Competition Law: Information, Updates and Analysis, Nov 2015

Notice of Acquisition filed by Koneru Holdings Limited. (C-2015/07/290) September 8, 2015

The proposed acquisition was notified under Section 6(2) of the Competition Act, 2002 (‘Act’) pursuant to a Share Purchase and Business Transfer Agreement dated June 11, 2015. The transaction comprises of a series of interconnected steps involving (a) the acquisition of Saucon Holdings Limited (‘SHL’), PVK Engineers Private Limited (‘PVK’), Aster Private Limited (‘Aster’) and Ideamax Consultancy Services Private Limited (‘Ideamax’) by Koneru Holdings Limited (‘KHL’); and (b) an indirect acquisition of certain identified undertakings (assets and liabilities) of Agrawal Steel Structures (India) Private Limited (‘Agarwal’), Gem Cables and Conductors Limited (‘Gem’), Vijeta Transformers Private Limited (‘Vijeta’) and Sourya Insulators Private Limited (‘Sourya’) by KHL. Subsequent to these transactions, PIPL Holdings Pvt. Ltd. (‘PIHPL’), a wholly owned subsidiary of KHL, proposes to acquire 100% shares of SHL from KHL. (hereinafter B&C, Aster, Agarwal, Gem, Vijeta and Sourya are referred to as ‘Targets’). Further, Puissant Holdings Pvt. Ltd. (‘PHPL’), a wholly owned subsidiary of KHL, would subscribe to non-convertible debentures in PVK. The acquirer, KHL is an investment company incorporated in Mauritius. The targets are primarily engaged in the business of providing engineering, procurement and construction solutions for power transmission and distribution, telecom and railway electrification (‘EPC solutions for electricity and telecom towers’). It was observed that post combination, KHL would become a vertically integrated player present in the business of EPC Solutions for electricity and telecom towers. The CCI noted that post combination, KHL is not likely to be a significant player in the said business based on the small market shares enjoyed by the targets. Further, the CCI noted that there are other vertically integrated players such as KEC International Limited, Kalpatru Power Transmission Limited, Larsen & Tubro Limited, Tata Projects and Jyothi Structures Limited etc. operating in the market which would provide competitive constraint to KHL. In light of the observations, the Commission approved the combination under Section 31(1) of the Act as the proposed combination is not likely to cause an appreciable adverse effect on competition in India.

Notice of acquisition filed by FIH Mauritius Investments Limited and I Investments Limited, C-2015/07/296 dated August 19, 2015

Notice was given to the CCI under Section 6(2) of the Act pursuant to a mandatory requirement of open offer made in accordance with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. FIH Mauritius Investments Limited and I Investments Limited (collectively, ‘Acquirers’) had proposed to acquire 26% of the total equity share capital of IIFL Holdings Limited. The Acquirers belong to the Fairfax group and have been incorporated primarily for the purpose of making investments in India. IIFL Holdings Ltd, the target is primarily engaged in the provision of providing financial services in India, inter alia, merchant banking and investment advisory services, retail broking, asset management, commodities broking, distribution of financial products etc.  Upon enquiry, the CCI noted that there is no change in control of the management of IIFL Holdings Ltd post combination and that its business operations will continue under the present management. It was also observed that there are no veto/special rights granted to the Fairfax Group on account of the proposed transaction. However, the CCI observed that in the event the Acquirers acquire more than 25% of the equity share capital of the Target, they will be in a position to veto strategic decisions of the Target and as a result, will be jointly controlling the Target with the existing promoters of the Target. Therefore a competitive assessment was undertaken, wherein it was noted that there is no horizontal overlap between the parties. Further it was noted that there would not be any change in the competitive landscape with regard to investment advisory services on account of the proposed combination. Accordingly, the CCI was of the opinion that the proposed combination is not likely to have any appreciable adverse effect on competition in India and the combination was approved under Section 31(1) of the Act.

Notice filed by Heidelberg Cement AG, C-2015/08/300 dated September 17, 2015

The notice under Section 31(1) of the Act was given pursuant to the execution of a Share Purchase Agreement dated July 28, 2015 involving the acquisition by Heidelberg Cement AG (‘Heidelberg’) of 45% shareholding of Italcementi S.P.A (‘ISPA’). Further, Heidelberg would file a public offer for buying outstanding shares of ISPA from public in order to acquire approximately 98.89% shareholding in ISPA. Heidelberg is a major producer of cement and other construction material such as aggregates, asphalt etc. In India, Heidelberg, through its subsidiaries, Cochin Cements Limited and Heidelberg Cement India manufactures and sells clinker and different varieties of grey cement such as pozzolona portland cement (‘PPC’) and portland slag cement (‘PSC’), apart from trading of coal, petcoke and gypsum. ISPA is also a global producer of cement and other construction material (aggregates, asphalt etc). In India, ISPA through its subsidiary, Zuari, manufactures and sells clinker and different varieties of grey cement such as Ordinary Portland Cement (‘OPC’), PPC and PSC apart from trading cement products and building material like AAC blocks, admixtures etc. For undertaking a competitive assessment, the CCI delineated the relevant product market as market for grey cement following its earlier decisional practice in Holcim Limited/Lafarge S.A, C-2014/07/190. With regard to the relevant geographic market, the CCI observed that the consumption of cement is generally centred around production clusters. Thereafter the CCI employed the Elzinga Hogarty Test to determine the geographic market, however the determination of the relevant geographic market remained inconclusive and the exact definition was left open. Thereafter, the CCI assessed the proposed combination on the basis of factors stated in Section 20(4) of the Act, opined that the proposed combination is not likely to have an appreciable adverse effect on competition in India and therefore, the same was approved under of Section 31(1) of the Act.

Notice given by Standard Life (Mauritius) 2006 Limited, C-2015/09/308 dated October 7, 2015 

The CCI was notified under Section 6(2) of the Act pursuant to the execution of a Share Sale and Purchase Agreement dated August 14, 2015 between Standard Life (Mauritius) 2006 Limited (‘Acquirer’), Housing Development Finance Corporation Limited (‘Seller’) and HDFC Standard Life Insurance Company Limited (‘Target’). The proposed combination is a purchase of an additional nine per cent shares by the Acquirer from the Seller in the Target. Post combination, the shareholding of the Acquirer will increase from twenty six percent to thirty five per cent. The Acquirer is a company incorporated in Mauritius and does not offer any products in India. The Target is engaged in the business of providing life insurance services in India. The CCI noted that the Acquirer already holds a minority shareholding in the Target and has joint control over it owing to the fact that it enjoys certain affirmative rights in the Target including, inter alia, adopt or amend the annual business plan, close down any business or dispose off or dilute its interest in any of its subsidiaries for the time being and approve any remuneration of whole time directors and managers. However, the rights enjoyed by the Acquirer presently shall remain unchanged and therefore there will not be any change in control of the management/affairs of the Target. As such, it was observed by the CCI that the proposed combination is not likely to cause any appreciable adverse effect on competition in India. The combination was therefore approved under Section 31(1) of the Act. 

Acquisition of NordGlass Sp. z.o.o by AGC Automotive Europe S.A.
October 29, 2015

The CMA has cleared the proposed acquisition of NordGlass SP by Automotive Europe (‘NordGlass’), a subsidiary of Asahi Glass Co (‘AGC’) (collectively, ‘Parties’). The CMA observed that the Parties have overlapping business interests in the production and supply of automotive glass (used in automobiles). It was further observed that Asahi supplies float glass to NordGlass which is used as a raw material for the production of automotive glass. Upon undertaking a study of the potential competitive effects of the transaction, it was found that on account of NordGlass’s low market share in the automotive glass segment, the increment in ADC’s market share is negligible and that AGC will continue to face sufficient competitive constraints. It was also found that the products offered by the parties to the transaction are differentiated both in terms of price and quality and therefore the parties are not close competitors.

Acquisition of assets of Shell Group by Motor Fuel Limited.
September 24, 2015

The acquisition relates to the purchase of 90 petrol filling stations belonging to Shell U.K Limited by Motor Fuel Group (collectively, ‘Parties’). Investigation was undertaken with respect to the markets for the retail supply of road fuel (petrol and diesel), auto-LPG and grocery retailing where it was observed that the operations of the companies overlapped. Upon investigation, it was noted that the parties had small individual market shares pre-merger, and therefore there is only a minimal increment in the market shares of the parties in the respective markets and as such the merger will not give rise to a substantial lessening of competition in any of the markets identified herein.

Surrey Hospitals Merger cleared
September 16, 2015

The parties to the transaction, Ashford and St. Peter’s Hospitals NHS Foundation Trust and Royal Surrey County Hospital NHS Foundation Trust (collectively, ‘Parties’) provide clinical services from their sites in Ashford, Chertsey and Guildford. The CMA investigated the overlapping health services provided by the Parties i.e elective services, emergency services, services provided to private patients, specialized services and community health services and arrived at the conclusion that competition and consumer choice will not be affected after the merger. It was observed that the presence of a number of nearby hospitals, which attract significant number of patients from the local area are viewed as a credible alternative by both patients and practitioners.

United States of America (‘US’)- Federal Trade Commission (‘FTC’)

FTC settles charges concerning anti-competitive acquisition of Tornier N.V. by Wright Medical Group, Inc. reported on September 30, 2015.  

Wright Medical Group, Inc. (‘Wright’) and Tornier N.V. (‘Tornier’) have agreed to sell Tornier’s U.S. rights and assets related to its total ankle replacements and total silastic toe joint replacements to Integra Lifesciences Corporation to settle FTC charges that the proposed $3.3 billion merger of Wright and Tornier would violate federal antitrust laws by substantially reducing competition for these devices. FTC noted Wright and Tornier are close competitors and significant suppliers of these orthopaedic devices in the United States. As a part of the settlement Wright and Tornier will also provide Integra with intellectual property, manufacturing technology, and existing inventory, as well as other assets and assistance to ensure that Integra can effectively compete in the markets. The proposed order also requires Wright and Tornier to supply Integra with total ankle replacements for up to three years and total silastic toe joint replacements for up to a year, while Integra transitions to become an independent competitor in these markets.

European Commission approves acquisition of BG Group by Royal Dutch Shell.
September 2, 2015

The European Commission has approved the $ 70 billion (Seventy Billion Dollars) acquisition of BG Group by Royal Dutch Shell Company (‘Parties’). The Parties are multi-national companies primarily operating in the oil and gas sector. The European Commission limited its investigation to where the business activities of the parties overlap, namely in the exploration of oil and gas resources, the LNG liquefaction business and the wholesale supply of LNG. It was observed that, post acquisition, there would still be effective competitive constraints in the market in the form of competitors and that the Parties will not be able to unfairly influence prices. It was further noted that, it was unlikely that the Parties would foreclose competition in Shell’s LNG liquefaction facilities in the North Sea which is used to supply LNG into the European Economic Area, due to the fact that additional liquefaction capacity is being built and will come on-stream in the near future. It was also observed that significant oil and gas transport and processing capacity exists in the North Sea region.                

European Commission approves acquisition of Alstrom’s energy business by General Electric.
September 8, 2015

Following a detailed investigation, the European Commission approved the 12.5 billion euro takeover of the energy related business of French company Alstrom by US Company General Electric (‘GE’). The approval is conditional upon the divestiture of central parts of Alstrom’s heavy duty gas turbines business to Ansaldo of Italy, which is mainly used in gas-fired power plants. The European Commission had raised initial concerns that the transaction would have eliminated one of the major competitors of GE in the heavy duty gas turbines market, which would have been prejudicial to the competitive process. However, the competitive concerns have been removed by the commitments offered by GE. With regard to the other businesses, which are part of the transaction, namely thermal power generation business and grid and renewables, it was observed that the operations of the parties do not overlap and therefore does not raise any competition concerns.

Commission clears Intel’s acquisition of Altera, dated October 14, 2015

The European Commission has cleared the proposed acquisition of Altera by Intel, both of which are engaged in the business of manufacturing different types of semiconductors. The European Commission had focused its investigation on several semiconductor markets where the activities of the companies are overlapping.  The European Commission also investigated the vertical overlap between Intel’s contract manufacturing services and Altera’s activities in the supply of FPGA (field programmable gate arrays) and CPLDs (complex programmable logic devices). The European Commission also investigated potential anti-competitive effects that may arise out of Intel’s premiere position in the market for CPUs, in associated markets. Upon investigation it was found that the proposed acquisition does not have the potential to cause any anti-competitive effects.