CCI Declares Cartelisation by Trustees’ Association of India
The Competition Commission of India (CCI) has adjudged the Trustees’ Association of India (TAI) and three debenture trustee firms guilty of cartelisation, stemming from their collaborative efforts to set minimum fees for debenture trusteeship services. The firms named in this decision are IDBI Trusteeship Services Limited, Axis Trustee Services Limited, and SBI CAP Trustee Company Limited.
The CCI determined that these entities breached Sections 3(3)(a) and 3(3)(b) of the Competition Act by establishing benchmark prices and curbing the supply of debenture trusteeship services during the fiscal years 2020-21 and 2021-22. The Commission noted, “Such collective fixing of minimum price/fee by OP-1, for the provision of debenture trusteeship services, and other follow-on actions prevented independent commercial decision-making by the DTs and amounted to cartelisation.”
No Monetary Penalties Imposed
Despite these findings, the CCI refrained from imposing any monetary penalties. The decision to waive fines was influenced by the fact that the Association reported no income during the violation period, and the trustee companies occasionally charged fees below the benchmark rate. Nonetheless, the CCI issued a stern warning that any recurrence of such behavior would be deemed recidivism, leading to harsher consequences for both the organizations and their officials personally.
Complaint by Muthoot Finance Limited
This ruling arose from a complaint lodged by Muthoot Finance Limited. In August 2021, Muthoot sought to privately place secured non-convertible debentures worth ₹982 crore and requested a fee quote from IDBI Trusteeship. The quoted fees were significantly higher than those previously charged, according to Muthoot. IDBI Trusteeship attributed the revised fees to TAI’s guidelines, warning that deviation could result in negative repercussions.
TAI had purportedly decided in March 2021 that members should not price services below a unified benchmark. The Association allegedly monitored quotations and warned trustees against undercutting the established rates. Notably, the Commission found that members had previously contemplated whether setting common prices could constitute cartelisation.
Defensive Arguments and CCI’s Rejection
The trustee firms defended their actions, citing increased responsibilities and costs due to regulatory changes. They also referred to a Securities and Exchange Board of India (SEBI) circular mandating the disclosure of minimum fees by trustees. However, the CCI dismissed this defense, clarifying that SEBI had not sanctioned collective fee-setting but merely required individual disclosure of pricing.
The Commission also recognized the newly formed TAI as the successor to the previous association, as six out of seven members transitioned from the former body.
Legal Representation
Muthoot Finance was represented by Advocates Vijay V Paul and Rhianne Reuben Stephen. TAI’s defense included Senior Advocates Vaibhav Gaggar and Samar Bansal. IDBI Trusteeship Services Limited and Axis Trustee Services Limited were represented by Senior Advocate Vaibhav Gaggar alongside Advocates Vaibhav Choukse, Faiz Siddiqui, Priyanshi Jain, Ketan Sarraf, and Abhishek Nair. SBI CAP Trustee Company Limited’s representation was managed by Advocate Sana Khan.
For further details, please refer to the [full judgment].
