ORDER
C.M. Nayar, Chairman
1. This Notice of Enquiry was issued under Section 10(a)(iv) and Section 37 of the Monopolies and Restrictive Trade Practices Act, 1969 and Regulation 51 of the Monopolies and Restrictive Trade Practices Commission Regulations, 1991. The Director General of Investigation and Registration had received a copy of the complaint dated 24.9.1994 from Calcutta Chamber of Trade addressed to Hon’ble Union Minister of Finance as well as a complaint from Dr. M.S. Kamath and Shri Nagesh N. Kini stating that the respondent Association has
formed a cartel with a view to hike Bank service charges steeply w.e.f. 1st October, 1994. The complaint was investigated by the D.G. (I&R) and a Preliminary Investigation Report was filed wherein after referring to the averments of the complainants and reply received from the respondent association it was stated as follows :
“The above reply would indicate that the association co-ordinated the work relating to the cost structure of different services/ products offered by banking industry through a costing group consisting of offers from the various Banks. While the accusation of Banks arbitrarily increased the service charges may not be established but there is no doubt that all the Banks are fixing the Bank charges collectively. To this extent the trade practice of fixing common Bank service charges impairs the competition within the meaning of Section 2(o)(ii) read with Sections 33(1)(d) and (g) and Section 35(5) Explanation III of the M.R.T.P. Act (being a recommendation made by an Association to its competent member) and also imposed higher cost of service on them. It may be difficult to say that such increase in service charges is totally unjustified inasmuch as admittedly there have been an increase in cost of operation of the Banks due to various factors including higher wages/ installation of computerization, etc. In these circumstances, the Commission may consider issuing a Notice of Enquiry for indulgence in restrictive trade practices within the meaning of Section 2(o)(ii) read with Sections 33(1)(a) and (g) and Section 35(5) Explanation III.”
2. The learned Counsel for the respondent has referred to the affidavit dated 23.10.2000 wherein it is stated in para 8 as follows :
“8. I say that the Reserve Bank of India has given Notification No. Dir/339/ 13.10.99/99-2000 dated 8.9.1999. As per the said notification, it is clear that before
8th September, 1999 (i.e. the date of the above notification), even the Reserve Bank of India recognised that the practice of fixing benchmark rates by Indian Banks’ Association which were of advisory nature only, were consistent with the regime of administered interest rates.”
We may also refer to the letter issued by the Reserve Bank of India dated September 8, 1999 which is reproduced below :
“…Benchmark Service Charges by member Banks
During the discussions held by our Regulation Review Authority with the Chairman of Indian Banks’ Association on the captioned subject, it was observed that the present practice of fixing benchmark rates by IBA for services rendered by Banks was consistent with a regime of administered interest rates. However, in the current scenario of de-regulation, the above practice is not consistent with the principle of competition among Banks. Since Banks are now free to fix their own interest rates on deposits and advances (PLR), fixing of various service charges also should be left to the individual Banks. We, therefore, feel that any fixation of rates even of advisory nature, or as a guideline by the Association tantamounts to fixing a price and thus is deemed as a restrictive trade practice, undermining the competition.
2. In the circumstances, it has been decided that henceforth, Indian Banks’ Association need not fix or advise any benchmark fees/service charges for any banking services rendered by its member Banks and the same may be left to the individual Bank.”
3. In view of the fact, that the Reserve Bank of India has already given directions in respect of the contentions raised by the respondent, we need not proceed further in the matter. The complaint, accordingly, stands disposed of.
Notice of Enquiry also stands discharged with no order as to costs.