The Securities Exchange Board of India (SEBI) and Competition Commission of India (CCI) have locked horns on jurisdiction over credit rating agencies (CRAs).
This comes after SEBI asked the latter to ignore a complaint filed by CRA Brickworks against peers on alleged predatory pricing. The CCI rejected SEBI’s stance by saying it is “well within its powers to investigate anti-trust practices,” The Economic Times reported.
SEBI opposed CCI’s involvement on grounds that it is the regulatory authority overseeing alleged violations of CRA regulations and “will take appropriate action if required … and therefore CCI may not entertain the present information,” the report said.
Moneycontrol could not independently verify the report.
The capital markets regulator intervened after CARE, CRISIL, ICRA and India Ratings – the CRAs named in Brickworks’ complaint objected to CCI probing the matter while SEBI is their regulator.
The CCI has however proceeded with its investigation and cited a 2019 Supreme Court order on Bharti Airtel where the apex court stated that “the mere presence of a sectoral regulator” does not oust the CCI’s jurisdiction. It further acknowledged “subject matter domain of SEBI” and said it would “examine anti-competitive conduct” which is within its jurisdiction.
Brickworks complaint alleges that cartelisation by big CRAs, who were quoting very low prices to public sector utilities (PSUs) which have blocked smaller CRAs from winning these contracts.
While CCI ruled that evidence is “insufficient to prove cartelisation” it asked SEBI to supply action in the matter. But since SEBI did not disclose this information, CCI stated it would “proceed and decide the present allegations on merits.”
SEBI on its part has not confirmed nor denied investigations. Legal experts told the paper this is done to keep companies unaware of the regulator’s probe action if any.