Allegations of anti-competitive conduct against National Securities Depository Ltd., rejected as premature

Competition Commission of India (CCI): While observing that an alleged anti-competitive conduct can be initiated by the Commission in terms of provisions of Section 3 or Section 4 of the Competition Act, 2002 only if the alleged anti-competitive conduct has already taken place, CCI rejected an information against National Securities Depository Ltd. (NSDL) pertaining to its proposal to operate as a registrar and share transfer agent. CCI rejected the allegations on the ground that entry of NSDL Database Management Ltd. (NDML), a wholly-owned subsidiary of NSDL, in the participant market is a mere proposal. The order was passed while Commission was hearing an information filed by Registrars Association of India alleging that NSDL, through its wholly owned subsidiary NDML, is trying to enter into the participant market i.e. RTI/ STA market wherein it acts as a regulator. It was further alleged in the information that this act of NSDL would create business uncertainties for other players in the participant market and would lead to consolidation in the securities market where the two markets such as depository services market and participant market (as envisaged in the Depositories Act, 1996) would merge, thereby creating a monopoly situation in the market. After perusing the material on record and hearing both the parties, CCI noted, “Since the opposite parties (NSDL and NDML) are not operating in the participant market as of now, the alleged anti-competitive conduct of opposite parties in that market cannot be examined in terms of the provisions of Sections 3 or 4 of the Act at this stage.” It was further noted by the Commission that there is also nothing binding on NSDL to not engage in any activities relating to the participant market through its subsidiary “NDML” as according to SEBI there are no restrictions on the activities that can be carried out by a subsidiary of a depository. CCI also observed that Registrars Association of India has already raised the issue before SEBI, which is looking into the matter. While noting that the allegations leveled against NSDL do not raise any competition concern in the market at this stage, CCI closed the information. [Registrars Association of India v. National Securities Depository Ltd.,[2016] CCI 15,  decided on March 29, 2016]