CCI by its order dated June 2, 2015 exonerated Bank of Baroda (Vadodara, Gujarat) (BOBG) and Bank of Baroda (Nainital, Uttarakhand) (BOBN) for alleged anticompetitive practices and abuse of dominant position under sections 3 &4 of the Act, respectively.

The present case was filed by M/s Dhanvir Food Product against BOBG and BOBN alleging, inter alia contravention of the provisions of sections 3 and 4 of the Act. It was alleged that BOBN arbitrarily levied foreclosure penalties in violation of Reserve Bank of India (RBI) Guidelines. Further, it was alleged that the conduct of BOBG and BOBN is detrimental to competition amongst the banks in the market and against the interest of the borrower as it prevents the borrower from switching over to other bank and other financial institutions offering better options. Levy of an arbitrary prepayment penalty or foreclosure charges would deter or limit competition among banks/financial institutions drive existing competitors out of the market, forecloses competition by hindering entry into the market, create a barrier for the existing customers who wish to switch over and, enhance their fee based income. CCI determined relevant product market as the “market of commercial/corporate loan in India”. CCI analyzed the advances of various banks in the market and concluded that BOBG does not have a dominant position in the market and thus, question of abuse of the position does not arise. Also, it was observed that RBI issued guidelines on “Levy of foreclosure charges/pre-payment penalty on Floating Rate Term Loans” for all scheduled commercial banks and financial institutions in 2014 advising them to abstain from charging foreclosure charges/ pre-payment penalties on all floating rate term loans sanctioned to any individual borrower. On the basis of abovementioned reasons and analysis, CCI concluded that BOBG and BOBN are not in violation of Section 3 and Section 4 and thus, relieved them of the allegations of anti-competitive agreement and abuse of dominance.