CCI Fines Axis Bank for Failing to Notify Regulator about Stake Acquisition in CSC e-Governance
CCI Fines Axis Bank for Failing to Notify Regulator about Stake Acquisition in CSC e-Governance
The Competition Commission of India (CCI) has fined Axis Bank ₹40 lakh for failing to notify the regulator about its acquisition of a 9.91 per cent stake in CSC e-Governance in November 2020.
The CCI said that Axis Bank was required to notify the regulator about the transaction under the Competition Act, 2002, as it could have had an impact on competition in the market. However, Axis Bank did not do so, which is a violation of the law.
Axis Bank was required to inform the CCI of the transaction, but it neglected to do so.
The CCI stated that the acquisition of a stake in CSC e-Governance by Axis Bank is not solely an investment, nor can it be regarded as part of their regular course of business.
"Therefore, the Axis-CSC e-Governance acquisition is not eligible for the benefit of the Item 1 of Schedule I (combination regulation) and accordingly, it is immaterial whether the transaction led to acquisition of control or not," the CCI order said.
The CCI further noted that there was no need to assess whether the transaction resulted in the acquisition of control in this particular case.
The CCI further said that in order to take advantage of the combination rules, the acquiring party must not hold a position on the board of directors, should lack the authority to appoint a director, and must refrain from involvement in the operations or administration of the company from which shares or voting rights are being procured.
The regulator observed that Axis Bank currently maintains a presence on the board of CSC e-Governance. Additionally, the bank had expressed its intent to secure a position on the company's board of directors and engage in its operational and strategic activities. Consequently, Axis Bank does not qualify for the advantages offered by the aforementioned rules.
As per the directive issued on August 9, Axis Bank is obligated to remit the penalty within 60 days from the date of the order.
CSC e-Governance Services India Limited (CSC SPV) is a special-purpose vehicle (SPV) set up by the Ministry of Electronics and Information Technology (MeitY) under the Companies Act, 1956 to oversee the implementation of the Common Services Centre (CSC) scheme.
The CSC scheme is a government initiative to provide access to e-governance services to citizens in rural and remote areas of India. CSC SPV provides a centralised platform for the delivery of these services through a network of CSCs located across the country.
The CSC scheme has been a major success in bridging the digital divide in India. It has enabled millions of citizens to access essential services such as education, healthcare, financial services, and government schemes.
Axis Bank, a private financial institution, has conveyed that the CCI has levied a penalty of ₹40 lakh on the bank. This penalty, as stipulated under Section 43A of the Competition Act, 2002, was communicated to the bank through a letter dated August 17, 2023.
