India – Merger Control Updates

27 July, 2016

 

CCI approves acquisition by PVR of DLF’s multiplexes subject to modifications

 

On May 5, 2016, CCI approved PVR Limited’s (‘PVR’) acquisition of DLF Utilities Limited’s (‘DUL’) multiplex business (comprising 39 screens, of which 29 screens are existing and 10 screens are upcoming), subject to behavioural and structural modifications.

 

CCI had identified separate markets for ‘exhibition of films through multiplexes including high end single screen theatres’ in various geographical regions (e.g., Gurgaon, South Delhi, Noida, etc.). Based on its analysis of factors such as (i) level of market concentration using Her- findahl Hirschman Index; (ii) change in concentration and the increment in market shares; (iii) constraints exerted by competitors; and (iv) efficiencies resulting from the combination, CCI reached a finding that the combination could lead to an AAEC in certain geographical markets (Noida, South Delhi and New Gurgaon). Accordingly, while CCI did approve the combination, it did so subject to certain behavioral and structural remedies, including: (i) commitments not to expand PVR’s presence in the concerned relevant markets; (ii) commitment not to enter into a non-compete, non-solicitation or cooperation arrangement with DUL. Interestingly, there was a dissenting note from three members of CCI, who (unlike the majority of CCI) agreed with the set of voluntary commitments offered by the parties.

 

CCI approves Black River’s acquisition in Future Consumer Enterprise

 

On May 13, 2016, CCI approved the acquisition by Black River Food 2 Pte. Ltd. (‘Black River’) of compulsorily convertible debentures and equity shares of Future Consumer Enterprise Limited (‘FCEL’), subject to a modification to the envisaged non-compete arrangement with promoters of FCEL (allowing FCEL group companies to make passive financial investments in companies competing with FCEL).

 

CCI approved the transaction, finding no likelihood of AAEC, since Black River and FCEL do not produce similar, identical or substitutable products. While the CCI observed that Black River had stake in a company that competes with FCEL in the market for milk products, the presence of ‘market leaders’ such as Amul, Mother Dairy, Nandini, etc., ruled out any potential competition concerns.

 

CCI approves acquisition of certain assets of Lanxess by Clariant India

 

On May 11, 2016, CCI approved an acquisition by Clariant Chemicals (India) Limited (‘Clariant’) of certain assets (a carbon black pigment dispersion plant) of Lanxess India Private Limited (‘Lanxess’) subject to a modification to the envisaged non-compete arrangement (reducing its duration to three years).

 

CCI approved the transaction on the basis that the incremental market share was not sig- nificant (between 0 to 5%. post transaction) in the market for pigment dispersion. The CCI also observed that Clariant would continue to compete with other significant domestic players after the completion of the transaction.As such the CCI found that there would be no AAEC as a

result of the transaction. 

 

CCI approves Edelweiss’ acquisition of the mutual fund business of JP Morgan

 

On May 25, 2016, CCI approved acquisition of the mutual fund business of JP Morgan Asset Management India Private Limited by Edelweiss Asset Management Limited.

 

Assessing the horizontal overlap between the parties, relating to management of mutual funds in India, CCI considered each of the sub-segments of the mutual funds and observed that given the low market shares, insignificant change in market concentration and presence of oth- er substantial competitors in each of the sub-segments, CCI found that the transaction would not result in an AAEC. CCI approved the proposed transaction.

 

CCI approves the acquisition of HUL’s raw material rice business

 

On May 11, 2016, CCI approved the acquisition by LT Foods Limited and LT Foods Middle East DMCC, and Sona Global Limited of certain business and related intellectual property rights (re- lating to the business of processing of raw material for rice) of Hindustan Unilever Limited (‘HUL’).

 

CCI approved the transaction observing that: (i) while both parties are engaged in distribu- tion and sale of basmati rice, HUL has negligible presence in India; and (ii) the Indian market has several players such as KRBL Limited, Kohinoor Foods Limited, amongst others. However, CCI directed the acquirers to reduce the duration of the non-compete clause agreed with HUL, from five to three years.