On October 11, 2019, the CCI dismissed allegations of abuse of dominance under Section 4 of CA02 against the State Bank of India ('SBI'), filed by Sainath Autolinks Private Limited ('Informant').1 The Informant was an authorised dealer of Maruti Suzuki India Limited ('Maruti') in West Bengal. The Informant opened a Supply Chain Finance Unit account with SBI's Durgapur branch in 2011. As per the terms and conditions of the account, Maruti would dispatch cars to the Informant after receipt of payment from SBI after which, the Informant would deposit the sales proceeds of the cars into the account.
On July 23, 2018, SBI allegedly informed the Informant of an accounting error from the financial year 2013-2014 due to which, the Informant was liable to pay SBI a sum of Rs. 2.13 Crore. The Informant also alleged that SBI did not provide any documentation or explanation for raising such a demand. Moreover, the Informant was compelled to pay the amount to SBI after SBI threatened to transfer the Informant's account to the 'Non-Performing Asset' category. The Informant filed a complaint with the Banking Ombudsman on the grounds that the demand was time barred under the Limitation Act, 1963, which was dismissed. The Informant alleged that the terms and conditions of the letter of arrangement signed between them were unfair, discriminatory, and favoured SBI. Further, the Informant alleged that SBI was a dominant entity in the banking sector, which SBI had abused.
The CCI observed that loans could be availed from SBI for either business or personal purposes. Further, within the business segment, loans could further be categorized into credit facilities to large corporate borrowing, mid-corporate borrowing, etc. The CCI noted that in terms of Priority Sector Lending requirements, there existed regulatory provisions by the RBI specific to Micro, Small and Medium Enterprises ('MSMEs'). Pertaining to the relevant geographic market, the CCI relied on an earlier case pertaining to the banking sector where the relevant geographic market was limited to the confines of a particular state2. Given the nature of the business of the Informant, and the state of business, the CCI defined the relevant market as the 'market for provision of loans to MSMEs in State of West Bengal'.
The CCI noted that the Informant was unable to provide any evidence backing its claim pertaining to SBI's dominance. The CCI also noted the market share of SBI was around 11%, and that there were a large number of competitor banks within the relevant market which imposed competitive restraints on SBI. Accordingly, SBI was not held to be a dominant enterprise and the CCI found no contravention of Section 4 of the CA02.
1 Sainath Autolink Private Limited v. State Bank of India, Case No. 15 of 2019.
2 Matha Timbers Private Ltd. v. Tamil Nad Mercantile Bank Ltd., Case No. 02 of 2015.
Originally published 11 November 2019
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