Jurisdiction - India
India – CCI Directs Investigation Into Allegations Of Abuse Of Dominance By ACI.

22 October, 2013


The Competition Commission of India (‘CCI’) notified its prima facie decision under Section 26(1) of the Competition Act, 2002 (‘Act’) pursuant to which the Director General, CCI (‘DG’) commenced an investigation into the alleged anti competitive practices of M/s ACI Worldwide Incorporated, USA and its affiliate group companies in India and Singapore (together referred to as ‘ACI’). The complaint was filed by Financial Software and System Private Limited (‘Informant’).  

ACI is in the business of developing a “transaction processing switch” software, commonly referred to as an ‘EFT switch’. This software enables automated teller machines (‘ATMs’) and Point of Sale (‘POS’) terminals to communicate with a bank’s core banking network. As a result, this software is required by all banks that wish to provide ATM, POS, mobile and internet banking services. The EFT switch software developed by ACI (BASE24) is used by 77% of all ATMs and about 80% of all POS terminals in India. The Informant is an Indian private limited company, which acts as a system integrator for banks and financial institutions. It provides its services through two business divisions, FSSTechnologies and FSSNeT.

According to the Informant, there exists a license agreement between ACI and banks that use BASE24 (‘ACI Banks’), which allows the latter to use BASE24 and customize it, according to their specific needs. To enable banks to offer additional value added services through ATMs and POS devices (such as identifying customers at a branch level and sending authorizations to the branch host), the Informant provides customization services to ACI Banks. In February 2013, ACI communicated to ACI Banks that it would not allow any third party to access, modify or customize its existing BASE24 applications from July 13, 2013. Instead, ACI, through its new ACI enhanced support programme, would provide customization and modification services to its software. This, the Informant alleged, essentially disallowed ACI Banks to freely choose a service provider to customize BASE24, and amounted to an abuse of dominant position by ACI in contravention of Section 4 of the Act. Further, the Informant alleged that the act of restricting ACI Banks from dealing with third parties to customize ACI products amounted to a ‘refusal to deal’ under Section 3 of the Act.

In its order, CCI differentiates between the provision of EFT switch software per se and the provision of customization/modification services to the EFT switch software. The ‘software for electronic payment systems in India’ was identified as the relevant upstream market and the ‘provision of services in respect to customization and modification of software of electronic payment systems in India’ as the relevant downstream market. CCI further noted that while the Informant and a few other players offered services in the upstream relevant market, 77% of all ATMs and approximately 80% of all POS devices operate on BASE24 software in India. Moreover, migration to other software services appeared to pose commercial risks to banks, giving rise to switching costs and consumer dependence on ACI. On this basis, CCI concluded that ACI was in a dominant position in the relevant upstream market. In addition, CCI held that the conduct of ACI in disallowing banks to choose a service provider of their choice, directing ACI Banks not to avail the integration services of the Informant and using its dominance in the upstream market to gain entry in the downstream market, not only prima facie appeared to contravene Section 4 of the Act but also amounted to a ‘tie-in arrangement’ and ‘refusal to deal’ under Section 3(4) of the Act. As a result of these findings, CCI directed DG to commence an investigation into the practices of ACI.




For further information, please contact:


Zia Mody, AZB & Partners
[email protected]


Abhijit Joshi, AZB & Partners 
[email protected]

Shuva Mandal, AZB & Partners 
[email protected]


Samir Gandhi, AZB & Partners
[email protected]

Percy Billimoria, AZB & Partners 
[email protected]


Aditya Bhat, AZB & Partners 
[email protected]

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