The National Stock Exchange (NSE) today said that it would decide its future course of action on being penalised Rs 55.5 crore by the Competition Commission of India (CCI) for abusing its dominant market position, after studying the legals aspects.
"We are reviewing the 4-2 majority CCI's order. We will consider our future course of action after reviewing the order and obtaining the opinion of our legal advisors," the NSE said reacting to the CCI's directive to pay the penalty within 30 days.
In its order, passed last evening and dispatched today, the competition watchdog said that there was "a clear intention on the part of NSE to eliminate competitors in the relevant market".
Accordingly, the CCI has imposed a penalty of Rs 55.5 crore, which is 5% of the bourse's three-year average turnover, the order said.
In addition, the bourse has been directed to "cease and desist from unfair pricing, exclusionary conduct and unfairly using its dominant position in other markets to protect the relevant CD [currency derivative] market with immediate effect."
The final order from CCI follows a majority order passed by the commission on May 25, along with which it had also issued a notice to the bourse before quantifying the penalty.
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Last month's order was passed with a majority vote of five members of the seven-member commission.
Two members -- Anurag Goel and Geeta Gouri -- had dissented with the majority order, where NSE was found guilty of abusing its market dominance and following unfair trade practices in the currency derivatives market.
While NSE limited its reaction to the CCI order to a brief statement that it would seek legal view before taking any action, sources said that the bourse might challenge the directive on grounds that it was against consumers and also unreasonable.
The exchange could also seek to highlight the dissentive views expressed by two of the CCI members against the order.
The dissenting members had termed the zero-pricing move as being in the interest of consumers.
Sources said that NSE could argue that the CCI order was in the interest of "a competitor" and not necessarily to protect the competition in the market.
In its arguments to challenge the order, NSE might depend heavily on the views expressed by the dissenting members of the CCI.
The dissenting members had argued that another player in the currency derivatives market, United Stock Exchange, never complained of any abuse of dominance by NSE and chose to enter the market when zero-price regime was there for more than two years.
The NSE might also argue against a heavy penalty against it, despite the Competition Commission being in existence for a very short period.
It might cite example of Europe's anti-trust watchdog, the European Commission, which maintained an extremely discreet attitude regarding fines and for almost seven years and limited the penalties to only token fines.
Sources said that NSE might also term the quantum of penalty at 5% of its entire turnover as unreasonable, as the relevant market was only currency derivatives segment and a company's total turnover also includes non-operating revenues such as those from interest income and other investments.