CCI rejects case against J&K Bank alleging anti-competitive agreements

The Competition Commission of India (CCI) has dismissed a complaint filed against Jammu and Kashmir Bank (J&K Bank), rejecting allegations that the bank had engaged in anti-competitive agreements and abuse of dominant position in the Union Territory of Jammu & Kashmir..In an order dated April 30, a coram of Chairperson Ravneet Kaur and Members Anil Agrawal and Deepak Anurag held that “no prima facie case is made out against the OP [Opposite Party] for violation of Sections 3 and 4 of the Act.”.The information was filed by Umar Javeed and Aaqib Javeed, alleging that J&K Bank, a dominant banking entity in the region, had entered into various memoranda of understanding (MoUs) and agreements with public and private bodies that allegedly restricted competition and consumer choice.According to the informants, J&K Bank had agreements with government bodies such as the Government of J&K, the Universities of Jammu and Kashmir and J&K Police, requiring employees to maintain salary accounts with the bank. It was also alleged that J&K Bank had exclusive financing arrangements with automobile dealers like Royal Enfield, Maruti Suzuki, Tata Motors, and oil company Hindustan Petroleum Corporation Limited (HPCL), which constrained customers to use its banking services.Further, the informants cited an instance from October 2022 where a Royal Enfield dealer allegedly refused to offer loan options from any bank other than J&K Bank. They also alleged a tie-in arrangement requiring consumers to purchase a fixed deposit of ₹15,000 for ten years in order to access the bank’s locker facilities, which, they claimed, went beyond the Reserve Bank of India’s guidelines..However, the Commission rejected the allegations after examining the materials on record.“Institutions ordinarily enter into agreements with banks of their choice for availing/providing banking facility/services to/for their employees,” the Commission observed. It noted that such arrangements are common and usually “decided mutually by both the parties on agreeable terms and conditions.”.Regarding the MoU dated September 12, 2018, between the Government of J&K and the bank, the Commission noted that “the primary purpose... was to confer preferential treatment to the entities/permanent employees of Government of J&K in terms of offering customized, hassle free and personalized banking services.”The Commission further clarified:“Such kind of issues usually do not fall under the perimeter of competition law as they do not disclose any concern warranting intervention under the provisions of the Act.”.On the allegations of exclusive tie-ups with automobile dealers, the Commission found that such agreements “cannot be considered as anti-competitive, ipso facto, and are not likely to cause an appreciable adverse effect on competition, as mandated under Section 3 of the Act.”On the locker facility issue, the Commission stated that no documentary evidence of a mandatory fixed deposit requirement was placed on record. It also noted that the bank’s Standard Operating Procedure did not indicate that such a deposit was compulsory.“Allegation of tie-in arrangement with regard to locker facility appears to be misplaced,” the order stated, adding that “deficiency in services or non-adherence of prescribed norms for banking operation cannot be given colour of competition concern,” the Commission said.Consequently, the CCI dismissed the case finding no evidence of anti-competitive practices..[Read Judgment]