CCI imposes ₹40 lakh penalty on Axis Bank over acquiring stake in CSC e-Governance

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₹40 lakh on Axis Bank for failing to notify the regulator about its acquisition of a stake in CSC e-Governance. The watchdog said in an order that the transaction under consideration comprised acquisition of a 9.91 per cent stake in CSC e-Governance by Axis Bank and was completed in November 2020. The leading private sector lender was required to give a notice to the fair trade regulator as part of the transaction, 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," said the regulator according to a report by news agency PTI. The regulator observed that no determination is warranted whether the transaction led to the acquisition of control or not in this matter.

The commission found that Axis Bank failed to comply with the regulations. The acquirer should not be a member of the board of directors to avail the benefit of combination rules and does not have a right to nominate a director. It should also not participate in the affairs or management of the enterprise whose shares or voting right are being acquired, according to the order.

The private lender has/had representation on the board of CSC e-Governance. It also intended to have representation on the board of directors of the company and participate in its management or affairs, according to the competition watchdog. Axis Bank is required to pay the penalty within 60