Jurisdiction - India
India – CCI Dismisses Allegations Of Abuse Of Dominance And Vertical Restraints Against ACI Worldwide.

16 February, 2015


On January 13, 2015, CCI closed its investigation into allegations of anti-competitive vertical agreements and abuse of dominant position by M/s ACI Worldwide Solutions Private Limited, M/s ACI Worldwide Incorporated, Florida, USA and M/s. ACI Wordwide (Asia) Pvt. Limited, Singapore (collectively referred as ‘ACI’). M/s Financial Software and Systems Private Limited (‘FSS’), a private limited company, operating in the areas of electronic payment, financial transaction processing solutions and services was aggrieved by the ACI’s decision to not allow banks using BASE24 software (‘ACI Banks’) to use FSS or any other third party to provide customization services on BASE24 software beyond July, 2013.
ACI is engaged in the business of developing BASE24, transaction processing switch software (‘Electronic Fund Transfer (‘EFT’) Switch’) which enables an automated teller machine (‘ATM’) or point of sale (‘POS’) terminal to communicate with relevant bank’s core banking network.

FSS had alleged that ACI had abused its dominant position under Section 4 of the Competition Act by (i) not allowing ACI Banks to choose a service provider of their choice; (ii) imposing unfair condition in the purchase or sale of goods or services through exclusive supply arrangements with ACI Banks; (iii) restricting services in downstream market by directing ACI Banks not to avail integration services of FSS; (iv) using its dominance in the upstream market to gain entry in the downstream market; and (v) limiting and restricting the technical or scientific development in the market. FSS further complained that ACI had contravened provisions of Sec-tion 3(4) of the Competition Act, which deals with vertical restraints, by restricting its customer banks from dealing with any third party in respect of providing services of customization and modification of ACI products. This, FSS alleged, amounted to a ‘refusal to deal’. Lastly, it was alleged that ACI sought to impose ‘tie in’ arrangements with ACI Banks by tying the upstream market of software with the downstream market of services.

DG’s Investigation

DG’s investigation identified ‘the market for EFT Switch/ switch software in India (Upstream market)’ and ‘the market for provision of services in respect of customization and modification of EFT software (professional services) in India (downstream market)’ as the relevant markets. Based on an analysis of evidence and facts, DG found that ACI had contravened the provisions of Section 4 the Competition Act and thus abused the dominant position. DG further examined the violations under Section 3(4) of the Competition Act and made the following observations:

i. Refusal to deal: DG found the clauses of the agreement between ACI and ACI Banks, along with the ACI’s decision to not grant consent to third parties (including FSS) beyond July 2013, amounting to a ‘refusal to deal’ under Section 3(4)(d) of the Competition Act.

ii. Exclusive supply agreement: Secondly, ACI’s stipulation to their BASE24 customers to obtain professional services only from it or entities authorised by it was identified as an ‘exclusive supply agreement’ by DG under Section 3(4)(b) of the Competition Act.

iii. Tie-in arrangement: Lastly, the agreement between ACI and its customers amounted to a de facto ‘tie in’ arrangement since it imposed a condition on the licensee to avail professional services from ACI along with the license for BASE24 software.

CCI’s Decision

CCI disagreed with DG’s definition of the relevant market as the ‘market for EFT Switch/ switch software in India’ due to the presence of other buyers of EFT Switch/ switch software in the market for different transaction operations other than for core banking transaction requirements of the issuing bank. CCI noted that assessing dominance in such a narrow relevant market would be fallacious and lead to incorrect results. CCI’s examination of ACI’s dominant position under Section 19(3) was based on the following factors: (i) market share of the enterprise; (ii) size and importance of competitors; (iii) dependence of consumer on the enterprise; (iv) countervailing buying power. CCI concluded that the material on record did not sufficiently establish that ACI operated independently of competitive forces prevailing in the relevant market or can affect competitors or consumers or the relevant market in its favour.

While deciding on violation of provisions of Section 3, CCI disagreed with DG on the ground that since ACI Bank were buyers/ consumers and not a part of production chain, the above mentioned agreements did not fall within the purview of Section 3(4) (a), (b) and (d) of the Competition Act. Accordingly, CCI concluded that no contravention of the provisions of Section 3(4) and Section 4 of the Competition Act was established and closed the investigation against 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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