NEW DELHI: The Competition Commission of India (CCI), the fair play watchdog, on Wednesday issued a 140-page penalty notice detailing the grounds on which it had found the National Stock Exchange (NSE) of abusing its dominant position in the currency derivates business.
As reported first by TOI in its May 13 edition, CCI earlier issued a notice to NSE asking it why penalty should not be imposed. The NSE had moved court saying the ground of violation should be made clear. The high court then asked CCI to issue a detailed notice and NSE is expected to respond to it within a week. Based on its reply, CCI will decide on levying a penalty, which could be up to 10% of NSE's average turnover for the last three years. The NSE spokesman could not be reached for comments.
According to data available on the NSE website, its total income in 2008-09 was Rs 1,024 crore, which rose 24% to Rs 1,266 crore during the year-ended March 2010. The numbers for 2010-11 are yet to be reported. MCX-SX had moved the CCI in 2009 and had alleged that NSE had reduced admission fees to shut out competition from the currency derivatives market.
"CCI has sent the notice and given specific reasons as to why a penalty should be levied. The commission has found that NSE had flouted norms under section 19 (4) and others sections of the competition law," a source told TOI. He said it has been it been established that NSE was not charging fees in the currency derivatives (CD) market but was using income from its other businesses to strengthen its derivatives segment. It was not charging any fees in the CD segment whereas it was earning enough from other segments such as equities.
Competitors were forced not to charge fees because of NSE's strategy. MCX-SX was only functioning in the CD segment and had no other business like NSE.
Section 19 (4) of the CCI Act says "the commission shall, while inquiring whether an enterprise enjoys a dominant position or not under section 4 have due regard to all or any of the following factors such as market share of the enterprise, size and resources of the market, size an importance of the competitors, economic power of the enterprise including commercial advantages over competitors among others conditions."
As reported first by TOI in its May 13 edition, CCI earlier issued a notice to NSE asking it why penalty should not be imposed. The NSE had moved court saying the ground of violation should be made clear. The high court then asked CCI to issue a detailed notice and NSE is expected to respond to it within a week. Based on its reply, CCI will decide on levying a penalty, which could be up to 10% of NSE's average turnover for the last three years. The NSE spokesman could not be reached for comments.
According to data available on the NSE website, its total income in 2008-09 was Rs 1,024 crore, which rose 24% to Rs 1,266 crore during the year-ended March 2010. The numbers for 2010-11 are yet to be reported. MCX-SX had moved the CCI in 2009 and had alleged that NSE had reduced admission fees to shut out competition from the currency derivatives market.
"CCI has sent the notice and given specific reasons as to why a penalty should be levied. The commission has found that NSE had flouted norms under section 19 (4) and others sections of the competition law," a source told TOI. He said it has been it been established that NSE was not charging fees in the currency derivatives (CD) market but was using income from its other businesses to strengthen its derivatives segment. It was not charging any fees in the CD segment whereas it was earning enough from other segments such as equities.
Competitors were forced not to charge fees because of NSE's strategy. MCX-SX was only functioning in the CD segment and had no other business like NSE.
Section 19 (4) of the CCI Act says "the commission shall, while inquiring whether an enterprise enjoys a dominant position or not under section 4 have due regard to all or any of the following factors such as market share of the enterprise, size and resources of the market, size an importance of the competitors, economic power of the enterprise including commercial advantages over competitors among others conditions."
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