterling had notified the CCI seeking its approval for a proposed two-stage scheme of arrangement and amalgamation whereby the resort and timeshare business of Sterling would be demerged and transferred to TCISIL in the first step, and in the second step, Sterling with its residual business would amalgamate into TCIL. Separately, TCISIL acquired some 9 million equity shares of Sterling representing 9.93% of its equity share capital through open market purchases on the Bombay Stock Exchange (market purchases).

The parties did not notify the CCI regarding the market purchases, on the understanding that on a standalone basis, they did not qualify as a combination in view of a target exemption notification which exempts the acquisition of shares or voting rights of an enterprise having assets of not more than ₹2.5 billion (US$38 million) in India or turnover of not more than ₹7.5 billion in India.

Upasana Rao is a partner at Trilegal and Aditi Halan is an associate. Trilegal is a full-service law firm with offices in New Delhi, Mumbai, Bangalore and Hyderabad.