New Delhi: The Competition Commission of India (CCI) has slapped a fine of Rs 40 lakh on Axis Bank for failing to notify the regulator about its acquisition of a stake in CSC e-Governance.
The transaction under consideration comprised acquisition of a 9.91 percent stake in CSC e-Governance by Axis Bank and got completed in November 2020, the CCI said in an order.
For the transaction, Axis Bank was required to give notice to the fair trade regulator. However, it failed to do so, according to the order.
"It is apparent that the acquisition of stake in CSC e-Governance by Axis Bank was neither solely as an investment nor can be considered to be in ordinary course of business.
"Therefore, the Axis CSC e-Governance acquisition is not eligible for the benefit of the Item 1 of Schedule I (combination regulation) and accordingly, it is immaterial whether the transaction led to acquisition of control or not," the regulator said.
Thus, CCI observed that no determination is warranted whether the transaction led to the acquisition of control or not in this matter.
Accordingly, the commission found that in relation to the Axis CSC e-Governance acquisition, Axis Bank failed to comply with the regulations.
To avail the benefit of combination rules, the acquirer should not be a member of the board of directors, does not have a right to nominate a director and should not participate in the affairs or management of the enterprise whose shares or voting right are being acquired, as per the order.
However, Axis Bank had/has representation on the board of CSC e-Governance. Further, it had intention to have representation on the board of directors of the company and participate in its management or affairs, thereby it is not eligible for the benefit of the rules.
Axis Bank is required to pay the penalty within 60 days from the date of order, as per order passed on August 9.
CSC e-Governance Services India Ltd is a special-purpose vehicle set up by the electronics and information technology ministry to oversee the implementation of the common services centre scheme.
Private lender Axis Bank informed, "The Competition Commission of India (CCI) vide its letter dated August 17, 2023, has imposed a penalty amounting to Rs 40 lakhs under Section 43A of Competition Act, 2002," the company said in a stock exchange filing on Friday.