CCI Orders Trustees’ Association and Three Debenture Trustees to Stop Alleged Fee-Fixing Cartel

CCI Orders Trustees’ Association and Three Debenture Trustees to Stop Alleged Cartelisation and Fee Fixing

The Competition Commission of India has issued a cease-and-desist order against the Trustees’ Association of India and three major debenture trustees after finding that their conduct amounted to cartelisation through coordinated benchmark pricing for trusteeship services.

The order covers:

IDBI Trusteeship Services Limited,

Axis Trustee Services Limited,

and:

SBI CAP Trustee Company Limited,

alongside the Trustees’ Association of India, or TAI.

The competition regulator concluded that the association and the trustee companies collectively established a benchmark minimum fee structure that restricted independent commercial decision-making among debenture trustees.

The conduct examined by the CCI occurred primarily during:

FY2020-21 and FY2021-22.

The case originated from a complaint by Muthoot Finance, which challenged a substantial increase in the trusteeship fee quoted for a proposed non-convertible debenture issue in 2021.

The order is significant because debenture trustees play a critical role in India's corporate bond market, acting on behalf of investors to monitor issuers and protect their interests.

CCI Issues Cease-and-Desist Direction

The CCI's September 3 order directs the Trustees’ Association of India and the three trustee companies to:

cease and desist from anti-competitive conduct.

The regulator concluded that collective fee setting had reduced the ability of individual trustees to determine prices independently.

Independent pricing is a fundamental element of competitive markets.

When competitors coordinate minimum fees, issuers may lose the ability to obtain lower prices through negotiation or by switching service providers.

That is why coordinated price setting can attract scrutiny under competition law even when the parties argue that the benchmark reflects rising business costs.

Three Major Debenture Trustees Named in Order

The companies involved are among the better-known participants in India's trustee-services industry.

They are:

IDBI Trusteeship Services Limited,

Axis Trustee Services Limited,

and:

SBI CAP Trustee Company Limited.

These firms provide trusteeship services across debt securities and other financial-market structures.

Their role can extend beyond conventional debentures into areas such as:

security trusteeship,

escrow arrangements,

lender agency,

investment structures,

and other fiduciary services.

The case therefore concerns an important segment of India's financial-market infrastructure.

Trustees’ Association of India Was Central to Pricing Framework

The Trustees’ Association of India represents organisations involved in a range of trusteeship functions.

Its members may act as:

debenture trustees,

security trustees,

escrow agents,

lender agents,

and trustees for REITs, InvITs and alternative investment funds.

According to the CCI's findings, the association played a central role in developing and communicating the benchmark fee structure.

The regulator concluded that the benchmark was not simply an advisory reference point.

It functioned as a minimum pricing framework capable of discouraging members from competing below the prescribed level.

Benchmark Pricing Restricted Independent Decisions

The core competition concern was not merely that trustees charged higher fees.

Businesses are free to increase prices independently when costs rise.

The problem identified by the CCI was:

collective pricing by competing service providers.

Competition law generally expects rival companies to determine their prices independently.

When competitors coordinate on:

minimum prices,

benchmark fees,

discount limits,

or other commercial terms,

customers may face reduced competition.

The CCI found that the trustee association's pricing arrangements interfered with independent commercial decision-making.

CCI Says Conduct Amounted to Cartelisation

The Commission concluded that the collective determination of minimum fees amounted to:

cartelisation under the Competition Act.

Cartels are among the most serious forms of anti-competitive conduct because they can remove the price competition that would otherwise occur between independent businesses.

Price coordination can result in customers paying more even when individual service providers might have been willing to charge less.

The CCI also found that the conduct extended beyond simple fee discussions.

The arrangements allegedly attempted to limit the market's ability to price trusteeship services competitively.

Muthoot Finance Complaint Triggered the Case

The investigation originated from a complaint filed by:

Muthoot Finance.

The financial-services company had previously used IDBI Trusteeship Services as a debenture trustee for several non-convertible debenture issuances.

In 2021, Muthoot Finance was preparing another debt issue.

The proposed fundraising was approximately:

₹982 crore.

When Muthoot sought a trusteeship quotation, it received a fee proposal materially higher than what it had previously paid.

That prompted questions about how the new pricing had been determined.

Muthoot Questioned Sharp Increase in Trustee Fee

The disputed quotation represented a significant increase over previous trusteeship charges.

During the earlier stages of the case, the increase was reported as being roughly:

300% above previous rates.

Muthoot challenged the higher quotation.

According to material examined during the investigation, the trustee explained that the revised pricing was based on a structure determined through the industry association.

This raised an immediate competition-law concern.

If the price was determined collectively rather than independently, competing trustees might not genuinely compete for the mandate.

Association Established Benchmark Floor Price

The CCI found that the Trustees’ Association had developed a:

benchmark floor price

for debenture trusteeship services.

A floor price represents a minimum level below which participating firms are discouraged or prevented from quoting.

This matters because competition frequently occurs through discounting.

One trustee may charge less than another because it has:

lower costs,

greater scale,

better technology,

a different business strategy,

or a desire to win market share.

A coordinated floor prevents this normal competitive process from operating freely.

Trustees Allegedly Faced Consequences for Deviating

The investigation also examined whether members could freely offer prices below the benchmark.

Evidence from the earlier stages of the case indicated that deviations could attract adverse consequences within the association framework.

That meant the pricing structure potentially operated as more than a suggested industry guideline.

The CCI concluded that the arrangement discouraged individual members from undercutting the benchmark.

Such restrictions can make an industry appear competitive because multiple service providers still exist, while removing meaningful price rivalry between them.

CCI Also Examined Attempts to Influence Non-Members

The Commission's findings extended beyond association members.

The CCI concluded that there were efforts to encourage:

non-member trustees

to follow the benchmark pricing structure as well.

This is strategically important.

If only association members observe a minimum fee but competing non-members remain free to quote lower prices, the benchmark may quickly become ineffective.

Customers would simply shift their business to cheaper providers.

Extending pricing discipline beyond members would therefore reduce the ability of outsiders to disrupt the agreed fee structure.

Regulator Says Objective Was to Reduce Competitive Pricing

The CCI concluded that encouraging non-members to follow similar pricing would reduce the possibility of competitive undercutting.

If competing trustees avoid quoting below the benchmark, firms can potentially earn higher fees without engaging in normal price competition.

From an antitrust perspective, the concern is therefore not whether the resulting fee is reasonable in isolation.

The critical question is:

was the fee produced by independent competition or coordinated behaviour?

The Commission found that the conduct crossed the line into anti-competitive coordination.

Certain Officials Also Held Liable

The CCI did not restrict its findings to the association and companies themselves.

Certain officials connected with:

the Trustees’ Association

and

the trustee companies

were also held liable for their role in the alleged anti-competitive conduct.

Competition cases can extend responsibility to individuals when evidence shows that they were involved in or responsible for the conduct.

This creates an additional compliance incentive for senior managers and association representatives.

Executives cannot assume that competition-law exposure exists only at the corporate level.

What Does a Debenture Trustee Do?

A debenture trustee is appointed to protect the interests of investors who purchase debt securities.

When a company raises money through debentures or non-convertible debentures, individual investors may have limited ability to monitor the issuer continuously.

The trustee acts as a representative for the debenture holders.

Responsibilities can include:

monitoring compliance,

reviewing security arrangements,

tracking covenants,

protecting investor rights,

and taking action when agreed obligations are breached.

The trustee therefore occupies an important position between the issuer and debt investors.

Trusteeship Fees Are Paid by Issuers

Companies raising debt generally pay trusteeship fees to the appointed trustee.

The fee can depend on factors including:

issue size,

complexity,

security structure,

tenure,

compliance workload,

and regulatory responsibilities.

Higher regulatory standards can legitimately increase the cost of providing trustee services.

The competition issue arises when rival trustees collectively determine how much those higher costs should translate into fees.

Each company is expected to make that commercial calculation independently.

Regulatory Obligations Had Increased Before Fee Reset

The trustee industry had previously argued that its operating costs had risen because of tighter regulatory requirements.

Changes in the debt market had expanded trustee responsibilities involving:

due diligence,

security creation,

monitoring,

reporting,

and investor protection.

These obligations can require more:

personnel,

technology,

legal expertise,

and compliance infrastructure.

The association therefore argued during earlier proceedings that higher fees were economically justified.

The CCI's concern, however, focused on the coordinated mechanism used to establish pricing rather than simply whether costs had increased.

Higher Costs Do Not Automatically Justify Collective Prices

This distinction is important for businesses across industries.

Companies facing higher costs are generally free to increase prices.

Competitors may independently arrive at similar prices because they face similar:

labour costs,

regulatory obligations,

commodity prices,

or technology expenses.

But competitors generally cannot meet and collectively decide what minimum price everyone should charge.

The first situation can reflect parallel commercial behaviour.

The second can constitute anti-competitive coordination.

The CCI found the trustee case fell into the latter category.

Case Began Several Years Before Final Order

The matter has a long history.

The CCI's investigation became publicly known in:

2022.

At that time, the competition regulator was examining the trustee units linked to SBI, Axis and IDBI over suspected fee coordination.

The investigation followed the Muthoot Finance complaint and evidence concerning the association's benchmark pricing framework.

The eventual September 2026 cease-and-desist order therefore represents the culmination of a regulatory process extending across several years.

Trustee Association Had Challenged Investigation

During the earlier stages of proceedings, the Trustees’ Association challenged the CCI investigation through legal action.

The association argued that the investigation direction was improper and disputed the competition regulator's jurisdictional approach.

It also contended that trustees were already regulated within the securities-market framework.

The argument raised a broader question frequently seen in regulated industries:

Can competition authorities intervene when another sector regulator already oversees the industry?

Competition law generally operates alongside sector-specific regulation rather than disappearing simply because a business is regulated elsewhere.

SEBI Regulation and Competition Law Serve Different Purposes

Debenture trustees operate within the securities-market regulatory system overseen by the Securities and Exchange Board of India.

SEBI rules focus on issues such as:

investor protection,

market integrity,

disclosures,

trustee obligations,

and securities-market conduct.

The CCI has a different mandate.

It examines whether business behaviour:

restricts competition,

creates cartels,

abuses market power,

or harms competitive market functioning.

A firm can therefore comply with technical securities regulations while still facing scrutiny under competition law for pricing arrangements.

Corporate Debt Market Depends on Trustee Services

The case has broader significance because trusteeship services are part of the infrastructure supporting India's corporate bond market.

Companies use bonds and non-convertible debentures to raise capital from:

institutional investors,

wealth-management clients,

and retail investors.

A functioning debt market requires reliable mechanisms for protecting bondholder rights.

Debenture trustees are an important part of that framework.

If trusteeship costs become unnecessarily inflated through anti-competitive behaviour, debt issuers could face higher fundraising expenses.

Higher Trustee Fees Can Raise Issuance Costs

Trusteeship fees may represent only one component of the total cost of issuing debt.

Other costs can include:

interest,

credit ratings,

legal advice,

listing fees,

documentation,

distribution,

and regulatory compliance.

Even so, competitive pricing matters.

Capital markets work most efficiently when issuers can obtain services from competing providers on independently determined terms.

Artificially elevated costs can be particularly burdensome for frequent issuers and smaller companies.

The CCI's intervention therefore has implications beyond the trustee companies themselves.

Competitive Trusteeship Market Could Benefit Issuers

A competitive market allows issuers to compare offers based on:

price,

service quality,

technology,

turnaround time,

experience,

and risk-management capabilities.

Competition can encourage trustees to innovate rather than relying on standardised industry pricing.

For example, firms might invest in digital monitoring systems to reduce operating costs.

Those efficiencies can then be passed to issuers through lower fees.

A collective fee floor weakens that incentive because providers are protected from aggressive price competition.

Competition Does Not Mean Lowest Price at Any Cost

The CCI order should not be interpreted as requiring trustees to charge unsustainably low fees.

Trustees have significant legal and fiduciary responsibilities.

Underpricing could itself create problems if providers lack the resources required to conduct proper:

due diligence,

monitoring,

and enforcement.

The objective of competition law is not necessarily to produce the lowest possible fee.

It is to ensure that fees emerge from:

independent commercial choices.

Individual trustees remain free to price services according to their own costs and risk assessments.

Industry Associations Face Particular Competition Risks

The case also offers a broader lesson for professional and trade associations.

Associations frequently perform legitimate functions.

They can develop:

technical standards,

training programmes,

best practices,

regulatory submissions,

and industry research.

However, associations bring competitors together.

That creates competition-law risks when discussions move into commercially sensitive areas such as:

prices,

discounts,

customers,

market allocation,

production levels,

or bidding strategies.

Companies therefore need strong antitrust compliance protocols when participating in industry bodies.

Benchmark Fees Can Become Competition Concern

Industry benchmarks are not automatically anti-competitive.

Some benchmarks can improve transparency and market efficiency.

But pricing benchmarks become more sensitive when competing companies collectively establish a:

minimum,

floor,

mandatory range,

or enforced pricing structure.

The more a benchmark constrains individual members' ability to offer different commercial terms, the greater the potential antitrust risk.

The trustee case demonstrates how an ostensibly industry-wide pricing framework can become the focus of cartel enforcement.

Independent Commercial Decision-Making Is Central Principle

The CCI repeatedly emphasised the importance of:

independent commercial decision-making.

Competition works when each market participant individually decides:

what to charge,

which customers to serve,

what quality to offer,

and how aggressively to compete.

Businesses may observe competitors and respond to market conditions.

What they cannot generally do is coordinate those decisions with rivals in a way that reduces competition.

This principle applies across industries, including sophisticated financial services.

Financial Services Are Not Exempt From Antitrust Scrutiny

The case reinforces that competition law applies to financial-market intermediaries.

Banks, trustees, exchanges, payment companies and other financial businesses may operate within heavily regulated frameworks.

But regulation does not automatically insulate them from antitrust oversight.

Competition authorities can examine:

price coordination,

market sharing,

bid rigging,

exclusionary conduct,

and other anti-competitive practices.

As India's financial markets deepen, interactions between sector regulators and competition authorities are likely to become increasingly important.

Cease-and-Desist Order Focuses on Future Conduct

The immediate practical effect of the CCI order is that the association and the named trustees must stop the conduct identified by the regulator.

A cease-and-desist direction is intended to prevent continuation or repetition of the anti-competitive arrangement.

Going forward, trustees should therefore establish fees independently.

Industry discussions around legitimate regulatory and operational matters can continue, but commercially sensitive coordination creates significant legal risk.

The order sends the same message to other professional associations operating across India's financial sector.

Issuers Could Gain Greater Pricing Flexibility

For debt issuers, greater pricing independence among trustees could lead to more differentiated quotations.

One trustee may choose to compete on:

lower fees.

Another may emphasise:

specialised expertise.

Others may offer:

technology,

faster execution,

or additional monitoring capabilities.

This is the type of competitive differentiation that markets are designed to produce.

Issuers can then select the provider that offers the best balance between price, quality and risk management.

Service Quality Remains Critical for Investors

Lower fees cannot be the only objective.

Debenture trustees ultimately exist to protect investors.

A weak trustee could create significant risk if it fails to monitor:

security coverage,

issuer obligations,

covenants,

or defaults.

Competition should therefore occur across both:

price

and:

quality.

A healthy trusteeship market is one where providers compete for mandates while continuing to meet strong regulatory and fiduciary standards.

Case Could Influence Other Industry Associations

The implications of the order extend beyond trusteeship services.

Professional associations in sectors ranging from finance to manufacturing routinely develop guidelines for members.

The CCI decision reinforces the need to distinguish between:

legitimate technical standards

and

commercial coordination.

Associations should be particularly cautious about discussions concerning:

minimum fees,

recommended price floors,

discount restrictions,

or sanctions against members that deviate commercially.

Those practices can attract cartel scrutiny.

Compliance Teams May Review Association Participation

Financial institutions and other businesses may respond to the decision by reviewing how employees participate in trade bodies.

Antitrust compliance policies often govern:

meeting agendas,

information sharing,

minutes,

competitor discussions,

and escalation procedures.

Employees may be instructed to leave meetings if competitors begin discussing sensitive pricing or customer information.

The trustee case provides a practical example of why such controls matter.

Corporate Bond Market Continues to Grow in Importance

India has been working to deepen its corporate bond market as an alternative to bank financing.

A larger bond market can provide companies with more diversified sources of capital.

It can also create additional investment options for institutional and retail investors.

Efficient market infrastructure is essential to that development.

Trustees, rating agencies, exchanges, clearing systems and depositories all contribute to the functioning of the debt ecosystem.

Competition among these service providers can help improve efficiency.

Transparent and Competitive Fees Support Market Development

For issuers, predictable and transparent transaction costs can make capital-market fundraising easier to evaluate against bank borrowing.

If service fees are determined competitively, companies can compare providers and negotiate appropriate terms.

This helps improve price discovery across the broader issuance process.

Competition enforcement in a specialist market such as trusteeship services can therefore contribute indirectly to the development of the larger corporate debt ecosystem.

CCI Order Marks Important Financial-Sector Enforcement Action

The decision is notable because cartel cases are often associated with:

commodities,

manufacturing,

transport,

or procurement.

This case involves highly specialised financial-market services.

It demonstrates that competition concerns can arise wherever rival businesses coordinate commercial behaviour.

The sophistication of the underlying service does not change the basic competition principle.

Providers must independently decide how they compete.

Conclusion

The Competition Commission of India's cease-and-desist order against the Trustees’ Association of India, IDBI Trusteeship Services, Axis Trustee Services and SBI CAP Trustee Company marks an important competition-law intervention in India's financial-services sector.

The CCI found that the association and the trustee companies had participated in a benchmark minimum-fee framework for debenture trusteeship services during FY2020-21 and FY2021-22 that restricted independent pricing and amounted to cartelisation.

The case originated from Muthoot Finance's complaint following a sharply higher trusteeship quotation for a proposed ₹982-crore non-convertible debenture issue in 2021.

The Commission also found that the conduct went beyond merely setting fees for association members, with efforts made to discourage competitive pricing and influence non-member trustees.

The order carries broader significance for India's corporate bond ecosystem.

Debenture trustees perform an essential investor-protection function, but their fees must emerge from independent commercial decisions rather than collective pricing arrangements.

For professional and trade associations, the ruling provides another reminder that legitimate industry cooperation can cross into competition-law territory when competitors begin coordinating prices or restricting members' freedom to compete.

As India's financial markets deepen, maintaining both strong regulatory standards and genuine commercial competition will remain essential to ensuring that issuers receive efficient services while investors continue to receive effective protection.