Hero Fincorp Unlisted Shares
No Abuse of Dominance: CCI Dismisses complaint Against Hero Fincrop, Citing No Contravention Of Section $ Of The Competition Act
Live Law
2 min read
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.
Being relieved from the complaint, by a statutory body like CCI, may prove advantageous for Hero FinCorp to maintain its goodwill in the industry in the long run.
A legal complaint by Synco against Hero might result in a long-term rift between the companies, and also close the doors for potential future relationships.
The complaints might also lead to a financial drain of resources & time for both parties concerning Synco & Hero FinCorp.
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