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Mumbai: The Bombay High Court on Monday asked the Competition Commission of India (CCI) not to take any coercive action against debenture trustees and their association in the matter pertaining to alleged collusion on fees till the Securities and Exchange Board of India (Sebi) concludes its enquiry in the case.
A bench led by Justice GS Patel and Nitin Jamdar said “Until Sebi concludes its enquiry and forms its prima facie view, we request the CCI not to take any “coercive" action and not to adjudicate further or proceed with the matter that is before it."
CCI had launched an investigation into the debenture trustees and their associations on a prima facie view that there is probably a form of cartelization between debenture trustees to fix the prejudice of consumers’ debenture trust fees.
Consequently, debenture trustees and Trustees’ Association of India filed a bunch of petitions that challenged the CCI’s investigation. This involved debenture trustees --SBICAP Trustee Company, Axis Trustee and IDBI Trusteeship which were under CCI’s scanner.
The counsel representing Sebi requested the court to grant it 60 days for carrying out enquiry and for forming a prima facie view on the matter before it.
“We will allow Sebi reasonable time not exceeding 60 days, till 30 June, to complete its enquiries and form its prima facie view opinion on the matter that is before it. , this is subject to the order passed on Friday," Justice Patel said.
If Sebi finally comes to the conclusion that it does not need to make any orders or that the matter should properly proceed before CCI, then whatever material Sebi has obtained, it will send to CCI so as to save time in that investigation, Patel said.
On Friday, Justice Patel in his order observed that since Sebi is the sectoral regulator it is preferable for the regulator to form a prima facie view on a case pertaining to an ongoing investigation by Competition Commission of India on the debenture trustees and their associations for alleged collusion on fees.
Sebi also pointed out to the court that it has called for certain documents from the petitioners (Trustees’ Association of India) but did not receive it. The court asked the latter to furnish the documents to Sebi by 30 April.
The matter will be taken up by the high court on 1 July.
The anti-trust watchdog in a confidential order of December said that the Trustees Association of India, of which the trio are founding members, “substantially" increased the fee for assisting companies raising debt last year and prevented members from going below a floor price, thereby harming competition.
As per the petition, the debenture trustees and their associations are seeking that since the sectoral regulator Sebi is investigating the issue following the decision of the Supreme Court in CCI vs Bharti Airtel 2019, the CCI should hold its action in abeyance.
They are also seeking to quash the order stating it was illegal.
A complaint from Muthoot Finance, an Indian gold lending company, sparked the antitrust investigation. Muthoot received a costing estimate that was 300% more than previous rates when it intended to raise debt in August last year.
Thereafter, while ordering a probe, the CCI highlighted that “such collective decision-making by the group... harms market competition." It also asked the debenture trustee to explain its role in fixing the minimum fee structure.
Sebi too questioned the debenture trustees regarding the indicative pricing being on the higher side.
However, the Trustees’ Association defended its stance stating that due to the significant increase in roles and responsibilities of the debenture trustees, there has been a substantial increase in their costs.
It also said that it had informed Sebi ast year that the pricing structure will be decided by debenture trustees, considering their own costs, but it “will not be below the benchmark floor price"(the indicative pricing structure).
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