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Case Study analysis Report Submitted in partial fulfillment of the requirements for the award of the Degree of POST GRADUATION DIPLOMA IN AVIATION LAW AND AIR TRANSPORT MANAGEMENT By M. KRANTHI KUMAR
NALSAR University of Law
Institute of Applied Aviation Management
TRANSFERBILITY OF SHARES 3. ACQUISITIONS 3.4. DEMERGES 2.3.4. TRANSFER OF SHARES 3.5.2. MARKET POWER EFFECTS 4. FINANCIAL & TAX BENEFITS 4. THE JET SAHARA MEGA MERGER 5.1. CONCLUSION 7.2. JOINNT VENTURES 1. ACQUISITION OF SHARES 126.96.36.199.1.4. APPLICABILITY OF MERGER PROVISIONS TO FOREIGN COMPANIES 3. STAKE HOLDERS EXPROPRIATE 4.1. THE AIR INDIA-INDIA MERGER 6. MERGES 1. PROCEDURE UNDER THE MERGER PROVISIONS 2.INDEX CHAPTER NAME: 1.1. SQUEEZE OUT PROVISIONS 188.8.131.52. MERGES & ACQUISITION 4. EFFICIENCIES 4.KINGFISHER MERGER 5. THE AIR DECCAN. MERGES & AMALGAMATIONS 2. MERGERS & ACQUISITION IN AVIATION MARKET PAGENO 3 3 5 6 6 6 7 7 8 8 8 8 8 11 11 11 12 12 13 5. CASES OF M & A IN INDIA 5. INTRODUCTION 1. BIBLOGRAPHY 2 13 13 13 14 15 16 . ACQUISTIONS 1.1.
an amalgamation is an arrangement. The shareholders of the amalgamating companies become shareholders of the amalgamated company. one between A and its shareholders and the other between B and its shareholders. 3 . Very often. The merging entity loses its identity and its shareholders become shareholders of the merged company. But there is.1 MERGERS: The term „merger‟ is not defined under the Companies Act. Generally. in fact. the Income Tax Act. economies of scale. though in certain transaction structures the amalgamated company may or may not be one of the original companies. INTRODUCTION 1. 1961 (the „ITA‟) or any other Indian law. obtaining access into sectors / markets with established players etc. The ITA defines the analogous term „amalgamation‟ as the merger of one or more companies with another company. Sections 390 to 394 of the Companies Act deal with the analogous concept of schemes of arrangement or compromise between a company. While the Companies Act does not define a merger or amalgamation. The ITA goes on to specify certain other conditions that must be satisfied for the merger to be an amalgamation. the merging entities would cease to be in existence and would merge into a single surviving entity. it shareholders and/or its creditors. The amalgamating companies all lose their identity and emerge as the amalgamated company.1. A merger of a company „A‟ with another company „B‟ would involve two schemes of arrangements. the two expressions "merger" and "amalgamation" are used synonymously. the desired effect being not just the accumulation of assets and liabilities of the distinct entities. a difference. in a merger. or the merger of two or more companies to form one company. Merger generally refers to a circumstance in which the assets and liabilities of a company (merging company) are vested in another company (the merged company). Simply put. whereby the assets and liabilities of two or more companies (amalgamating companies) become vested in another company (the amalgamated company). . a merger is a combination of two or more distinct entities into one. acquisition of cutting edge technologies. 1956 (the „Companies Act‟). but to achieve several other benefits such as. On the other hand.
Mergers may be of several types. but having no common customer-supplier relationship. and by lowering the average cost of capital. this kind of merger takes place between entities engaged in competing businesses which are at the same stage of the industrial process. the merger of a company engaged in the construction business with a company engaged in production of brick or steel would lead to vertical integration. Congeneric Mergers These are mergers between entities engaged in the same general industry and somewhat interrelated. the merged entity combines the assets of the two companies and grants the shareholders of each original company shares in the new company based on the relative valuations of the two original companies. also known as a „cash-out merger‟. Based on which entity is the survivor after such merger. This is a common practice in cases where the shareholders of one of the merging entities do not want to be a part of the merged entity. enlargement of debt capacity. The downside of a Vertical merger involves large investments in technology in order to compete effectively. The other benefits of this form of merger are the advantages of economies of scale and economies of scope. the shareholders of one entity receives cash in place of shares in the merged entity. For example. Companies stand to gain on account of lower transaction costs and synchronization of demand and supply. Conglomerate Mergers A conglomerate merger is a merger between two entities in unrelated industries. Triangular Merger A triangular merger is often resorted to for regulatory and tax reasons. A merger with a diverse business also helps the company to foray into varied businesses without having to incur large start-up costs normally associated with a new business. Cash Merger In a typical merger. it is a tripartite arrangement in which the target merges with a subsidiary of the acquirer. A horizontal merger takes a company a step closer towards monopoly by eliminating a competitor and establishing a stronger presence in the market. A company uses this type of merger in order to use the resulting ability to use the same sales and distribution channels to reach the customers of both businesses. As the name suggests. in the case of a „cash merger‟. The principal reason for a conglomerate merger is utilization of financial resources. and increase in the value of outstanding shares by increased leverage and earnings per share. Moreover. Vertical Mergers Vertical mergers refer to the combination of two entities at different stages of the industrial or production process. depending on the requirements of the merging entities: Horizontal Mergers Also referred to as a „horizontal integration‟. vertical integration helps a company move towards greater independence and self-sufficiency. a triangular merger may be 4 . However.
such as agreements providing the acquirer with voting rights or board rights. of another company. or all or substantially all of the assets and/or liabilities.2 ACQUISITIONS An acquisition or takeover is the purchase by one company of controlling interest in the share capital. Bailout Takeovers Another form of takeover is a „bail out takeover‟ in which a profit making company acquires a sick company. a friendly takeover involves an acquisition of the target company through negotiations between the existing promoters and prospective investors. and may be effected through agreements between the offer or and the majority shareholders.forward (when the target merges into the subsidiary and the subsidiary survives). An acquirer may also acquire a target by other contractual means without the acquisition of shares.. e. but the bidder continues to pursue it or the bidder makes the offer without informing the board beforehand. management rights or veto rights in the target. This is a common structure when acquirers wish to make large acquisitions without having to commit too much capital.g. or reverse (when the subsidiary merges into the target and the target survives). This kind of takeover is resorted to further some common objectives of both the parties. thereby reducing the tax payable by the acquirer. 5 . This kind of takeover is usually pursuant to a scheme of reconstruction/rehabilitation with the approval of lender banks/financial institutions. the acquirer may hold 26% of the shares of the target but may enjoy disproportionate voting rights. One of the primary motives for a profit making company to acquire a sick/loss making company would be to set off of the losses of the sick company against the profits of the acquirer. and hope to make the acquired business service the debt so raised. or by making an offer for acquisition of the offer‟s shares to the entire body of shareholders. Leveraged Buyouts These are a form of takeovers where the acquisition is funded by borrowed money. Friendly takeover Also commonly referred to as „negotiated takeover‟. purchase of shares from the open market. Often the assets of the target company are used as collateral for the loan. It is also possible for an acquirer to acquire a greater degree of control in the target than what would be associated with the acquirer‟s stake in the target. This would be true in the case of a merger between such companies as well. or acquisition of assets and liabilities of the target. A takeover may be friendly or hostile. Acquisitions may be by way of acquisition of shares of the target. depending on the offer or company‟s approach. 1. Hostile Takeover A hostile takeover can happen by way of any of the following actions: if the board rejects the offer.
The execution of a joint venture agreement setting out the rights and obligations of each of the parties is usually a norm for most joint ventures.1. 2. the byelaws of the joint venture company would incorporate the agreement between the joint venture parties. This facilitates the restructuring or sale of the sick business. such as mergers. settlement.4 DEMERGERS A demerger is the opposite of a merger. spin-off /hive off. The Merger Provisions are in fact worded so widely. Conversely. The joint venture parties may also incorporate a new company which will engage in the proposed business.3 JOINT VENTURES A joint venture is the coming together of two or more businesses for a specific purpose. An entity which has more than one business. A demerger. but could also be structured in a manner to avoid attracting the Merger Provisions. agreement or arrangement between a company and its members and/or its creditors. If one of the businesses of a company is financially sick and the other business is financially sound. and every other compromise.1 Procedure under the Merger Provisions Since a merger essentially involves an arrangement between the merging companies and their respective shareholders. expertise. In such a case. which requires the specific skills. may decide to „hive off‟ or „spin off‟ one of its businesses into a new entity. the sick business may be demerged from the company. involving the splitting up of one entity into two or more entities. or the entry into a new market. 2. each of the companies proposing to merge with the other(s) must make an application to the Company 6 . The purpose of the joint venture may be for the entry of the joint venture parties into a new business. MERGERS AND AMALGAMATIONS: Key Corporate and Securities Laws Considerations COMPANIES ACT. The shareholders of the original entity would generally receive shares of the new entity. Sections 390 to 394 (the “Merger Provisions”) of the Companies Act govern a merger of two or more companies (the provisions of Sections 390-394 are set out in Annexure 1 for reference) under Indian law. which may or may not be for a limited duration. demergers. amalgamations. a demerger may also be undertaken for situating a lucrative business in a separate entity. 1. may be completed through a court process under the Merger Provisions. that they would provide for and regulate all kinds of corporate restructuring that a company may possibly undertake. without affecting the assets of the healthy business. or the 6 investment of each of the joint venture parties. 1956.
However. The order of the Court approving a merger does not take effect until a certified copy of the same is filed by the company with the Registrar of Companies. i. and under these provisions Courts have full power to sanction any alterations in the corporate structure of a company that may be necessary to affect the corporate restructuring that is proposed. if sanctioned by the Court. is binding on all creditors/shareholders of the company.e. The Merger Provisions constitute a comprehensive code in themselves. But the reverse is not permitted. in cases where an application is made for sanctioning an arrangement that is: for the reconstruction of any company or companies or the amalgamation of any two or more companies. 2. implying that a foreign company could also be a transferor. whether or not a company registered under the Companies Act (i. unless it is satisfied that all material facts have been disclosed by the company. if a reduction of share capital forms part of the corporate restructuring proposed by the company under the Merger Provisions. Section 394 (4) (b) makes it clear that: „Transfer or company‟ would mean any body corporate6. If the majorities in number representing 3/4th in value of the creditors/shareholders present and voting at such meeting agree to the merger. The Court may then order a meeting of the creditors/shareholders of the company. For example. and A„transferee company‟ would only mean an Indian company. in ordinary circumstances a company must seek the approval of the Court for effecting a reduction of its share capital. and under the scheme the whole or part of the undertaking. and an Indian company cannot merge into a foreign company. an Indian company). The Court will not approve a merger or any other corporate restructuring.e. the Merger Provisions recognize and permit a merger/reconstruction where a foreign company merges into an Indian company. then the merger. 7 . Therefore.2 Applicability of Merger Provisions to foreign companies: Section 394 vests the Court with certain powers to facilitate the reconstruction or amalgamation of companies. property or liabilities of any company concerned in the scheme (referred to as the „transferor company‟) is to be transferred to another company (referred to as the transferee company‟).Court5 (the „Court‟) having jurisdiction over such company for calling meetings of its respective shareholders and/or creditors. then the Court has the power to approve and sanction such reduction in share capital and separate proceedings for reduction of share capital would not be necessary.
The modes most commonly adopted are a share acquisition or an asset purchase. 1956. the various modes used for making an acquisition of a company involve compliance with certain key provisions of the Companies Act. the transferee company may give notice to the dissenting shareholders that it desires to acquire such shares. On lodging the same with the company. it is therefore advisable for the acquirer to ensure that the non-selling shareholders (if any) waive any rights they may have under the articles of association. the company will affect the transfer in its records and endorse the share certificates in favor of the acquirer. The Companies Act does not make a reference to the term „acquisition‟ per se. an Indian company may be set up as a private company or a public company.2 Transferability of shares Broadly speaking.1 Acquisition of Shares A share purchase may take place by an acquisition of all existing shares of the target by the acquirer. lest any shareholder of the company claim that the transfer is void or claim a right to such shares. not only entitled. such restrictions being contained in its articles of association (the byelaws of the company). and lodge such form along with the share certificates. It is also necessary for the Board of the company to pass a resolution approving the transfer of shares. and usually in the form of a pre-emptive right in favor of the other shareholders. which must be stamped in accordance with law. 3. and a private company is required by the Companies Act to restrict the transferability of its shares. and the transferee company is then. 3. 3. While acquiring shares of a private company.3. with the company. 3. and the procedure for transfer under the articles of association is followed. Membership of a private company is restricted to 50 members14. ACQUISITIONS: Key Corporate and Securities Laws Considerations COMPANIES ACT. but also bound to acquire such shares.4 Squeeze out provisions Section 395 of the Companies Act provides that if a scheme or contract involving the transfer of shares or a class of shares in a company (the „transferor company‟) to another company (the „transferee company‟) is approved by the holders of at least 9/10ths in value of the shares whose transfer is involved.3 Transfer of shares The transferor and transferee are required to execute a share transfer form. The share transfer form is a prescribed form. or by way of subscription to new shares in the target so as to acquire a controlling stake in the target. 8 . A restriction on transferability of shares is consequently inherent to a private company. The articles of association may prescribe certain procedures relating to transfer of shares that must be adhered to in order to affect a transfer of shares. However.
or the Court does not provide any relief to the dissenting shareholders on their application. and the remaining 5% is held by 5 shareholders who do not approve the transfer. If the dissenting shareholders do not apply to the Court. then the following conditions must also be met: The transferee offers the same terms to all holders of the shares of that class whose transfer is involved. to the target along with the consideration payable.In computing 90% (in value) of the shareholders as mentioned above. executed on behalf of the dissenting shareholder by any person appointed by the acquirer. Therefore the target can also be a 9 . if they are aggrieved by the terms of the offer. the approval of holders of 45% of the shares of the target. or the application is dismissed within one month of issue of the notice. i. then the shareholders holding 45% of the share capital must also constitute at least 3/4ths (in number) of the shareholders holding the balance 50%. The scheme or contract referred to above should be approved by the shareholders of the transferee company within 4 months from the date of the offer. Therefore. then the acquirer must send a copy of the notice (issued to the dissenting shareholders) along with an instrument of transfer. the acquirer would then be entitled to acquire the balance 5% of the shares of the target. shares held by the acquirer.e. The consideration received by the transferor must be deposited in a separate bank account and held in trust for the dissenting shareholders. nominees of the acquirer and subsidiaries of the acquirer must be excluded. and The shareholders holding 90% (in value) who have approved the scheme/contract should also be not less than 3/4ths in number of the holders of those shares (not including the acquirer). The transferor would then be obliged to record and register the transfer in favor of the transferee. the transferee company is entitled and bound to acquire the shares of the dissenting shareholders. if an acquirer already holds 50% of the shares of the target. then the acquirer would not be able to invoke the provisions of Section 395.e. The dissenting shareholders have the right to make an application to the Court within one month from the date of the notice. Therefore. if one shareholder holds 45% and approves the transfer. The instrument of transfer must also be executed by the transferee on its own behalf. Some restrictions Section 395 provides that the “transferor company” (i. it would need the approval of 90% (in value) of the other shareholders of the target to invoke the provisions of this Section. If this approval is received. Since the acquirer in such a case holds more than 10% of the share capital. whether or not incorporated under Indian law. If the transferee already holds more than 10% (in value) of the shares (being of the same class as those that are being acquired) of the transferor. the target) can be any body corporate. This procedure is subject to the conditions and terms set forth in the Companies Act. The merit of these provisions is that a complete takeover or squeeze-out could be affected without resort to tedious court procedures. If no application is made.
and a simple resolution of the board of directors should suffice. the securities of any other body corporate up to 60% of the acquirers paid up share capital and free reserves. a „transferee company‟ (i. The issue of shares by an unlisted public company to an acquirer must also comply with the Unlisted Public Companies (Preferential Allotment) Rules. A private company is not required to pass a special resolution for the issue of shares. 2003. it would be necessary for more than 50% of the shareholders of the seller company to 10 . or 100 % of its free reserves. Limits on investment Section 372A of the Companies Act provides for certain limits on intercorporate loans and investments. Further. The board of directors of a public company or a private company which is a subsidiary of a public company.foreign company. cannot sell. Asset Purchase An asset purchase involves the sale of the whole or part of the assets of the target to the acquirer. the resolution will lapse. implying that if shares are not issued within 12 months of the resolution. must be an Indian company. Section 372A would not be applicable to an acquirer which is a foreign company. and whether the promoters/directors/key management persons propose to acquire shares as part of such issuance. Therefore. partly convertible debentures or any other financial instruments convertible into equity are governed by these rules. However. purchase or otherwise. then it would be necessary for the shareholders of the company to pass a special resolution under the provisions of Section 81(1A) of the Companies Act. A special resolution is one that is passed by at least 3/4ths of the shareholders present and voting at a meeting of the shareholders. and a fresh resolution will be required for the issuance. if any. shareholding pattern. pricing of shares including the relevant date for calculation of the price. Some of the important features of these rules are as follows: Equity shares. substantially all. The validity of the shareholders‟ resolution is 12 months. or any undertaking of the company without the approval of the shareholders in a shareholders meeting. It may be noted that the restrictions under Section 372A are not applicable to private companies. fully convertible debentures. An acquirer may acquire by way of subscription. New share issuance If the acquisition of a public company involves the issue of new shares or securities to the acquirer. authorizing the board of directors of the company to issue the shares. However. if it is authorized by its shareholders vide a special resolution passed in a general meeting. The explanatory statement to the notice for the general meeting should contain key disclosures pertaining to the object of the issue. the acquirer is permitted to acquire shares beyond such limits. the acquirer).e. lease or dispose all. whichever is more. change of control. The issue of shares must be authorized by the articles of association of the company and approved by a special resolution passed by shareholders in a general meeting.
The potential efficiency benefits from mergers and acquisitions include both operating and managerial efficiencies. more resources in the hands of better managers). Andrade. there are a few categories of factors that ought to play a role in a least some mergers. obtain new technologies.g. improved resource allocation (e. general business investment is fairly stable through time. improved focus on core skills of the firm. improved use of information and expertise. however.2 Financial and Tax Benefits Mergers and acquisitions may lead to financial efficiencies. 4. Regardless of the general motivations for mergers. consumption economies of scope. whereas merger activity is much more concentrated in small time periods. there may also have been significant tax reduction benefits associated with mergers and acquisitions. cheapest. The gains from mergers and acquisitions are not. Operational efficiencies may arise from economies of scale. reducing the risk of bankruptcy and its attendant costs. Mitchell. improve product quality. MERGERS AND ACQUISITION At the industry level. In addition. and Stafford note that much merger activity occurs as a reaction to deregulation and thus is clustered in the post-deregulatory period. Earnings diversification within firms may lessen the variation in their profitability.1 Efficiencies Firms may combine their operations through mergers and acquisitions of corporate assets to reduce production costs. This research implies that merger activity is something other than a simple extension of business investment. For example. or provide entirely new products. firms may diversify their earnings by acquiring other firms or their assets with dissimilar earnings streams. improvements in the use of brand name capital. limited to narrowly considered gains to the firms (and ultimately to consumers). Prior to the mid-1980s. moving to an alternative less costly production technology or asset configuration. The ability of one firm to merge with another firm or acquire its assets also creates a market for corporate control. It may be that mergers or acquisitions are the quickest. a separate asset purchase agreement may sometimes be executed to better capture the provisions relating to transfer of assets. 11 .pass a resolution approving such a sale or disposal. Non – compete provisions may also be linked to goodwill and contained in the asset purchase agreement. The empirical evidence. production economies of scope. increase output. Several of those factors are discussed below. and reductions in transportation and transaction costs. or only way to attain these benefits. Further. 4. 4. Many economists consider an active market for corporate control an important safeguard against inefficient management. a more effective combination of assets.
4. antitrust agencies or other regulatory agencies (e. some target firms may seek acquirers to escape financial problems or to break unfavorable labor contracts. Romano32 evaluated the various stakeholder arguments based on the financial/economics literature. regarding these benefits implied that if they existed.). George Stigler argued that such an effect might have been a primary motivation for many of the mergers and acquisitions during the last quarter of the nineteenth century and the first half of the 20th century. which broadened the definition of taxable income and limited the ability of acquiring firms to use the acquired firm's net operating losses to reduce future taxes. 12 .g. mergers between competing firms with significant market shares (those mergers most likely to be anticompetitive) became relatively rare. 4. it is doubtful that the bulk of more recent merger activity could be attributed to an effort to secure market power. While the literature is not always conclusive. was almost surely the cause of a late 1986 increase in merger activity as firms rushed to beat the higher taxes that would be required in 1987. labor. Romano‟s review of the literature on the tax incentives for mergers up to about 1990 found little support for the hypothesis that tax changes had a significant effect on takeover activity. FCC for telecommunications. Romano generally finds the evidence to be inconsistent with the theory that takeovers are motivated by a desire to expropriate gains from taxpayers. FERC for electricity.4 Stakeholder Expropriation Shleifer and summers suggest a number of other motives for mergers and acquisitions in which the shareholders may gain at the expense of other stakeholders. they were likely not a major motivation for most merger activity. of how extensive the tax benefits were prior to 1987. for more recent mergers. He called the 1887-1904 merger wave "mergers for monopoly" and the 1916-1929wave "mergers for oligopoly. or consumers. etc. Following the passage and enforcement of effective anti-merger legislation in 1950. The loss of one tax benefit. related to a change in the “General Utilities” doctrine. or was not. State Attorneys General.31 For example. Other firms may seek leveraged purchases of their targets to increase the surviving firms' riskreturn profile at the expense of existing debt holders." Regardless of whether market power was.S. likely reduced any potential tax benefits associated with mergers and acquisitions. the Tax Reform Act of 1986.. bondholders.3 Market Power Effects Some mergers may result in market power which redounds to the benefit of the merging firms. a major motivation for mergers in the first-half of the century.however. Regardless. and those that did occur (mainly in the 1980s and 1990s) were allowed only after review by the U. For example.
many others point to the pitfalls that are often associated with M&A deals.2007 which is sharply in contrast to their market share in Jan.5 Mergers and Acquisition in Aviation Market M&A in aviation markets has become the hottest topic in the industry. 5.They together account for a market share of 28% as on May. The ultimate consummation of Sahara represented the conclusion of the arbitration exercise that has been going on since July. 2006. the just agreed merger of BA and Iberia and rumors on further mergers such as US Airways / United Airlines seem to be the beginning of a new wave of mergers in the aviation sector.5 billion (3500 USD Million) which is 35 % less than the price agreed in 2006. One of the strengths of the Cranfield course is that we will bring together a world-class group of experts to share and discuss their experiences. European liberalization and EU/US discussions on lifting foreign ownership restrictions Many argue that M&A is the perfect tool to survive in the rapidly changing world of globalization. to gain access to new markets. most recently as a result of increasing cost pressures. senior managers of recently merged airlines and last but not least the most experienced members of our faculty here at Cranfield. “Open Aviation Area” might generate up to 80. particularly in aviation. CASES OF M&A IN INDIA: 5.2 The Air Deccan-Kingfisher Merger: The merger between the pioneer LCC and liquor baron was announced on 31st May.000 new jobs. Jet has announced it‟s going to re brand Sahara as “Jetlite” which would operate as a value carrier. analysts. picked up 26% stake in Air Deccan and propose to buy another 20 % via an open offer. The successful mergers of the recent past such as Lufthansa/Swiss. The European Commission. 13 . for example.1 The Jet-Sahara Mega Merger: On 20th April. 2007 Jet acquired 100% stake in Air Sahara 15 months after signing the original purchase agreement. Jet purchased its arch rival for INR 14. as it allows to grow.S. The deal UB group paid a whopping INR 550 Crores to pick up a 26% stake in the LCC. 5. 2007 as the United Brewies. The list of confirmed speakers includes top antitrust lawyers. However. strategy consultants and investment bankers who have been involved in M&A transactions. to cut costs and to leverage risk.4. 2006 which was more than 45% reflecting increase in competition and fragmentation since then. The new entity would offer reduced frills but would be over and above LCC in terms of service . argues that creating a full EU-U.
3 The Air India-Indian Merger: The two state run carriers entered into a merger in April. 2007 in a bid to consolidate and optimize the use of the assets of the two public sector airlines. The will help the two airlines to synergize their operations.5. 14 .
What is even more disheartening is that new International players with scanty fleet size & minute experience are allowed to operate in & out of the country but ironically the domestic players who are much better in terms of safety. A quote that holds good for M&A in India. 2002 with regard to Regulations of M&A. but by the responsibility for our future”. the number of players serving the International Routes has reduced to half as no other domestic player is eligible for flying Internationally as per the current regulatory framework. Indian civil aviation is facing some problem even after liberalization like traffic jams. Ever since 2003. which are needed to be focused besides competition issues. are needed to be focused these are some features of industry which favors anti-competitive practices and are needed to be regulate by the competition commission. post their entry in the Aviation Sector. and the future of India is bright indeed. low productivity etc. Though the later entrant have given the incumbents a run for their money & have taken away a major chunk of domestic market share from these Incumbents by matching their networks and services but they are still barred from joining the International Skies. and a credo to which Indian companies seem to subscribe given their successes to date in completing acquisitions. experience are barred from flying the same International Routes. As far as IA-AI Merger is concerned it doesn‟t pose much problem from competition angle as the merging entities have complementary networks with AI having International presence with negligible domestic presence and IA having heavy domestic presence with negligible international presence Another important issue that needs to be highlighted is that post Jet-Sahara Deal & IA-AI deal . As George Bernard Shaw is reputed to have said “We are made wise not by the recollection of our past. taxation policy. Price transparency related issues etc. Mergers and acquisitions are powerful indicators of a robust and growing economy. backed by horse sense and persistence. CONCLUSION As Dale Carnegie said “Flaming enthusiasm..6. is the quality that most frequently makes for success”. 15 . insufficient and poor infrastructure. The biggest obstacle in the way of completing a merger or an amalgamation remains the often long drawn out court procedure required for the sanction of a scheme of arrangement. All three M&A very well come under the lens of the Competition Commission of India‟s lens as they meet the benchmarks standards laid down by the Competition Act. benefits have trickled down to the consumers in terms of low fares. The legal framework for such corporate restructuring must be easy and facilitative and not restrictive and mired in bureaucratic and regulatory hurdles.
Background Note for the Economic Editor‟s Conference Organized by PIB on16-18th Nov. Asia Pacific. CAPA Consulting. 2000. 16 . . May. Hyderabad. Aviation Analyst.Balakista Reddy Nalsar University of law. 2007. Indian Aviation – A good Investment by Andrew Miller. BIBLIOGRAPHY Emerging Trends in Air and Space Law by Professor V. 2007. Aviation & tourism Summit. 2007. India. Indian Civil Aviation Industry: Road Map for Growth by ASSOCHAM in association with Ernst-Young. Airlines Mergers & Alliances: OECD Document.7. Issue: 77. CAPA Journal. 2005 On Latest developments & policy initiatives relating to the Ministry of Civil Aviation.
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