CCI rejects complaint against DIAL on high office rent

The Competition Commission has dismissed allegations that Delhi International Airport Ltd (DIAL) abused its dominant position by charging high rentals for office space from some of the airlines.
The allegations were levelled by the Airline Operators Committee (AOC), which facilitates the movement and handling of passengers, baggage and cargo, among others, for its member airlines operating at Delhi airport.
DIAL operates the Indira Gandhi International Airport here.
According to the Competition Commission of India (CCI), the nub of the grievance emanates out of the letters received by its member airlines from DIAL whereby rentals for the office space provided for them at Delhi airport has been increased.

Citing the complainant, CCI said such increase has been alleged as arbitrary, unreasonable, exorbitant and discriminatory without there being any consultation or discussion by DIAL with the other stakeholders.
However, the Commission has rejected the complaint made against DIAL.

For this matter, the Commission considered 'provision of office space to the airlines for non-aeronautical services at T3, IGIA, New Delhi' as the relevant market.
In its order dated November 17, CCI said it is apparent that DIAL has proposed enhancement of licence fee on per square meter basis in a varying manner from 25 per cent to over 100 per cent to make it uniform at Rs 2,615.72 per sq mt.

AOC's argument to the effect that it was agreed that the base rate for rentals should be Rs 1,822 per sq mt as a prevailing rate for the financial year 2009-10 and thereafter there ought to have been an escalation of 7.5 per cent per year only, "is misconceived", the regulator noted.
"There is nothing on record to suggest that it was agreed that the increase in rental would be only nominal. Similarly, it is not borne out from the records that the increment in the office space rental would not be in any event more than 7.5 per cent per annum.

"In fact, the increase envisaged (of) 7.5 per cent was during the subsistence of the agreement on annual basis. Once the term of the agreement to license office space expired by efflux of time, the said limit was not attracted," it said.
According to the Commission, in the absence of any material, a mere increase in the rental for the fresh term of the agreement cannot be viewed as per se unfair particularly when the license fee appears to be rationalised in a uniform manner.
The regulator also noted that DIAL was free to fix the charges for non-aeronautical services subject to the provisions of the existing contracts and other agreements.