The Delhi High Court today asked the Competition Commission of India (CCI) to give a copy of its order to the National Stock Exchange Ltd on the basis of which a show cause notice on penalty was issued to the bourse for allegedly abusing its dominant position.
“CCI has to furnish the petitioner any order forming the basis of penalty show cause notice. On principle of natural justice CCI is directed to furnish a copy of order dated April 29 within one week,” Mr Justice S. Muralidhar said.
The court was hearing a petition filed by NSE seeking directions to the competition watchdog to provide full details and reasons behind the notice, which asked as to why penalty should not be imposed on it for allegedly abusing its dominant position.
The CCI notice followed its internal investigations after a complaint filed by NSE's rival in the currency derivative market, Multi Commodities Exchange Stock Exchange (MCX-SX).
MCX-SX charge
The complaint had alleged that NSE substantially reduced transaction fees to eliminate competition and discourage other entities from entering the market.
The NSE had moved the High Court contending that the notice did not give reasons as to how CCI reached the conclusion on penalty.
After hearing counsels for the NSE, CCI and MCX-SX the bench said: “Any material which is going to be used against him (NSE) has to be given to him. It is simple principle of natural justice.
“In arriving to the penalty show cause notice you had some order. What is the problem? Give NSE a copy of that.”
CCI issued the penalty show cause notice after its Director General's investigation found prima facie that NSE allegedly violated the Competition Act, specifically section 4, which relates to “abuse of dominant position“.
CCI had then asked NSE to show cause as to why a penalty should not be imposed on it for unfair trade practices in connection with currency derivatives trading.
It had sent the notice recently to NSE before deciding on the quantum of fine to be imposed on the bourse.
MCX-SX had alleged in its complaint to CCI that NSE used its dominant position and original monopoly in equity, F&O (Future and Options) and WDM (Wholesale Debt Market) markets to protect its position in the currency derivative (CD) market.
Currency futures trading started on the NSE on August 29, 2008, and at the MCX-SX on October 7, 2008.
While MCX-SX is allowed to trade only in currency derivatives, NSE has presence in all major financial trading segments.