No Abuse of Dominance: CCI Dismisses complaint Against Hero Fincrop, Citing No Contravention Of Section $ Of The Competition Act

The Competition Commission Of India, clears Hero Fincorp from the complaint, citing no. Section 4 contravention of the Competition Act, 2002.

Recap:

Informant, Synco, a rubber manufacturer, took a Rs 5 crs loan from Hero FinCorp Ltd on 1.08.2018 at the following rates-

• Hero FinCorp Prime Lending Rate (HFC PLR) as on:

  01.08.2018 - 12%

   06.11.18- 13%

• Spread as on: 

01.08.2018 -  (1.5%)

  06.11.18-  (1.5%)

• Effective int rate as on:

01.08.2018 -  10.5%

  06.11.18-  11.5%

• RBI Repo rate (linked to loan terms) as on:

01.08.2018 - 6%

06.11.18- 4%

Justification:

• Synco alleged that despite a decrease in repo rates, their loan interest rate did not decrease & Hero is trying to exploit their customers, using its dominant position in the market.

• The informant tried loan pre-payment, Hero FinCorp offered a 1.25% lower rate and charged Rs. 29,500 switch fee, despite no request for rate switch or changes.

• CCI relieved Hero FinCorp after assessing the relevant product market,

  • Stating it did not violate Sec 4 & the loan lent comes under the "market for the provision of loans against property” market.