Supreme Court upholds CCI order, clears NSE of anti-competitive practices in co-location case

New Delhi: The Supreme Court on Tuesday upheld the Competition Commission of India’s decision rejecting a probe against the National Stock Exchange over allegations that it had engaged in anti-competitive practices by providing preferential market access to selected brokers through co-location facilities.

A bench comprising Justices JB Pardiwala and Vijay Bishnoi said the court found no grounds to interfere with the National Company Law Appellate Tribunal’s February order, which also upheld the competition regulator’s decision.

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The appeals court ruled that mere dominance did not amount to abuse.

“Merely being a dominant player is not bad in itself, unless it results in abuse of dominant position resulting in AAEC (significant adverse impact on competition),” the court observed. “Abuse can occur where a dominant business such as NSE in the present case exploits its position by imposing unfair or discriminatory price conditions or limiting or restricting its services or products. If such elements are not present, then such dominance cannot be assumed to be abuse.”

The complainant had accused the NSE of disadvantaging the rest of the market through information asymmetry, enabling selected brokers to gain faster access to individual data and gain an unfair trading advantage. According to the complaint, these practices violated the Competition Law.
Also read: Supreme Court refuses to challenge challenging decision to grant cabinet rank to MLAs and MLCs in KarnatakaIn June 2021, CCI closed the case stating that no prima facie case of abuse of dominant position emerged. The competition authority observed that co-location facilities are globally recognized services that increase liquidity and market efficiency. On appeal, the NCLAT upheld the CCI’s decision, holding that Sebi did not ban co-location services and the Securities Appellate Tribunal also quashed the findings regarding the violations.

The appellate court ruled that the complainant failed to provide concrete evidence of what harm colocation facilities or even access to secondary servers caused to investors or consumers. It was stated that the co-location facilities are only for trading members of NSE and not for investors.