CCI dismisses allegations of abuse of dominance and anticompetitive agreements against ICICI Bank
The Information filed by Shri Pramod Mahajan (Informant) under Section 19(1)(a) of the Competition Act, 2002 (Act) against ICICI Bank (Opposite Party/OP) alleging violation of the provisions of Sections 3 and 4 of the Act has been directed to be closed forthwith in terms of the provisions of Section 26(2) of the Act.
The Informant was primarily aggrieved by the increase in rate of interest charged by the OP on the home loan facility availed by him without any prior notice and was also aggrieved with the terms and conditions of the loan agreement, which were alleged to be one-sided and discriminatory in nature and purportedly included by all banks in their loan agreement including the OP. Accordingly, the Informant had alleged contravention of Section 4 as well as Section 3 of the Act.
The Informant had also alleged that this unilateral one sided clause is used by all banks providing housing loans including the OP, without taking consent of the borrower, to increase the EMI when the interest is increased by them in order to increase their earnings.
It was also alleged that all the housing finance banks have cartelized to use the same clause which leaves the borrower with no choice but to agree with these one sided terms and conditions. It was further alleged that the banks abuse their dominant position by having such similar one sided clauses in the loan agreement which, have an adverse effect on competition in market and were against the interest of consumers.
The Commission observed that the allegations of abuse of dominance made by the Informant, specifically relate to arbitrary increase in interest rate on home loan and increase in tenure of home loan by the OP based on one sided conditions in the loan agreement.
For the purposes of ascertaining whether such conduct amounts to abuse under Section 4 of the Act, first the relevant market needs to be delineated followed by an assessment of whether the OP enjoys a position of strength required to operate independently of the market forces in the relevant market. If OP is found to be in such a position, then it is to be examined whether the impugned conduct of the OP can be considered an abuse of dominant position under the Act.
In order to assess the dominance, the Commission noted that there are several public and private sector banks, Non-banking Finance Companies (NBFCs) and Housing Finance Companies (HFCs) operating in the home loan market in India providing various options to consumers for availing home loans such as SBI Home Loans, PNB Housing Finance, HDFC Housing Finance, LIC Housing Finance, L&T Housing Finance, Indiabulls Housing Finance, DHFL, ICICI Housing Finance, amongst others.
Existence of large number of players in the home loan market showed that the OP cannot operate independently in the market and, hence cannot be considered to be in a position of dominance in the relevant market as identified above. Therefore, in absence of dominance, the issue of abuse of dominance did not arise. Hence, the Commission was of the opinion that no case of contravention of the provisions of Section 4 of the Act was made out against the OP.
The Commission also observed that the Informant had made allegations of cartelisation in terms of Section 3(3) of the Act against all banks providing home loans based on inclusion of a similar clause in their loan agreement.
However, he had not identified any bank/ entity which might be involved in cartelisation with the OP or provided any material which showed that the inclusion of similar clause, if so, by a bank/ entity other than OP was an outcome of collusion. Thus, in absence of any information/ material showing collusion amongst any bank(s)/ entity(s) with the OP, the Commission was of the opinion that no case of contravention of the provisions of Section 3 of the Act was made out against the OP.