Case No. 95 of 2014. Case: Brickwork Ratings India Private Limited Vs Crisil Limited, A Standard & Poor's Company and Ors.. Competition Commision of India

Case Number:Case No. 95 of 2014
Party Name:Brickwork Ratings India Private Limited Vs Crisil Limited, A Standard & Poor's Company and Ors.
Counsel:For Appellant: Avinash Kumar, Advocate, Vivek Kulkarni, Managing Director and D. Ravishankar, Director
Judges:Ashok Chawla, Chairperson, S.L. Bunker, Sudhir Mital and Augustine Peter and U.C. Nahta, Members
Issue:Competition Act, 2002 - Sections 19(1)(a), 26(2), 4
Judgement Date:March 18, 2015
Court:Competition Commision of India
 
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Order:

Order under section 26(2) of the Competition Act, 2002

  1. The present information has been filed by Brickwork Ratings India Private Limited ("the Informant"/Brickwork) under section 19(1)(a) of the Competition Act, 2002 ("the Act") against CRISIL Limited, A Standard & Poor's company ("the Opposite Party No. 1"/OP-1/CRISIL) and S&P India LLC, USA ("the Opposite Party No. 2"/OP-2), alleging inter alia contravention of the provisions of section 4 of the Act.

  2. The Informant i.e., Brickwork is a credit rating agency ("CRA") registered under the Companies Act, 1956 and accredited with SEBI with its corporate office in Bengaluru. It is also accredited by National Small Industries Corporation (NSIC) and RBI for carrying out SME and bank loan ratings respectively. It is stated to be a full-service rating agency providing Non-convertible Debentures (NCD), Bank Loan and MSME ratings with a country-wide presence. It is stated to be the smallest and a new entrant in the CRA market.

  3. OP-1 i.e. CRISIL Limited is stated to be the oldest and largest CRA amongst all credit rating agencies in India. OP-2 is S&P India LLC, a Delaware, US based firm which holds the largest shareholding in OP-1 i.e. CRISIL. It is averred that Standard & Poor is the premier rating agency established in 1860 and got present corporation status in 1941. The agency now belongs to McGraw Hill, whose numerous firms own rating agencies all over the world. It is pointed out that Standard & Poor has shareholding in over 50 CRAs all over the world.

  4. It is averred in the information that OP-1 has given ratings to the maximum number of companies for their bank loans in India. OP-1 has been described in the information as the pioneer in credit ratings in India since 1987. It is averred that till S&P took over OP-1, it had a fair name. OP-1 was earlier promoted by premier financial institutions like SBI, ICICI, UTI and ADB etc. However, it is stated that presently the majority shareholding in OP-1 belongs to S&P, an international credit rating agency which enjoys number one position/largest credit rating agency globally. It has been stated that S&P is a dominant credit rating agency not only in US but also internationally with more than 12 lakh ratings of debt of $52 trillion or nearly Rs 50 lakh crores which is 28 times the Indian GDP.

  5. It is stated that the relevant product market in the instant case may be defined as the market for "providing the services of credit ratings and other allied services". Further, the relevant geographic market may be taken as all of India since all CRAs provide their services of credit ratings and other allied services all over India. Hence, the Informant avers that the relevant market for the purpose of our analysis in this case may be taken as the market for "providing the services of credit ratings and other allied services in India".

  6. On dominance, it is stated that OP-1 is the largest credit rating agency in India having more than 60% market share of the entire ratings market in India. OP-1 is also stated to have given ratings to the maximum number of companies for their bank loans in India. It is also averred that the agency has the largest revenue, which is more than double its nearest rival ICRA that was set up 23 years ago. Comparatively, it was pointed out that Brickwork was set up only six years ago. OP-1 and OP-2 have been stated to enjoy double dominance due to various reasons. OP-1 has dominance in the Indian market whereas OP-2 (S&P as an economic entity) has dominance in the world market and is present in at least 50 countries in the...

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