CCI rules on a complaint from rival MCX-SX
Deevakar Anand | June 24, 2011
The competition commission of India (CCI) has asked the national stock exchange (NSE) to pay a penalty of Rs 55.5 crore after it held the bourse guilty of predatory practices in the currency derivatives (CD) market.
The order follows a complaint by the rival MCX–SX that NSE was resorting to anti-competitive methods to establish dominance in the CD market.
In its 170 - page order, CCI noted that “there was a clear intention on the part of NSE to eliminate competitors in the relevant market” and imposed penalty at the rate of 5 per cent of its three year annual turnover.
The order says that NSE has abused its dominant position in terms of Section 4(2)(a)(ii) and 4(2)(e) of the Competition Act and its intention was to acquire a dominant position in the currency derivative segment. This, CCI has pointed was done by the bourse by cross subsidising the segment of business with the other segments where it enjoyed virtual monopoly.
NSE has also been ordered to maintain separate accounts for each segment from April 1, 2012 and modify its zero price policy in the CD derivative segment as also appropriately levy transaction costs within 60 days. “NSE created a façade of the nascency of market for not charging any fees on account of transactions in the CD segment, " reads the order.
Also, under section 27(a) of the Competition Act, NSE is directed to "cease and desist from unfair pricing, exclusionary conduct and unfairly using its dominant position in other market/s to protect the relevant C.D. market with immediate effect.”
The order has held that NSE members should be allowed free choice to select their own trading software in the CD segment.
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