The Competition Commission of India fines Axis Bank Rs 40 lakh

21 Aug 2023 , 11:07 AM

Axis Bank was fined Rs 40 lakh by the Competition Commission of India (CCI) for failing to inform the watchdog about its purchase of a stake in CSC e-Governance. According to a CCI order, the transaction under review involved Axis Bank purchasing a 9.91% share in CSC e-Governance, and it was concluded in November 2020.

Axis Bank was compelled to notify the fair trade authorities of the transaction. However, the order stated that it had failed to do so.

It is clear that Axis Bank’s purchase of a stake in CSC e-Governance was neither an investment exclusively nor could be regarded as part of regular commercial operations. It is therefore irrelevant whether the transaction resulted in the acquisition of control or not because the Axis-CSC e-Governance purchase is not qualified for the benefit of Item 1 of Schedule I (combination regulation), according to the regulator.

Therefore, CCI noted that it is not necessary to determine whether or not the transaction resulted in the acquisition of control in this case.

The commission thus concluded that Axis Bank had violated the rules in respect to the acquisition of Axis-CSC e-Governance.

According to the ruling, in order to profit from combination regulations, the acquirer cannot be a director or member of the board of directors, cannot propose a director, and cannot manage or participate in the affairs of the company whose shares or voting rights are being bought.

However, Axis Bank had and still has a representative on the CSC e-Governance board. Additionally, it intended to participate in the management or affairs of the firm and have representation on the board of directors, thus it is ineligible for the benefits of the regulations.

According to the August 9 order, Axis Bank must pay the fine within 60 days of the order date.

The electronics and information technology ministry established CSC e-Governance Services India Ltd as a special-purpose vehicle to supervise the common services centre program’s execution.

Private lender Axis Bank announced, ‘The Competition Commission of India (CCI) vide its letter dated August 17, 2023, has imposed a penalty amounting to Rs 40 lakhs under Section 43A of Competition Act, 2002,’ the company stated in a stock exchange filing on Friday.

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