CCI Says "All Izz Well" With Pre Payment Penalty

After nearly eighteen months from the date of notification of the substantive provisions of the Competition Act ("Act") pertaining to anti competitive agreements and abuse of dominance by business enterprises, the Competition Commission has issued a comprehensive final order, after a thorough investigation by the Director General, the investigating authority under the Act. The order deals with issues involving the alleged anti-competitive agreements entered into and abuse of dominant position by banks while charging prepayment charge ("PPC") on home loans. PPC currently ranges between 1-4% for most banks. The levy and the rate of such PPC is discretional. However, CCI, by a majority order of 4-2, has held that the practice of charging PPC is not violative of the provisions of the Act. Interestingly, the Chairman of the Commission recused himself in the case. It has been observed that owing to the extremely fragmented market shares of the banks in the area of home loans