CCI finds TAI, three trustees guilty of cartelisation over debenture fee fixing
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The Competition Commission of India (CCI) has directed Trustees’ Association of India, IDBI Trusteeship, Axis Trustee Services and SBI CAP Trustee to cease anti-competitive conduct.
The CCI has directed the four entities to cease and desist from such anti-competitive practices. | Credits: Shutterstock
The Competition Commission of India (CCI) has found the Trustees’ Association of India (TAI) and three debenture trustee companies guilty of anti-competitive conduct for collectively fixing benchmark fees for debenture trusteeship services during FY21 and FY22.
The three companies are IDBI Trusteeship Services Ltd, Axis Trustee Services Ltd and SBI CAP Trustee Company Ltd. The competition regulator has directed the four entities to cease and desist from such anti-competitive practices.
In an order dated September 2, issued under Section 27 of the Competition Act, the CCI said the entities violated provisions relating to anti-competitive agreements by fixing minimum fees and restricting independent pricing decisions by debenture trustees.
“Such collective fixing of minimum price/fee by Trustees’ Association of India, for the provision of debenture trusteeship services, and other follow-on actions prevented independent commercial decision making by the debenture trustees and amounted to cartelisation,” the CCI said.
The Commission also found that the conduct went beyond fee fixing, with members and non-members of TAI allegedly being directed not to offer debenture trusteeship services below the prescribed benchmark. According to the CCI, this amounted to limiting and controlling the supply of such services.
What’s behind the CCI action?
The proceedings followed a complaint filed by Muthoot Finance. In August 2021, the company had proposed a private placement of secured non-convertible debentures worth ₹982 crore and sought a fee quotation from IDBI Trusteeship.
The CCI said its findings were based, among other things, on minutes of TAI meetings and email exchanges. It found that TAI had collectively decided on a benchmark price for trusteeship services and that subsequent actions prevented trustees from independently determining their commercial terms.
The Commission also held certain officials of TAI, IDBI Trusteeship Services, Axis Trustee Services and SBI CAP Trustee Company liable under Section 48 of the Competition Act.
However, the CCI did not impose any monetary penalty on the entities or individuals, citing mitigating factors.
The regulator warned that any repetition of the conduct could be treated as recidivism and result in aggravated consequences for the entities and officials concerned.
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