CCI examines Muthoot Finance's ₹13,478 crore NCD book in anti-trust case

It matters to citizens as it concerns the regulatory oversight of fees charged for corporate debt issuances, which can impact the cost of capital for companies and potentially the availability of credit.

Who it concerns: The document concerns Muthoot Finance Limited (Informant), Trustees’ Association of India (OP-1), IDBI Trusteeship Services Limited (OP-2), Axis Trustee Services Limited (OP-3), SBI CAP Trustee Company Limited (OP-4), and the Competition Commission of India.

What the Commission found or ordered

• The Informant alleged that OP-1 and its members entered into an anti-competitive agreement to fix fees for trusteeship services, violating Sections 3 and 4 of the Competition Act, 2002.
• The Informant claimed that OP-2 quoted fees significantly higher than previous structures, attributing the increase to a decision by OP-1, with warnings of adverse repercussions for deviation.
• The CCI noted that the decision by OP-1 to set a new pricing structure for its member debenture trustees, with penalties for deviation, prima facie appears to violate Section 3(3)(a) read with Section 3(1) of the Act.
• The CCI stated that such collective decision-making by an association in commercial matters interferes with independent decision-making and distorts competition in the market.

Also in the document

• The Informant's total Non-Convertible Debenture (NCD) book stood at INR 13,478 crores as of 30.06.2021.
• For the proposed INR 982 crore issuance, OP-2 quoted an Initial Fee of INR 9,82,000 and an Annual Fee of INR 14,73,000 per annum, plus GST.
• OP-1 stated that the fee increase was due to enhanced roles and responsibilities mandated by SEBI regulations and circulars issued in 2020, including requirements for due diligence, monitoring, and system upgrades.
• The Informant alleged that the fee increase was unilateral and lacked prior consultation, preventing them from filing offer documents on time.