Allegations of unfair trade practices against Bank of Baroda, rejected

Competition Commission of India (CCI): While rejecting the allegations of unfair trade practices against Bank of Baroda in the market of commercial/corporate loan in India, CCI closed an information filed by Uttarakhand-based firm Dhanvir Food Product in the matter. Said information was filed by Dhanvir Food Product, which had availed of a term loan of Rs 7.25 crore from the bank for construction of factory building and also to purchase plant and machinery, alleging that the penalty imposed by the Bank upon the Firm to foreclose the loan account was in violation of the guidelines issued by the Reserve Bank of India (RBI) and hence, arbitrary, unreasonable and anti-competitive. It was alleged in the information that the Bank had imposed a penalty of Rs.18,86,711/- to foreclose the loan account of the Informant for the residual period of 65 months in terms of clause 25 of the sanction letter. After perusal of relevant documents and hearing both the parties, CIC observed, “the Informant has not provided any material to show that Opposite Party-2 (Bank of Baroda) have been imposing pre-payment penalty or foreclosure charges in pursuance of some agreement entered into by them with any other enterprise engaged in similar trade or business. Thus, prima facie, no case of contravention of Section 3 can be made out against the Opposite Part-2 in the instant case.” The Commission also turned down the contention of the Informant regarding abuse of dominant position by the Bank on the ground that as Bank of Baroda was not in dominant position in the relevant market, it cannot be held guilty of abuse of dominant position, Dhanvir Food Product v. Bank of Baroda, 2015 CCI 10, decided on 02.06.2015