A dissent note to the recent ruling by the Competition Commission of India (CCI) against the National Stock Exchange (NSE) said the exchange did not violate any rules relating to competition. “We have considered every aspect of DG’s report, arguments, rebuttals and submissions of both parties... we are of the opinion that no violation of provisions of section 4 of the Competition Act, 2002, has been established against National Stock Exchange,” members Geeta Gouri and Anurag Goel concluded in the order. It added that any intervention by the commission would only hurt the consumer, which is against the spirit of the competition regulation.
Last week, the Delhi High court had directed the competition commission to make the dissent available to NSE.
NSE will have to reply to CCI in the five working days after getting the complete order, along with the dissent notes, the court had said.
The exchange had approached the court seeking the complete order, including views of the members who dissented on the order pronouncing it guilty of abusing its dominant position and following unfair trade practices in the currency derivatives trading segment. CCI had passed the order after MCX-SX had reported that the zero-pricing policy by NSE was hurting competition in the currency segment.
To the contrary, the dissenting members found the currency derivatives segment was competitive almost from the beginning. “Zero pricing has in no way deterred entry or continued operations,” said the order. It also questioned whether a pricing can be considered predatory “when multiple competitors are entering and competing actively at the same price in an evidently vibrant and growing market.”
The order also pointed out the case of the United Stock Exchange (USE), which has entered the currency derivatives segment two years after NSE and MCX-SX and it still had no issues with the zero pricing prevailing in the market.
The dissent order also said the majority order had taken “an adversarial approach” which is not consistent with the spirit of the competition law. According to the dissenting members, the purpose of competition law is to protect competition in the interest of consumers and not to protect competitors.
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According to dissenting members, the commission should consider two major tests: Whether there is an operating competitive market place? And, whether interests of consumers are protected?
The members concluded from data that NSE’s market share had come down from 100 per cent to 40 per cent by August 2010, showing NSE was not a dominant player. Even a new player like USE could make inroads proving that the market place was competitive. The second test of consumer interest was also not served by asking NSE to charge, the dissent note said. “Regardless of what price is fixed, consumers would now be required to pay for a service which NSE, MCX-SX and USE are providing free. This is against the interest of consumers.”