NCLAT Upholds CCI Order, Dismisses Plea Against NSE Co-location Services for Lack of Prima Facie Abuse

February 6, 2026 : The National Company Law Appellate Tribunal (NCLAT), New Delhi, has dismissed an appeal filed by Manoj K. Sheth challenging the closure of proceedings by the Competition Commission of India (CCI) against the National Stock Exchange of India (NSE) over its co-location services, holding that no prima facie case of abuse of dominant position was made out.

The appeal arose from the CCI’s order dated June 28, 2021, passed under Section 26(2) of the Competition Act, 2002, in Case No. 35 of 2019, whereby the Commission had declined to direct an investigation into alleged anti-competitive practices by NSE.

Background of the Case

The appellant had approached the CCI alleging that NSE, by offering co-location facilities, granted preferential access to certain brokers. These brokers, by placing their servers within NSE premises, were purportedly able to access tick-by-tick market data faster than others, resulting in unfair advantages such as front-running, information asymmetry, and distortion of competition.

It was further alleged that NSE’s technological architecture, particularly its use of TCP/IP protocol without adequate safeguards like load balancers or randomisers, enabled inequitable dissemination of market data. The appellant contended that such conduct amounted to abuse of dominant position under Section 4 of the Competition Act, including denial of market access and discriminatory treatment.

CCI’s Findings

After examining the material on record, the CCI found no prima facie contravention of the Competition Act and closed the case at the threshold stage. It observed that co-location services are globally recognised, efficiency-enhancing facilities that improve liquidity, enable algorithmic trading, and contribute to better price discovery.

The Commission also noted the absence of evidence demonstrating denial of access or discriminatory conduct by NSE. The services were found to be uniformly available to all eligible trading members upon payment of prescribed fees.

Tribunal’s Analysis

Upholding the CCI’s order, the NCLAT observed that the Commission had applied its mind to all relevant material and recorded cogent reasons for closing the case.

The Tribunal explained that co-location services allow trading members to place their servers in close proximity to exchange systems, thereby reducing latency and enabling faster execution of trades. Such services, it noted, are widely used across global stock exchanges and are not inherently anti-competitive.

Addressing the allegation of abuse of dominance, the Tribunal reiterated that dominance per se is not prohibited under competition law. What is required is evidence of abusive conduct resulting in an appreciable adverse effect on competition (AAEC).

“Merely being a dominant player is not bad in itself, unless it has resulted into abuse of its dominant position resulting into AAEC… If such elements are not present, then obviously such dominance cannot be presumed to be abusive.”

The Tribunal found that the appellant failed to establish even a prima facie case of denial of market access or discriminatory treatment. It also noted that the data dissemination system involved inherent variability and did not guarantee any consistent advantage to any specific trading member.

Role of SEBI Findings

The NCLAT also took into account findings of the securities market regulator, which had conducted extensive investigations into the co-location framework. While certain procedural shortcomings were identified—such as absence of randomisers and load balancing mechanisms—no evidence of fraud, collusion, or deliberate preferential access was established.

Further, NSE had subsequently migrated to a different technological framework, addressing earlier concerns.

Conclusion

Finding no infirmity in the CCI’s order, the Tribunal held that the case did not warrant investigation or interference in appellate jurisdiction. The appeal was accordingly dismissed.

Case Details

• Case Title: Manoj K. Sheth v. Competition Commission of India & Anr.
• Case No.: Competition Appeal (AT) No. 20 of 2021
• Bench: Justice Mohammad Faiz Alam Khan (Member Judicial) and Naresh Salecha (Member Technical)
• Decision Date: 06 February 2026