The Competition Commission has slapped a fine of about Rs 4.5 crore on Verifone India Sales, the Indian arm of US-based electronic payments firm VeriFone Systems Inc, for indulging in unfair business practices.
The ruling, which comes after a detailed probe by the fair trade regulator upon complaints by Atos Worldline India Private Ltd and Three D Integrated Solutions, also directs Verifone "to cease and desist" from anti-competitive acts.
The regulator after examination found out Verifone India Sales indulging in unfair business practices relating to point-of-sale (POS) technologies.
Verifone provides electronic payment technologies such as POS machines that are used to swipe credit and debit cards at shops and restaurants.
POS machines are supplied along with core applications and Software Development Kits (SDKs). These are sold directly to the customers like banks and retail outlets or to the third party processors (TPPs) who act on behalf of acquiring banks and also render value added services (VAS) to develop and integrate applications into POS terminals.
It is averred that for the provision of VAS, it is important for TPPs (such as the complainants) to have access to the core POS Terminal applications and their crucial updates along with SDKs.
It was alleged that Verifone was imposing restrictive and unfair conditions on the usage of SDKs as well as abusing its dominant position in POS terminal market to control VAS space.
Based on the probe report by its investigation arm the Director General (DG), CCI in a recently released order said that "the conduct of the opposite party no 1 (Verifone India Sales) is abusive in terms of...The (Competition) Act".
"The Commission is of the considered opinion that through the SDK agreement the opposite party no 1 has imposed unfair conditions on VAS/TPP service providers which is in contravention of... The Act," it added.
Besides, CCI noted that Verifone had restricted the provision of VAS services as well as limited the technical and scientific development of these services used in POS Terminals market in India.
"Also, the conduct of opposite party no 1 with respect to seeking disclosure of sensitive business information from its customers in the downstream market in order to enable to enter into the downstream market of VAS services is in contravention of the provisions of...The Act," the regulator added.
Accordingly, CCI has imposed a penalty of over Rs 4.48 crore on Verifone which represents 5 per cent of the company's average turnover.
CCI has also identified persons who were in charge and responsible to Verifone for its conduct. However, the regulator has decided to pass an order separately in their regard after the proceedings against them are completed.