Competition Commission dismisses complaint against NSDL

CCI has rejected a complaint against National Securities Depository Ltd (NSDL) pertaining to its proposal to operate as a registrar and share transfer agent, saying there is no competition concern.
The allegations of anti-competitive practices against NSDL was filed by Registrars Association of India.
NSDL Database Management Ltd (NDML), a wholly-owned subsidiary of NSDL, has approached markets regulator Sebi to be registered as a registrar to an issue and share transfer agent.
According to the complainant, if Sebi allows NDML to enter the participant market, it would be difficult for other players to enter and a monopoly situation would be created.

After looking into the facts, Competition Commission of India (CCI) said the allegations are premature as the entry of NDML in the participant market is a mere proposal.
Action can be initiated only if the alleged anti-competitive conduct has already taken place, 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," the watchdog said.
While Section 3 of the Competition Act pertains to anti-competitive practices, Section 4 relates to abuse of dominant position.

Noting that the allegations against the opposite parties do not raise any competition concern , CCI said "No case of contravention of the provisions of the Act is made out against OPs (opposite parties)."
During its consultations with Sebi on the matter, CCI was told that there are no restrictions on the activities that can be carried out by a subsidiary of a depository.
The informant has already raised the same issue before Sebi and the latter has conveyed the same to NDML, it said.
"Sebi has also advised opposite party 2 (NDML) to submit nine undertakings in line with the safeguards suggested by informant and the opposite party 2 has already submitted the required undertakings before Sebi with some changes in five out of nine undertakings along with the rationale for such modifications," CCI said in its order dated March 29.