Key concepts of GROUP and CONTROL under the Competition

© Veritas Legal 2019

Key concepts of GROUP and CONTROL under the Competition Act, 2002

By Nandish Vyas and Geet Sawhney (Veritas Legal, India)*1

1 *Nandish Vyas is a partner at Veritas Legal, India and Geet Sawhney is an associate at Veritas Legal, India. The authors are grateful to Ms. Kanisha Vora for her valuable contributions in preparing this handbook.

contentsCHAPTER 1

INTRODUCTION ...................................04

CHAPTER 2

GROUP ................................................06• First Limb - Voting Rights

• Second Limb - Control of the Board

• Third Limb - Management or Control of Affairs

CHAPTER 3

CONTROL ............................................10• Various forms of Control

– Controlling Interest vs. Joint Control

– Negative Control through Shareholding

– No Control beyond 25%

– Sole Control

– Sole Control vs. Negative Control

– Joint Control

– Joint Control over Group

– Joint to Joint Control/No change in Control

> Increased Stake

> Exit of existing shareholders/investors

> Mergers

– Joint to Joint Control/Change in Control

– Joint Control to Sole Control

> Where acquirer already held 50% shares

> Where acquirer already held 51% shares

> Where 100% not acquired

– Joint to Sole Control by a Group

– ControlasDecisiveInfluence

– ControlasMaterialInfluence

> MaterialInfluence–Ex-antevs.Ex-post

– Control through Voting Rights

– Control through Shareholding caps

– Control through Common Ownership

CHAPTER 4

ITEM - 1 EXEMPTION ............................22• Determining Control under Exemptions

• Item 1 – Minority non-controlling acquisition but still not SIP or OCB

• Item 1 – Private Equity Transactions

• CCI’s orders provides inadequate guidance

• Co-investors as notifying parties

• Notificationforacquiringasingleboardseat?

• Singleboardseatmeans‘control’?

• Controllingornon-controllingportfoliocompanies?

CHAPTER 5

ITEM 8 AND 9 EXEMPTIONS .................32• Joint Control and Group under Item 8 and Item 9

CHAPTER 6

GROUP UNDER SECTION5 AND SECTION 6 ...........................................36• Disclosure of ‘group level information’ in notificationform

• FamilyMemberscoveredunder‘group’?

• Establishing ‘Control’ of Family Members

• Identifying Group and Control – from a threshold perspective

• Identifying Group and Control – from competitive assessment perspective

CHAPTER 7

GROUP UNDER SECTION 3 AND SECTION 4 ...........................................44• Group under Section 4

• Group under Section 3

– Isgroupasingleeconomicentity?

– Factors for ‘single economic entity’

– Isan‘Association’agroup?

– AreGovernmentDepartmentscoveredunderGroup?

– ArePSUscoveredunderGroup?

> Insurance Sector

> Railways Sector

> Oil Companies

APPENDIX A .........................................53

3© Veritas Legal 2019

4 © Veritas Legal 2019

1CHAPTER

INTRODUCTIONThe concepts of ‘group’ and ‘control’ are intrinsic to the Indian Competition Act, 2002 (Competition Act), from undertaking

the threshold notifiability analysis and product overlap analysis under the merger control provisions to proving dominance

of group in cases alleging abuse of dominance. The Competition Commission of India’s (CCI) interpretation of the terms

‘group’ and ‘control’ has evolved from 2011 to 2019, affecting not only the exemptions available to the combinations,

but also altering CCI’s approach towards competitive assessment while reviewing such combinations. The CCI has

approved more than 670 combinations, as on 2 July 2019, and has touched upon the concepts of group and control

in many combination orders. Of these combination orders, approximately 20 orders provide lists of affirmative voting

rights/veto rights which may tantamount to control as per the CCI, and more than 60 orders provide CCI’s interpretation

of various forms of control under the Competition Act.

In this handbook, Chapter 2 examines the three limbs of the definition of ‘group’ as provided under the Explanation to

Section 5 of the Competition Act; Chapter 3 discusses the various forms of ‘control’ as described by the CCI in its various

orders approving combinations; Chapter 4 highlights the importance of determining ‘group’ and ‘control’ in light of

availing the Item 1 exemption (Item 1) under Schedule I of CCI (Procedure in regard to the transaction of Business relating

to Combinations) Regulations, 2011 (Combination Regulations) and further links Item 1 and ‘control’ in light of private

equity transactions; Chapter 5 highlights combination orders where the CCI has explained the significance of ‘joint

control’ and ‘group’ in light of intra-group exemptions; Chapter 6 further elaborates on providing group level information

to the CCI to conduct competitive assessments and establish ‘control’ through shareholding of common family members;

lastly, Chapter 7 explains the CCI’s analysis of group in cases of abuse of dominance under Section 4 of the Competition

Act and concept of ‘single economic entity’ under Section 3 of the Competition Act. The focus of this handbook is to trace

the decisional practice of the CCI on these key concepts under the Competition Act.



GROUPThe term ‘group’ generally implies a degree of connection, cooperation, or common interest among its members. There

are three limbs/tests of the definition of ‘group’2 as contained in Explanation (b) to Section 5 of the Competition Act -

(i) the first test is whether an enterprise has the ability to exercise 50% or more3 of the voting rights in another enterprise;

(ii) the second test is in terms of ability to control a majority of the board of directors; and (iii) the third test, which is most

dynamic, is in terms of ability to control or manage the affairs of the other enterprise.

It is apparent that to constitute a ‘group’, the entities in question must first qualify to be an ‘enterprise’ under Section 2(h) of

the Competition Act. The next qualification to determine ‘group’ pertains to the aforementioned tests i.e. inter-se holding,

directly or indirectly, 50% or more voting rights or power to appoint 50% or more of the members of the board of directors

or control the management or affairs of the other enterprise.4 For instance, in 2012, in Kansan News Private Limited vs.

Fast Way Transmission Private Limited5, all three limbs of ‘group’ were satisfied.6

However, it is to be noted that the three limbs are ‘either/or’ tests and fulfilment of even a single limb would confer

belonging to a group.7

For example, if a particular enterprise does not hold 50% shares8 in another enterprise, it may still have the ability to

control it, if it has majority on the board of directors of that enterprise.9 In the matter of EMC/MBECL10, which involved the

acquisition by EMC Limited (EMC) of 19.77% shareholding of McNally Bharat Engineering Company Limited (MBECL),

the CCI investigated and concluded that EMC (the acquirer) and one of its promoter group companies (i.e. MKN

Investment Private Limited (MKN)) belonged to the same group, based on the observation that the Managing Director and

the Joint Managing Director of EMC were two of the three directors on the board of directors of MKN. Similarly, even in

the event an enterprise has neither the requisite shareholding nor the ability to control a majority of the board of directors,

2. Explanation to Section 5 — For the purposes of this Section,—

a) …..;

b) “group” means two or more enterprises which, directly or indirectly, are in a position to —

(i) exercise twenty-six percent or more of the voting rights in the other enterprise; or

(ii) appoint more than fifty percent of the members of the board of directors in the other enterprise; or

(iii) control the management or affairs of the other enterprise.

3. The Ministry of Corporate Affairs (MCA) had exempted the ‘Group’ exercising less than 50% voting rights in another enterprise from the application of provisions under Section 5 of the Competition Act by way of notification in 2011. The MCA notification in 2016 extended the validity of the exemption for a further period of five years, i.e. until 4 March 2021. MCA Notification S.O. 673(E) – dated 4 March 2016 - “In exercise of the powers conferred by clause (a) of Section 54 of the Competition Act, 2002 (12 of 2003), the Central Government, in public interest, hereby exempts the ‘Group’ exercising less than fifty per cent. of voting rights in other enterprise from the provisions of Section 5 of the said Act for a period of five years with effect from the date of publication of this notification in the official gazette.”

4. Arshiya Rail Infrastructure Limited vs. Ministry of Railway and Ors. (Case No. 64/2010, 12/2011 and 02/2011); Association of Third Party Administrators vs. General Insurers’ (Public Sector) Association of India and Ors. (Case No. 107 of 2013)

5. M/s Kansan News Private Limited 177, Industrial Area, Phase - I, Chandigarh -160002 vs. M/s Fast Way Transmission Private Limited Lajja Tower, Sham Nagar, Ludhiana, Punjab and Ors. (Case No. 36 of 2011)

6. The CCI observed that (i) Mr. Gurdeep Singh (opposite party) had more than 50% share in Fast Way Transmission Private Limited (Fast Way) and Hathway Sukhamrit Cable and Datacom Private Limited (Hathway) and 99% share in Creative Cable Network Private Limited (Creative Cable); (ii) he was controlling and managing the affairs of Fast Way, Hathway and Creative Cable directly and (iii) he was a Managing Director in Fast way and director in Hathway and Creative Cable. Thus, Mr. Gurdeep Singh, Fast Way, Hathway, and Creative Cable were held to be part of same group.

7. Order under Section 44 in UltraTech Cement Limited/Jaiprakash Associates Limited (C-2015/02/246)

8. Section 2(v) of the Competition Act states ‘shares means shares in the share capital of a company carrying voting rights and includes -……’

9. Alok Industries Limited/Grabal Alok Impex Limited (C-2012/01/28); EMC Limited/McNally Bharat Engineering Company Limited (C-2015/07/293)

10. Order under Section 43A in EMC Limited/McNally Bharat Engineering Company Limited (C-2015/07/293)

2CHAPTER


it is possible to infer control by virtue of the ability to control and manage the affairs of another enterprise. In Jet/Etihad11,

Etihad Airways PJSC’s (Etihad) acquisition of a 24% equity stake and the right to nominate two of the six shareholder

directors, including the Vice Chairman, on the board of directors of Jet Airways (India) Limited (Jet) was considered as

significant by the CCI in terms of Etihad’s ability to participate in the managerial affairs of Jet. Further, the governance

structure envisaged in the Commercial Cooperation Agreement (CCA) established Etihad’s joint control over Jet. Although

the parties considered the investment by Etihad into Jet as a strategic investment and not the acquisition by Etihad of any

degree of control over Jet, the CCI refused to rectify its observation in relation to Etihad’s control over Jet in its final order.12

In the 2018 matter of Bayer/Monsanto13 involving Bayer AG’s (Bayer) acquisition of Monsanto Company (Monsanto),

Monsanto submitted that it did not have any form of control over Maharashtra Hybrid Seed Company Limited (Mahyco)

in which it held 26% shares. However, the CCI differed from Monsanto’s view and noted that Monsanto (though its

subsidiary) had (i) three directors on the board of directors of Mahyco and (ii) enjoyed certain rights in relation to key

management personnel and certain strategic matters, which established Monsanto’s joint control over Mahyco.

The three limbs of ‘group’, as identified by the CCI in its decisional practice, are elaborately discussed below:

FIRST LIMB - VOTING RIGHTS

The first limb for determination of group takes into account the ability of an enterprise to exercise 50% or more of the voting

rights in the other enterprise. For instance, in Advanta/UPL14, which involved the merger of Advanta Limited (Advanta)

into UPL Limited (UPL), the CCI noted that UPL, along with its promoters, already held more than 50% of the equity share

capital of Advanta, and Advanta required the approval of UPL for passing any special resolutions. Therefore, UPL already

exercised control over Advanta prior to the merger, and Advanta belonged to the UPL group. Similarly, in 2019 in LIC/

IDBI15, the CCI observed that the combination involved the acquisition by Life Insurance Corporation of India (LIC) of a

controlling stake to the extent of 51% shareholding, along with management control rights, in IDBI.

Further, the Competition Act and the Combination Regulations use the term ‘voting rights’ and ‘shares’ almost interchangeably.

Section 2(v) of the Competition Act defines shares as ‘shares in share capital of a company carrying voting rights…..’.

Therefore, for instance, where the combination involves acquisition by an acquirer of optionally convertible preferential

stock without voting rights of a target, the CCI will only take into account the percentage of shareholding (on a fully diluted

basis) upon conversion of these preference shares (carrying voting rights) to be acquired by the acquirer.16

SECOND LIMB - CONTROL OF THE BOARD

The second limb for determination of control takes into account the ability of an enterprise to control a majority of the

composition of the board of directors of another enterprise. Accordingly, it may be inferred that if an enterprise has the

ability to appoint a majority of the board of directors of another enterprise, it may have outright control over such other

enterprise. However, even if there is no ability to control the majority of the board composition, but a right to nominate/

appoint one director on the board subsists, the enterprise(s) may have material influence over the affairs of the other

11. Jet Airways (India) Limited/Etihad Airways PJSC (C-2013/05/122)

12. Order under Section 38 - Jet Airways (India) Limited/Etihad Airways PJSC (C-2013/05/122)

13. Bayer Aktiengesellschaft/Monsanto Company (C-2017/08/523)

14. Advanta Limited/UPL Limited (C-2015/12/357)

15. Life Insurance Corporation of India/IDBI (C-2018/10/605)

16. Integral Corporation/Ohizumi Mfg. Co. Limited (C-2018/12/619)


enterprise, as the CCI has pointed out that the fact of having a single board seat is highly relevant to competition

assessment and must be disclosed by the parties. In 2012, in Tech Mahindra/Satyam Computers17, which involved

consolidation of the information technology and related businesses of Satyam Computer Services Limited (Satyam) into

Tech Mahindra Limited (Tech Mahindra), while proving control of Tech Mahindra on Satyam, one of the factors which the

CCI took into account was that the Managing Director of Tech Mahindra was also the Chairman of Satyam. In 2018,

in UltraTech/Jaiprakash18, the CCI observed that there was a common director on the board of directors of UltraTech

Cement Limited (Ultratech) and Century Textiles and Industries (Century) who had chaired four out of a total of 20 board

meetings of Century held from FY 2012-13 till the date of the order (12 March 2018) which, according to the CCI,

may have led to material influence of the common director over the affairs of Century, though a conclusive finding on the

same needed more examination of the commercial realities. The concept of material influence has further been discussed

in another 2018 order in Meru Travel Solutions vs. M/s ANI Technologies and Ors.19 , where the CCI observed that

Softbank, despite being a minority shareholder in Ola and Uber20, had the ability to exercise material influence over

them.

THIRD LIMB - MANAGEMENT OR CONTROL OF AFFAIRS

While the first two limbs of ‘group’ rest on fairly objective thresholds, the third limb of group, vested with a degree of

subjectivity, is unsurprisingly the most debated limb. Under the Competition Act, the concept of ‘group’ is intrinsically

linked to that of control and therefore, it is important to examine whether an enterprise is able to or can control the affairs

of the other enterprise in order to determine whether two or more enterprises belong to the same group.

The CCI has observed that the ability to manage the affairs of another enterprise may be inferred from special rights/veto

rights.21 For instance, in MSM India/Grandway/Atlas22, while establishing joint control of Grandway Global Holdings

Limited (Grandway) and Atlas Equifin Private Limited (Atlas) on Multi Screen Media Private Limited (MSM India/target

entity), the CCI noted that the Grandway and Atlas had certain veto rights over some strategic commercial decisions of

MSM India, and that Grandway and Atlas had been acting together/collectively in representing/enforcing these rights

in MSM India.

A list of affirmative voting/veto rights, which on a standalone/consolidated basis may tantamount to control as per CCI’s

decisional practice, has been appended as APPENDIX A. Over the course of time, the CCI has radically broadened

its list of such rights that would constitute ‘control’, thereby lowering the threshold for proving control for the purposes of

the Competition Act.

Moreover, special rights/veto rights are not the only basis for inferring the ability to manage/control the affairs of an

enterprise and there can be other sources of control as well viz., status and expertise of an enterprise or person, board

representation, structural/financial arrangements, etc.23

17. Tech Mahindra Limited/Satyam Computer Services Limited/C&S System Technologies Private Limited (C-2012/03/48)

18. Order under Section 44 - UltraTech Cement Limited/Jaiprakash Associates Limited (C-2015/02/246)

19. Meru Travel Solutions Private Limited vs. M/s ANI Technologies Private Limited and Ors. (Case No. 25-28 of 2017)

20. SoftBank has a shareholding of approximately 15% in Uber and has right to appoint 2 directors in Uber. SoftBank’s investment in Ola via its affiliate SIMI Pacific Pte. Limited is more than 25% and SIMI Pacific Pte Limited has 2 directors in Ola.


22. Multi Screen Media Private Limited (MSM India)/SPE Mauritius Holdings Limited/SPE Mauritius Investments Limited/Grandway Global Holdings Limited/Atlas Equifin Private Limited (C-2012/06/63)




CONTROLThe CCI uses several terms to express control, such as de jure control or controlling interest (shareholding conferring

more than 50% of the voting rights of an enterprise), de facto control (where an enterprise holds less than majority of the

voting rights, but in practice controls over more than half of the votes actually cast at a meeting), negative control (by

virtue of ability to block special resolutions), operational control (by virtue of commercial cooperation agreements with or

without involving equity), sole control, joint control, material influence, decisive influence, etc. The entire rationale behind

CCI’s assessment of cases which result in change in control over the target is (a) change in incentives and (ii) change

in competitive constraints exercised by each shareholder over the other.24 Further, the CCI has clarified that, in context

of competition law, as regards instances of acquisition of assets, “control” represents the right to economic benefits that

would flow from the resource and not the perpetual ownership of a resource.25 The CCI has analyzed various forms of

such control in detail in various orders, some of which are highlighted below:

• Controlling Interest vs. Joint Control: In the 2018 Ultratech/Jaiprakash order26, the CCI noted that only one

enterprise can have a controlling interest (de jure control) in the other enterprise, but more than one enterprise can

control the other enterprise (joint control).

• Negative Control through Shareholding: In the 2018 Lakshdeep/Telenor order27, the CCI explained the importance

of negative control by highlighting that more than 25% shareholding, with or without any affirmative voting rights,

confers the ability under the Companies Act to block special resolutions of the target entity by virtue of shareholding

itself. In the 2018 Bayer/Monsanto28 order, the CCI noted that Monsanto’s shareholding (through its wholly owned

subsidiary) of 26% in Mahyco gave it the power to block any special resolution of Mahyco.

• No Control beyond 25%: In the earlier CCI orders, for instance in 2015 Tata Projects/Omega29 order, pertaining

to the acquisition of 26.33% of the equity share capital of Tata Projects Limited (TPL/target entity) by Tata Capital

Limited (TCL) and Omega TC Holdings Pte. Limited (subsidiary of Tata Opportunities Fund LP), the CCI observed

3CHAPTER

24. Agrium Inc./Potash Corporation of Saskatchewan, Inc.(C-2016/10/443)

25. Order under Section 43A in Bharti Airtel Limited/Bharti Hexacom Limited (C-2017/05/510)


27. Order under Section 43(A) in Telenor ASA/Telenor (India) Communications Private Limited/Telenor South Asia Investments Pte Limited/Lakshdeep Investments and Finance Private Limited/Telewings Communications Services Private Limited

28. Bayer Aktiengesellschaft/Monsanto Company (C-2017/08/523)

29. Tata Capital Limited/Omega TC Holdings Pte. Limited/Tata Projects Limited (C-2015/04/265)


that as per the provisions of the shareholders agreement (SHA), TCL and Omega did not enjoy any veto rights in

relation to strategic or commercial decisions of TPL, and thus TCL and Omega did acquire control over TPL. In 2015

in Aalok Dilip Shanghvi and Ors./Suzlon30¸ where the acquirers were acquiring 42.49% shares of Suzlon Energy

Limited (Suzlon), the CCI noted that though the acquirers were acquiring affirmative voting rights on certain matters

pertaining to Suzlon, these rights were in the form of investor protection rights only and post combination, there was

going to be no change in control of Suzlon, regardless of shareholding being acquired by the acquirers in Suzlon,

since as per the provisions of the SHA, the existing promoters of Suzlon would continue to have control on its day

to day management.

• Sole Control: The 2011 Walt Disney/UTV Software31 combination related to the acquisition of sole control of UTV

Software Communications Limited (UTV Software) and its entire business by The Walt Disney Company (Southeast

Asia) Pte. Limited (Walt Disney) which already held 50.44% shares in UTV Software and was jointly controlling

UTV Software along with Mr. Rohinton Screwvala (and his associates). The 2018 Siemens/Alstom32 combination,

which involved Alstom S. A. (Alstom) and the mobility business of Siemens Aktiengesellschaft (Siemens), the CCI

noted that in consideration of combination Siemens holding 50% share capital of Alstom, Siemens will acquire

sole control over Alstom. In the 2019 matters of Jio/Den33 involving acquisition of 65.96% of the expanded equity

share capital of Den Networks Limited (Den) and Jio/Hathway34 involving subscription of 51.34% of the expanded

equity share capital of Hathway by Reliance Industries Limited group, the CCI noted that both the combinations led

to acquisition of sole control of both Den and Hathway by Reliance. Similarly, in 2016 matter of Emerson/CNAC/

ASCO35 involving the acquisition by the Platinum Equity Group (through special purpose vehicles) of 85% interest

of Emerson Network Power Business, and the 2017 matter of ChemChina/Syngenta36, involving China National

Chemical Corporation (ChemChina) acquiring at least 67% of the shares of Syngenta AG (Syngenta), the CCI

noted that sole control was acquired by the Platinum Equity Group and ChemChina, respectively.

• Sole Control vs. Negative Control: In the 2018 matter of Lakshdeep/Telenor37, involving Telenor (India)

Communications Private Limited’s acquisition of the assets of Unitech Wireless (Tamil Nadu) Private Limited (Uninor)

as one of the steps of the transaction, the parties argued that Telenor ASA (holding company of Telenor group) solely

controlled Uninor, by virtue of the former’s shareholding of 67.25% shares in Uninor. The CCI held that this argument

30. Aalok Dilip Shanghvi and Ors./Suzlon Energy Limited (C-2015/03/254)

31. The Walt Disney Company (Southeast Asia) Pte. Limited/UTV Software Communications Limited (C-2011/08/02)

32. Siemens Aktiengesellschaft/Alstom S. A. (C-2018/07/588)

33. Jio Futuristic Digital Holdings Private Limited, Jio Digital Distribution Holdings Private Limited and Jio Television Distribution Holdings Private Limited/Den Networks Limited (C-2018/10/609)

34. Jio Content Distribution Holdings Private Limited, Jio Internet Distribution Holdings Private Limited, and Jio Cable and Broadband Holdings Private Limited/Hathway Cable and Datacom Limited (C-2018/10/610)

35. Cortes NP Acquisition Corporation/ASCO Power GP, LLC/Emerson Electric Co. (C-2016/08/426)

36. China National Agrochemical Corporation/Syngenta AG (C-2016/08/424)

37. Order under Section 43A in Telenor ASA/Telenor (India) Communications Private Limited/Telenor South Asia Investments Pte Limited/Lakshdeep Investments and Finance Private Limited/Telewings Communications Services Private Limited


was flawed since the Unitech group held negative control over Uninor and therefore, Telenor had no ability to solely

control the affairs of Uninor.

• Joint Control: In 2016, in MCPI/MCCPTA38, the CCI noted that Mitsubishi Chemical Corporation (MCC) holding

9% shares in MCC PTA India Corp. Private Limited (MCCPTA/Target) along with certain reserved matter rights39

contained in the SHA conferred joint control on MCC till the time MCC held 9% stake. In the 2015 ZFCL/ZACL40

order, which involved the acquisition of 36.56% stake in Mangalore Chemicals and Fertilizers Limited (MCFL) by

Zuari Agro Chemicals Limited (ZACL) and Zuari Fertilizers and Chemicals Limited (ZFCL), the CCI noted that as per

(i) the terms and conditions regarding the exercise of voting rights; (ii) the principles of the minimum quorum; and

(iii) mutual agreement/consent with respect to certain matters laid down in the SHA, ZACL and ZFCL were in joint

control of MCFL along with its promoters. In 2014 in Alpha/Tata Capital/Standard Greases order41, involving

acquisition of 17.36% shares by the acquirers (part of Tata Capital Limited) of Standard Greases & Specialties

Private Limited (SGSPL), the CCI noted that the investment agreement reserved certain matters, including strategic

commercial decisions of SGSPL, in respect of which no action could be taken without the prior written consent of

the acquirers and therefore, the combination resulted in acquisition of joint control by the acquirers over SGSPL. In

2012 in Century Tokyo/Tata Capital Financial Services42, the CCI noted that the combination involved acquisition

of joint control over assets and operations of the leasing business division of Tata Capital Financial Services Limited

by Century Tokyo Leasing Corporation (CTLC), as the CTLC nominated member on the leasing division’s governing

board held veto rights over certain strategic affairs.43

• Joint Control over Group - In the 2016 Piramal/Shriram44 order, which pertained to a combination involving

three acquisitions by Piramal Enterprises Limited (Piramal) in Shriram group companies, the CCI held that the three

acquisitions by Piramal in the Shriram group of companies were interconnected and were made strategically to

acquire (joint) control over the financial services business of the Shriram group of companies.

• Joint to Joint Control/No change in Control:

(a) Increased Stake

– In March 2015, India’s foreign direct investment (FDI) policy in relation to the insurance sector was liberalised

to increase the FDI permitted under the automatic route in this sector from 26% to 49%. Consequently, a number

38. MCPI Holdings Limited/Mitsubishi Chemical Corporation/MCC PTA India Corp. Private Limited (C-2016/08/423)

39. Certain reserved matters such as, entering into any corporate transactions like acquisition, amalgamation, joint venture etc. and entering into any contract, commitment, transaction or arrangement outside the ordinary course of business which carries exposure over certain sum of money, required prior consent of MCC till the time MCC held 9% stake in MCCPTA.

40. Zuari Fertilisers and Chemicals Limited/Zuari Agro Chemicals Limited (C-2015/01/238)

41. Alpha TC Holdings Pte Limited/Tata Capital Growth Fund I/Standard Greases and Specialties Private Limited (C-2014/07/192)

42. Century Tokyo Leasing Corp./Tata Capital Financial Services (C-2012/09/78);

43. Strategic affairs included approval of business plan, commencing a new line of activity and discontinuing an existing line of activity or business, and appointment of key managerial personnel of leasing division and their compensation.

44. Order under Section 43A in Piramal Enterprises Limited/Shriram Transport Finance Company/Shriram Capital Limited /Shriram City Union Finance Limited (C-2015/02/249)


of combination notifications were filed with the CCI wherein foreign enterprises increased their shareholding in

joint ventures in insurance sector in India, which included:

(i) In HDFC/Standard Life45, which pertained to Standard Life (Mauritius) 2006 Limited (Standard Life)

increasing its shareholding from 26% to 35% in its joint venture HDFC Standard Life Insurance Company

Limited (HDFC Insurance), the CCI observed that there was no change in control as the affirmative

rights46 which Standard Life held in HDFC Life as a minority shareholder would remain unchanged post

the combination. Since there was no change in control on account of acquisition of additional shares by

Standard Life, the CCI concluded that there was no change in the competitive landscape of the insurance

sector in India.

(ii) In FAL Corporation/ICICI Lombard47, the shareholding of FAL Corporation in its joint venture, ICICI Lombard

General Insurance Company (target), increased from 25.59% to 34.59% with the remaining shares being

held by ICICI Bank Limited. The CCI noted that FAL Corporation already held certain affirmative voting

rights amounting to control and therefore, there was no change in control over the target.48

(iii) Similarly, in Nippon Life/Reliance Life Insurance49, involving increase in shareholding of Nippon Life

Insurance Company (Nippon Life) from 26% to 49% in Reliance Life Insurance Co. Limited (joint venture),

the CCI noted that Nippon Life already held joint control over the joint venture with 26% stake and

affirmative voting rights on certain matters.50 Similar observations were made in the AIA International /Tata

AIA Life Insurance order51, Sun Life/Birla Sun Life Insurance order52, Sanlam Mauritius/Shriram53 order and

AXA India Holdings/Société Beaujon54 order.

In 2014, the Shapoorji Pallonji/Sterling and Wilson/Khurshed Yazdi55 order involved increase

in shareholding of Shapoorji Pallonji & Company Limited (SPCL) and Khurshed Yazdi Daruvala (KYD)

(collectively, the acquirers) in Sterling and Wilson Limited (SWL) from 55.10% and 32.63% to 65.8% and

33.33% respectively, where the CCI noted that the acquisition would not result in any change in control

of the affairs and management of SWL by the acquirers. The CCI mentioned in its order that Schedule I of

45. HDFC Standard Life Insurance Company Limited/Standard Life (Mauritius) 2006 Limited (C-2015/09/308)

46. Certain affirmative rights 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 (including any Chief Executive Officer).

47. FAL Corporation/ICICI Lombard General Insurance Company (C-2015/11/343)

48. In 2017 in Red Bloom/ICICI Lombard, Red Bloom Investment Limited filed a notice with the CCI seeking its approval for its acquisition of 9% stake in the target from FAL Corporation, along with certain affirmative rights and the right to nominate one non-executive director on the board of target.

49. Nippon Life Insurance Company/Reliance Life Insurance Company Limited (C-2015/12/358)

50. Affirmative voting rights included, inter alia, commencement of any new lines of business by the company or any material change in the scope and nature of business of the company or expansion into a new geographical region outside India.

51. AIA International Limited/Tata AIA Life Insurance Company Limited (C-2015/12/346)

52. Sun Life Financial (India) Insurance Investments Inc./Birla Sun Life Insurance Company Limited (C-2015/12/362)

53. Sanlam Emerging Markets (Mauritius) Limited/Shriram Life Insurance Company Limited/Shriram General Insurance Company Limited (C-2016/03/379)

54. AXA India Holdings/Société Beaujon/Bharti AXA Life Insurance Company Limited/Bharti AXA General Insurance Company Limited (C-2015/04/267)

55. Shapoorji Pallonji and Company Limited/Khurshed Yazdi Daruvala/Sterling and Wilson Limited (C-2014/04/163)


the Combination Regulations mentions categories of combinations that are ordinarily not likely to cause an

appreciable adverse effect on competition (AAEC) in India, and accordingly, the notice under Section 6(2)

of the Competition Act need not normally be filed. The 2018 FIH Mauritius/BIAL56 combination involved

an increase in shareholding of FIH Mauritius Investments Limited (FIH Mauritius) in Bangalore International

Airport Limited (BIAL) from 48% to 54%. However, the CCI noted that FIH Mauritius was not acquiring and

Siemens Project Ventures GmbH (the seller) was not losing any rights in BIAL, including the right to nominate

directors on the board of BIAL.

In 2019, in the Denso/Subros57 order, the CCI noted that the combination resulted in an increase in

shareholding of DENSO Corporation in Subros Limited (Subros) from 13% to 20%, along with the right to

nominate one more director on the Board of Directors of Subros. The CCI concluded that the combination

did not give rise to any combination specific competition concerns, as Denso already held 13% shares

and the right to nominate one director on the board of Subros. In 2017, in Highdell/Kalyan58, Highdell

Investment Limited increased its shareholding in Kalyan Jewellers India Limited from 24% to 25%-35% on a

fully diluted basis, and the CCI observed that there was no change in control as a result of the combination.

(b) Exit of existing shareholders/investors

– In the 2016 Sabarmati Gas/GSPC order59 involving the exit of investors in Sabarmati Gas Limited (SGL)60 and

acquisition of their stake by the other existing shareholders, namely Gujarat State Petroleum Corporation Limited,

Gujarat State Petronet Limited, and Bharat Petroleum Corporation Limited, who already held approximately 50%

shares collectively in SGL, the CCI observed that keeping in view the nature of the affirmative voting rights held

by the investors, their exit was not likely to result in a change in competition dynamics in any market. Similarly, in

the 2019 CA Rover/SBI61 order, the CCI noted that the combination did not appear to change the competition

dynamics as it involved the exit of an existing shareholder i.e. General Electric Company subsidiaries from

two joint ventures namely SBI Cards and Payment Services Private Limited and GE Capital Business Process

Management Services Private Limited along with (i) increase in the shareholding of the other existing shareholder

(SBI) and (ii) bringing in new shareholder (Rover) in the targets.

(c) Mergers

– In the 2014 Alstom/Kalyani order62 involving the merger of Kalyani Alstom Power Limited (KAPL) into Alstom

Bharat Forge Power Limited (ABFPL), both joint ventures between Alstom Power Holdings S.A. (Alstom) and

Bharat Forge Limited (Bharat Forge), the CCI noted that ultimate control over the business activities of ABFPL and

KAPL, which would merge in ABFPL, would continue to be under the joint control of the Alstom and Bharat Forge.

56. FIH Mauritius Investments Limited/Bangalore International Airport Limited (C-2018/04/564)

57. DENSO Corporation/Subros Limited (C-2018/11/614)

58. Highdell Investment Limited/Kalyan Jewellers India Limited (C-2017/04/499)

59. Gujarat State Petroleum Corporation Limited/Gujarat State Petronet Limited/Bharat Petroleum Corporation Limited/Sabarmati Gas Limited (C-2015/12/361)

60. India Infrastructure Development Fund (IIDF), India Infrastructure Fund (IIF) and IFCI Venture Capital Funds Limited (IFCI)

61. CA Rover Holdings/State Bank of India/SBI Cards and Payment Services Private Limited/GE Capital Business Process Management Services Private Limited (C-2017/08/526)

62. Alstom Bharat Forge Power Limited/Kalyani Alstom Power Limited (C-2013/11/139)


• Joint to Joint Control/Change in Control: In Sarva Haryana Gramin Bank/Punjab National Bank63, a combination

involving the amalgamation of two regional rural banks (RRBs), namely Gurgaon Gramin Bank (GGB) and Haryana

Gramin Bank (HGB), into a single RRB i.e. Sarva Haryana Gramin Bank (SHGB), the CCI noted that despite the

share capital of RRB being held by the Central Government, State Government and sponsor bank in the ratio of

50:15:35, both HGB and GGB were two independent banks engaged in the provision of banking services before

the amalgamation, and were not part of the same group. Further, the CCI also noted that since a sponsor bank

is also entrusted with certain responsibilities in running the RRBs, such as nominating directors on board of a RRB,

providing refinance, expert guidance to RRBs, etc., therefore, the exit of sponsor bank of GGB i.e. Syndicate Bank

and acquisition of sole sponsorship of SHGB by PNB also tantamounted to change in control.

• Joint Control to Sole Control: : The CCI has observed that in cases involving a change from joint to sole control,

the extent to which the parties competed with each other prior to the change in control is relevant for competition

assessment.64 Item 2 and Item 9 of Schedule I of the Combination Regulations provides for exemption to the

combinations where the transactions do not result in transfer from joint to sole control. In the following combinations,

the CCI identified change in control from joint control to sole control:

(a) In 2017 in Tata Companies order65, which pertained to the acquisition of 21.63% shareholding in Tata

Teleservices Limited (TTSL) by Tata Companies66 from NTT Docomo Inc, Japan (Docomo)67, the CCI stated

that “Tata Sons and Docomo jointly exercise control over TTSL. Post the Combination, the Tata Companies will

continue to be in control of TTSL, and Docomo will cease to be a shareholder of TTSL, resulting in change in

control of TTSL from existing joint control of Tata Sons and Docomo to sole control of Tata Sons.” Based on the

foregoing, one may also infer that Tata Sons exercised sole control over these Tata Companies which resulted

in Tata Companies’ sole control over TTSL post the combination. Earlier, in 2015 in AIA International/Tata AIA

Life Insurance order68, the CCI has noted that Tata Sons is a promoter of the majority of Tata group companies.

(b) In 2018 in Shree Renuka Sugars Limited/Wilmar Sugar Holdings Pte. Limited69 , which related to the acquisition

of additional equity stake in Shree Renuka Sugars Limited (SRS) by (i) subscription of compulsorily convertible

preference shares (CCPS) which upon conversion would amount to approx. 38% of shareholding of SRS, and

(ii) additional acquisition of up to 26% stake through an open offer, the CCI noted that the increase in voting

63. Sarva Haryana Gramin Bank/Punjab National Bank/Gurgaon Gramin Bank (C-2015/12/344)

64. Shell Gas B.V./Hazira LNG Private Limited/Hazira Port Private Limited (C-2018/11/615)

65. Tata Sons Limited/Tata Steel Limited/Tata Industries Limited/Tata Communications Limited/The Tata Power Company Limited/Tata Teleservices Limited (C-2017/03/497)

66. Tata Sons Limited (Tata Sons), Tata Steel Limited (Tata Steel), Tata Industries Limited (Tata Industries), Tata Communications Limited (Tata Communications) and The Tata Power Company Limited (Tata Power)

67. Tata Companies hold 47.91% and Docomo holds 21.63% in TTSL.

68. AIA International Limited/Tata AIA Life Insurance Company Limited (C-2015/12/346)

69. Wilmar Sugar Holdings Pte. Limited/Shree Renuka Sugars Limited (C-2018/01/548)


rights, along with termination of the existing joint venture agreement, and certain changes in the composition of

the board of directors of SRS, would result in Wilmar Sugar Holdings Pte. Limited acquiring sole control over

SRS from the existing joint control.

(c) In the 2014 INEOS/BASF order70, the combination involved the acquisition by INEOS Styrolution Holding

Gmbh (INEOS Styrolution) of all the shares in the joint venture Styrolution Holding Gmbh (Styrolution) from its

other joint venture partner, BASF (SE) and BASF Ant werpen N.V (together referred as BASF). The CCI noted that

the combination would result in transfer of joint control from INEOS and BASF to INEOS acquiring sole control

over Styrolution.

Where acquirer already held 50% shares –

(d) In the 2013 Exide/ING Vysya Life order71 involving acquisition of the remaining 50% equity share capital of

ING Vysya Life Insurance Company Limited (ING Life)72 by Exide Industries Limited (Exide) from the existing

shareholders of ING Life i.e. ING Insurance International B.V., Netherlands and the Indian shareholders,

the CCI noted that the acquisition of sole control over ING Life by Exide was not likely to result in any

competition concern in India. In the 2013 L&T/Komatsu Asia Pacific order73, which pertained to the

acquisition by Larsen and Toubro Limited (L&T) of all shares held by Komatsu Asia Pacific Pte. Limited (KAP)

in L&T Komatsu Limited (LTK), a 50:50 joint venture company of L&T and KAP, the CCI noted that post-

combination, since L&T would hold 100% shareholding in LTK, LTK would cease to be a joint venture and

would come under the sole control of L&T. Therefore, the combination would result in a transfer from joint

control to sole control in LTK. The 2012 Star TV ATC/ESPN order74 involved an increase in the partnership

interest of News Corporation (NWS), the holding company of Star TV, in ESPN Star Sports (ESS) from 50%

to 100%, NWS would acquire sole control over ESS and its subsidiaries along with acquiring 49% interest

held by ESS in Premier Hockey Development Private Limited.

Where acquirer already held 51% shares -

(e) In 2015 in Union Bank of India/Union KBC Asset Management Company Private Limited/Union KBC Trustee

Company Private Limited75 relating to the acquisition of 49% equity share capital in each of Union KBC Asset

Management Company Private Limited and Union KBC Trustee Company Private Limited (together referred as

targets) by Union Bank of India (Union Bank), the CCI noted that Union Bank already held 51% equity share

capital in each of the targets, and pursuant to the combination, Union Bank will acquire sole control of the

70. INEOS AG/NEOS Styrolution Holding Gmbh/BASF (SE)/BASF Antwerpen N.V (C-2014/07/196)

71. Exide Industries Limited/ING Vysya Life Insurance Company Limited (C-2013/01/108)

72. Exide and ING International hold 50% and 26% equity share capital respectively of ING Life and the remaining 24% equity share capital is held by certain enterprises referred to as the “Indian Shareholders” in the notice.

73. Larsen and Toubro Limited/Komatsu Asia Pacific Pte. Limited/L&T Komatsu Limited (C-2013/03/113)

74. STARTV ATC Holding Limited/News Corporation/ESPN Star Sports/EGP Company (C-2012/07/64)

75. Union Bank of India/Union KBC Asset Management Company Private Limited/Union KBC Trustee Company Private Limited (C-2015/11/336)


targets and consequently, the sole sponsorship, trusteeship and management of Union KBC Mutual Fund, a

mutual fund registered with SEBI. Accordingly, the combination resulted in transfer from joint to sole control over

the target entities and therefore, it couldn’t avail the benefit of Item 2 of Schedule I of Combination Regulations.

In 2013 in M&M/IMH76, the combination related to the acquisition of the remaining 49% equity share capital

of Mahindra Navistar Automotives Limited (MNAL) by Mahindra and Mahindra Limited (M&M) from International

Truck and Engine Mauritius Holding Limited (IMH) such that post combination MNAL would become a wholly

owned subsidiary of M&M and, therefore, would be under the sole control of M&M. In Principal International/

PNB77 and Shell/Hazira LNG/Hazira Port78 combinations involved increase in the shareholding in joint venture

companies to 100%, the CCI observed that the combinations resulted in change in control of the targets from

joint control to sole ownership.

Where 100% not acquired

(f) In 2015 in Royal Sundaram order79, involving increase in shareholding of Sundaram Finance Limited (SFL) from

49.9% to 75.9% in its joint venture Royal Sundaram Alliance Insurance Company Limited (Royal Sundaram), the

CCI noted that the combination would result in transfer of joint to sole control of SFL in Royal Sundaram. In 2013

in Diageo/Relay/United Spirits80 involving acquisition of 53.4% of the United Spirit Limited’s (USL) equity share

capital by Relay B.V. (wholly-owned subsidiary of Diageo Plc.), Relay B.V. proposed to acquire sole control over

USL as Relay B.V. would exercise an absolute right to appoint a majority of the directors on the Board of USL

and the right to appoint all the senior executives of USL, apart from the contractual obligation of UBHL (existing

shareholder of USL) to vote its shares in accordance with Relay B.V.’s instruction, till such period and on such

terms as agreed in the SHA.

• Joint to Sole Control by a Group: In the GE Pacific /Alstom Bharat Forge Power81 order, the combination involved

the acquisition of BFL’s 49% stake in joint venture ABPFL by GE Pacific Private Limited (GE Pacific) with the remaining

shareholding of ABPFL after the combination being held by original joint venture partner GE Energy Europe B.V. (GE

Energy). The CCI noted that post combination ABFPL will be solely held by GE group through its subsidiaries i.e.

GE Energy and GE Pacific in ratio of 51:49 respectively. In 2018 in Unilever PLC/Unilever NV82 the combination

involved subsuming two ultimate holding companies of Unilever Group i.e. Unilever PLC and Unilever NV into New

NV. The CCI noted that there was no change in the shareholding pattern or management of any of the Unilever

group of companies.

76. Mahindra and Mahindra Limited/International Truck and Engine Mauritius Holding Limited/Mahindra Navistar Automotives Limited (C-2013/01/105)

77. Principal International India Limited/Principal Pnb Asset Management Company Private Limited/Principal Trustee Company Private Limited (C-2018/01/543)

78. Shell Gas B.V./Hazira LNG Private Limited/Hazira Port Private Limited (C-2018/11/615)

79. Sundaram Finance Limited/Royal Sundaram Alliance Insurance Company Limited (C-2015/03/257)

80. Diageo Plc./Relay B.V./United Spirits Limited (C-2012/12/97)

81. GE Pacific Private Limited/Alstom Bharat Forge Power Private Limited (C-2016/11/454)

82. Unilever PLC/Unilever NV (C-2018/05/569)


• ControlasDecisiveInfluence: In the 2012 RB Mediasoft/IMT order83, the CCI observed that the acquisition of the

right to convert zero coupon optionally convertible debentures (ZOCDs) into equity shares, at any time before the

expiry of ten years from the date of subscription, confers on Independent Media Trust (IMT) the ability to exercise

decisive influence over the management and affairs of the companies and the same amounts to control for the

purposes of the Competition Act.

• ControlasMaterial Influence: According to CCI’s interpretation, material influence is the lowest level of control

and implies the presence of factors which give an enterprise the ability to influence the affairs and management

of the other enterprise, including factors such as shareholding, special rights, status and expertise of an enterprise

or person, board representation, structural/financial arrangements, etc. In Agrium Inc. and Potash Corporation

of Saskatchewan, Inc.84, the CCI noted that Potash Corporation of Saskatchewan, Inc. (PotashCorp) held 14%

interest in Israel Chemicals Limited (ICL), and PotashCorp being one of the global leaders in production of potash,

the possibility of it having the ability to materially influence the policies of ICL could not be ruled out. The CCI

opined that post the amalgamation of Agrium Inc. (Agrium) and PotashCorp, the combination was expected to

lead to extension of material influence of PotashCorp to joint material influence of PotashCorp and Agrium on the

management and affairs of ICL, which made PotashCorp ultimately divest its equity interest in ICL.

Material Influence – Ex-ante vs. Ex-post

CCI’s stance on material influence has been different under its ex ante review of combination orders and ex post

review of allegations in relation to anti-competitive conduct. Under its ex-post review of allegations under Section

3 and 4 of the Competition Act, in Meru Travel Solutions vs. M/s ANI Technologies and Ors.85 case the CCI

observed that Softbank, being a minority shareholder in both Ola and Uber, had the ability to exercise material

influence over them and therefore, observed that minority shareholders like Softbank who make large investments

in competing firms need to be monitored carefully. However, the CCI concluded that the details are yet to unfold

regarding the impact of investments by common investors i.e. whether the common ownership has translated into

control and, if yes, whether such an ownership can pose a competitive risk. In this case the CCI was restrained

by its ex-post review powers i.e. without finding an anti-competitive agreement/conduct the CCI could not have

issued a cease and desist order for a likely anti-competitive behavior that may occur due to common ownership by

Softbank over Ola and Uber. However, under its ex-ante power of reviewing combinations, in the Agrium/Potash86

83. RB Mediasoft Private Limited/RRB Mediasoft Private Limited/RB Media Holdings Private Limited/Adventure Marketing Private Limited/Watermark Infratech Water Limited/Colorful Media Private Limited/Independent Media Trust (C-2012/03/47)





87. Diageo Plc./Relay B.V./United Spirits Limited (C-2012/12/97)

88. Order under Section 44 - UltraTech Cement Limited/Jaiprakash Associates Limited (C-2015/02/246); Order under Section 43(A) in Telenor ASA/Telenor (India) Communications Private Limited/Telenor South Asia Investments Pte Limited/Lakshdeep Investments and Finance Private Limited/Telewings Communications Services Private Limited

89. Agrium Inc./Potash Corporation of Saskatchewan, Inc. (C-2016/10/443)


combination order, the CCI required PotashCorp to divest its entire 14% stake in ICL (its competitor), since in the

CCI’s view, Agrium’s amalgamation with PotashCorp would have lead to extension of joint material influence of

Agrium along with PotashCorp on the management and affairs of ICL. This suggests that in cases where common

ownership translates into control, there can be potential harm to the competition in concentrated markets.

• Control through Voting Rights : In 2013, in Diageo/Relay/United Spirits87, which involved the acquisition of shares

and control of USL by Daigeo and Relay, the SHA between the parties provided that if following the acquisition of

shares, including the offer shares, Diageo (the acquirer) was unable to hold a majority of the share capital of USL,

then the entities in the UB group holding shares in USL would vote at Relay’s direction.

• Control through Shareholding caps : Under Companies Act, 2013, there are certain equity caps on shareholding

which reflect the level of ownership/control exercised by an acquirer over a target entity. Thus, for instance, (i)

shareholding of greater than 25% gives a right to block a special resolution; (ii) shareholding of approximately

49% equity represents a level of control just short of ownership; (iii) shareholding of approximately 51% signifies

ownership and a right to pass all ordinary resolutions; and (iv) shareholding of over 75% means that the entity,

acting in unison, can pass a special resolution. The CCI has explained in its orders88 that all this becomes important

while examining the third limb of the definition of group, where regard needs to be given to the likelihood of the

aforesaid degrees of control and not just the special rights as acquired by the acquirer in a combination.

• Control through Common Ownership : The CCI has analysed the concept of ‘common ownership’ in 2017 in

Agrium/Potash89, wherein the CCI, while analyzing the level of concentration likely to arise after the amalgamation

of Agrium Inc. and Potash Corporation of Saskatchewan, Inc. noted that ‘The coordinated effects are further likely

to arise because of the Parties’ ability to control/materially influence other companies having operations in Indian

potash market such as APC, SQM and ICL.’ The CCI mentioned that common ownership may lead to softening of

competition and it is possible that the anti-competitive effects of common ownership may arise more as an error of

omission, rather than an error of commission.

Further, in the 2018 Meru Travel Solutions vs. M/s ANI Technologies and Ors.90 order, although the CCI dismissed

Meru’s complaint against Uber and Ola, the CCI was faced with a question of whether the common ownership

has translated into control and, if yes, whether such an ownership can pose a competitive risk. The CCI observed


that whether common ownership leads to company managerial behaviour that violates fiduciary obligations and

harms competition is currently an unanswered empirical question. In this order, the CCI made a final conclusion by

observing that though the CCI is legally constrained from ordering investigations owing to the contours of Section 3

and Section 4 of the Competition Act, it will keep a close watch on whether Ola and Uber, by virtue of common

investors, indulge in behaviour which is in any way in violation of the provision of the Competition Act.



ITEM – 1 EXEMPTION

DETERMINING 'CONTROL' UNDER EXEMPTIONS

The Item 1 of Schedule I to the Combination Regulations read with Regulation 4 of the Combination Regulations provides

that transactions involving the acquisition of shares or voting rights that do not entitle the acquirer to hold 25% or more of

total shares or voting rights, directly or indirectly, in the target enterprise and do not lead to a change of control and are

made (i) solely for investment purposes (SIP), or (ii) in the ordinary course of business (OCB), are normally not notifiable

to the CCI. However, the CCI observed in the 2015 SCM Solifert/MCFL91 and ZACL/ZFCL92 orders that the categories

of combinations listed in Schedule I to the Combination Regulations must be interpreted in light of the CCI’s objectives

(listed in Section 18 of the Competition Act) and the intent of Schedule I (expressed in Regulation 4 of the Combination

Regulations). This means that the categories of combinations listed in Schedule I as normally not notifiable ought not

to include combinations which envisage or are likely to cause a change in control or are of the nature of strategic

combinations including those between competing enterprises or enterprises active in vertical markets. The CCI attempted

to align Item 1 with the above made observations through its proposal for amendment to Combinations Regulations in

2018; however, such proposal for amendment to Item 1 has not yet been brought into effect.

In the past there have been a number of combinations involving the acquisition of shares/voting rights of less than 25%

which did not result in change in the competition dynamics in the relevant market. However, these combinations were

notified to the CCI since they involved the acquisition of certain rights which amounted to ‘control’ from CCI’s point of

view. Some past instances of such combinations are:

• In 2012 in SAAB/Pipavav93, the acquisition of 3.329% of the total paid up capital of Pipavav Defence and Offshore

Engineering Co. Limited (Pipavav) by SAAB AB (Publ.) (SAAB) was not exempt under Item 1 as (i) the acquisition

was in the nature of a strategic technology partnership between SAAB and Pipavav and (ii) SAAB acquired certain

affirmative rights including the right to nominate one director on the Board of Pipavav under the Share Subscription

cum Shareholders Agreement (SSSA). However, the CCI mentioned in its order that post-combination, SAAB shall

only be a technology investor in Pipavav and the overall management and control of Pipavav shall continue to

remain with its promoters.

4CHAPTER

91. SCM Soilfert Limited/Deepak Fertilizers and Petrochemicals Corporation Limited/Mangalore Fertilizers and Chemicals Limited (C-2014/05/175)

92. Zuari Fertilisers and Chemicals Limited/Zuari Agro Chemicals Limited/Mangalore Chemicals and Fertilizers Limited (C-2014/06/181)

93. SAAB AB (Publ.)/Pipavav Defence and Offshore Engineering Company Limited (C-2012/11/95)


• In the 2015 SMTB/Reliance Capital order94 , the combination involved the acquisition of 2.77% of the paid up

share capital of Reliance Capital Limited (RCL) by Sumitomo Mitsui Trust Bank Limited (SMTB). However, since the

combination was a strategic alliance between the RCL and SMTB for the establishment of a universal bank, the

combination did not qualify for the exemption under Item 1 of Schedule I.

• In 2015 in Caladium/Bandhan95 , Caladium Investment Pte. Limited (Caladium) subscribed to 4.99% equity shares

in Bandhan Bank Limited (Bandhan). Although Caladium identified the combination solely as a financial investment

in the ordinary course of business, the CCI noted that on account of (i) certain rights acquired by Caladium through

a policy agreement in Bandhan; and (ii) rights under the restated shareholders’ agreement entrusted Caladium with

joint control over Bandhan.

• In 2016 in CDC/IIFL96, the transaction involving subscription by CDC Group Plc (CDC) of approximately up to

15.45% of the total share capital of India Infoline Finance Limited (IIFL) was notified to the CCI as the implementation

agreement provided that the prior consent of CDC would be required for, inter alia, commencement of any new

business by IIFL and/or its subsidiaries and/or cessation of any portion of business or variance of more than 20%

in the product mix of the business from the business plan.

• In 2016 in Madison India/Micromax order97, the transaction involving the acquisition of 2% of the total share

capital of Micromax Informatics Limited (Micromax) by Madison India Opportunities Trust Fund (MIOTF) was notified

to the CCI as it involved acquisition of certain affirmative rights (amounting to control as per CCI’s decisional

practice), along with a board seat in Micromax by MIOTF.

• In 2016, in Broad Street/MBD/Den98, the transaction involving an increase in the existing shareholding of Broad

Street Investments (Singapore) Pte. Limited (BSIPL) and MBD Bridge Street 2016 Investments (Singapore) Pte. Limited

(MBD) (together referred as GS Group Companies) from around 17.80% to around 24.51% in DEN Networks

Limited (DEN) was notified to the CCI as the GS Group Companies already held the right to appoint one director

on the board of DEN. The transaction was notified to the CCI without claiming an exemption.

• In 2016 in Piramal/Shriram99, a combination involving three acquisitions by Piramal of: (a) 9.96% stake in Shriram

Transport Finance Company (STFC) in May 2013; (b) 20% equity stake in Shriram Capital Limited (SCL) in April

2014; and (c) 9.99% stake in Shriram City Union Finance Limited (SCUFL) in June 2014, the CCI made the

following observations:

94. Sumitomo Mitsui Trust Bank Limited/Reliance Capital Limited (C-2014/12/235)

95. Caladium Investment Pte. Limited/Bandhan Bank Limited (C-2015/05/278)

96. India Infoline Finance Limited/CDC Group Plc. (C-2016/07/417)

97. Madison India Opportunities Trust Fund/Milestone Trusteeship Services Private Limited/Micromax Informatics Limited (C-2016/11/455)

98. Broad Street Investments (Singapore) Pte. Limited/MBD Bridge Street 2016 Investments (Singapore) Pte. Limited/DEN Networks Limited (C-2016/09/435)

99. Piramal Enterprises Limited/Shriram Transport Finance Company/Shriram Capital Limited/Shriram City Union Finance Limited (C-2015/02/249)


– SCL Transaction: The CCI noted that Piramal acquired a 20% in SCL along with certain affirmative voting

rights100, which as per the CCI included strategic commercial decisions of SCL, and since the same could not

be regarded as mere minority protection rights, it was not exempt under Item 1 of Schedule I.

– STFC and STUFL Transaction: In relation to the other two transactions, the CCI held that the three acquisitions by

Piramal in the Shriram group of companies were interconnected and were made strategically to acquire (joint)

control over the financial services business of the Shriram Group of Companies.

The CCI placed reliance on (a) the annual reports of Piramal which stated that the STFC and SCUF transactions

were strategic in nature, for the purposes of entering into a long-term partnership and association with the Shriram

Group and (b) the Chairman of Piramal, viz. Mr. Ajay Piramal, was appointed as Chairman of SCL, the holding

company of the Shriram Group. The CCI noted that, in cases where an investor/acquirer who anticipates seeking

to influence management decisions is an “active” investor and such acquisitions will not be considered as ‘solely as

an investment’.

• In 2018, in Macritchie/UST101 , Temasek Holdings (Private) Limited through Macritchie Investment Pte. Limited

(Macritchie) acquired up to 21.3% of the issued and paid-up capital of UST Holdings Limited (UST) along with the

right to nominate directors on the board of UST (proportional to Macritchie’s shareholding) and veto rights in respect

of certain matters, which included commencement of new lines of business, approval of the annual business plan,

and change in the key managerial positions of CEO, CFO and COO.

• In 2014, Highdell/Warburg Pincus102, which involved the acquisition of up to 24% of the equity share capital of

Kalyan Jewellers India Private Limited (Kalyan), by Highdell Investment Limited (Highdell), belonging to Warburg

Pincus LLP, was notified to the CCI as the SHA granted Highdell affirmative voting rights on certain key business

decisions.

• In 2015, in Cairnhill/Mankind103, Cairnhill CIPEF Limited and Cairnhill CGPE Limited (together referred to as

investors) acquired 11% equity share capital along with the right to appoint one director on the board of Mankind

Pharma Limited and certain affirmative voting rights104, which amounted to control according to the CCI, and

therefore the combination could not be treated as solely an investment and hence not covered under Item 1 of

Schedule I of the Combination Regulations.

100. Affirmative voting rights over inter alia the following matters: (i) approval of the appointment of the Chief Executive Officer and the Chief Financial Officer of SCL; (ii) alteration of charter documents; (iii) determining the business plan and annual budget; (iv) appointment or removal of auditors; and (v) commencement of any new business line by SCL.

101. Macritchie Investment Pte. Limited/UST Holdings Limited (C-2018/05/567)

102. Highdell Investment Limited/Kalyan Jewellers India Private Limited (C-2014/09/207)

103. Order under Section 43A in Cairnhill CIPEF Limited/Cairnhill CGPE Limited/Mankind Pharma Limited (C-2015/05/276).

104. Reserved matters (Veto) – share issuances, mergers, acquisition, sale of business or assets, winding up, auditor change, dividends, buybacks, related party transactions, change in articles, entering into new business.


ITEM 1 – MINORITY NON-CONTROLLING ACQUISITION BUT STILL NOT SIP OR OCB

Further, not every combination involving acquisition of minority non-controlling shares or voting rights is exempt under the

Item 1 exemption, unless such combination qualifies as an acquisition made ‘solely as an investment’ or in the ‘ordinary

course of business’.

– In the 2014 Kotak/MCX order105, involving acquisition by Kotak Mahindra Bank Limited (Kotak) of 15% equity

interest in Multi Commodity Exchange of India Limited (MCX), the CCI noted that even though (a) Kotak would

hold non-controlling equity interest in MCX, and (b) Kotak would not have any contractual right to appoint any

directors on the board of MCX, the combination was not exempt under Item 1 since Kotak held stake in Ace, a

national multi commodity exchange and a competitor of MCX,.

– In the 2015 Alibaba /Jasper106 order, the CCI observed that while Alibaba.com Singapore E-Commerce

Private Limited (Alibaba) was acquiring a non-controlling minority stake of 4.14% in Jasper Infotech Private

Limited (Jasper), since Alibaba and Jasper were competitors, in keeping with the decisional practice of the CCI,

such an acquisition by the Alibaba in Jasper, may not be viewed as an acquisition made solely as an investment

or in the ordinary course of business and hence cannot avail the Item 1 exemption.

The CCI has observed, in 2014 in the Abbott/Mylan107 order, and reiterated in the 2018 UltraTech/Jaiprakash108

order, that if any enterprise acquires shares in a competitor109 or a market player engaged in activities at different stages

of production chain (vertical relationship), such shareholding cannot be considered as being in the ordinary course of

business/solely as an investment.

In line with the observations made in the above orders in 2017 in Amazon/Shopper Stop110, Amazon.com NV Investment

Holdings LLC notified its acquisition of 5% stake in Shopper Stop Limited. In 2018, the CCI proposed to clarify this

position by adding a third provisio111 to Item 1 in the draft Combination Amendment Regulations, 2018. However, no

such amendments were brought into force in the final Combination Amendment Regulations, 2018.

In Piramal/Shriram, the CCI noted that where an investor/acquirer who anticipates seeking to influence management

decisions is an “active” investor, such acquisitions will not be considered as being “solely as an investment”. In the 2018

105. Kotak Mahindra Bank Limited/Multi Commodity Exchange of India Limited (C-2014/08/197)

106. Alibaba.com Singapore E-Commerce Private Limited/Jasper Infotech Private Limited/eBay Singapore Services Private Limited (C-2015/08/301)

107. New Moon B.V. /Abbott Laboratories/Mylan Inc. (C-2014/08/202)


109. Alibaba.com Singapore E-Commerce Private Limited/Jasper Infotech Private Limited/eBay Singapore Services Private Limited (C-2015/08/301); Amazon.com NV Investment Holdings LLC/Shoppers Stop Limited (C-2017/12/538)

110. Amazon.com NV Investment Holdings LLC/Shopper Stop Limited (C-2017/12/538)

111. The proposed third proviso stated that –

‘(c) the Acquirer and the enterprise whose shares and voting rights are being acquired are not, directly or indirectly, engaged in: identical or similar trade of goods or provision of service; or activities at different stages and levels of production chain; and’


Reliance Jio Infocomm Limited/Reliance Communications Limited/Reliance Telecom Limited order112, the CCI noted that

the term “ordinary course of business” was meant to refer to transactions which are frequent, routine and usual, and

therefore it may be said that the term “ordinary course of business” corresponds to revenue transactions for competition

law purposes. In other words, the activities for which business is established would be the activities in ordinary course

of business.

ITEM 1 – PRIVATE EQUITY TRANSACTIONS

The CCI orders provide a list of affirmative voting/veto rights (mentioned in APPENDIX A) which either on a standalone

or a consolidated basis tantamount to control according to the CCI, and for the acquisition of which, prior approval

is required from the CCI. Over the course of time, the CCI has expanded this inclusive and non-exhaustive list by

including additional affirmative voting/veto rights, thereby lowering the threshold for control. Many of these rights have

been argued by parties (especially private equity/investment firms) to be in the nature of minority shareholder rights or

investor protection rights. For instance, in the 2017 Section 43A order in Cairnhill/Mankind113 combination involving

the acquisition of 11% equity shares by Cairnhill CIPEF Limited and Cairnhill CGPE Limited (investors) in Mankind

Pharma Limited, the investors claimed that the rights conferred on them pursuant to the SHA were in the form of minority

shareholders’ rights. However, the CCI noted that the professional advice given to the investor itself stated that ‘In

the instant case, the rights stated in the term sheet such as those given below are similar to those adjudicated by the

Commission [as control in case of Century Tokyo Leasing Corporation/Tata Capital Financial Services Limited]’ and

therefore did not find merit in the argument of the investors. Further, the CCI has noted that a careful scrutiny is required to

differentiate mere investor protection rights from those rights which result in a situation of joint control, based on the facts

and circumstances of each case, with due consideration of relevant factors such as the statutory and contractual rights

of the shareholders.114

• CCI’s orders provides inadequate guidance

The CCI orders do not provide enough guidance as to why certain combinations, which ordinarily could be

claimed as being exempt under Schedule I, ought to be notified.

For instance, several transactions involving acquisitions by private equity investors have been notified to the CCI

for approval, which may have been exempt under Item 1 of Schedule I. For instance, in the 2014 Dunrean/Intas

order115 involving the acquisition of 10.16% of the share capital of Intas Pharmaceuticals Limited (Intas) by an

investment holding company named Dunearn Investments (Mauritius) Pte. Limited (a subsidiary of Temasek Holding

Private Limited) (Dunearn) from Mozart Limited, the CCI noted that the affirmative voting rights which Dunearn

112. Order under Section 43A, Reliance Jio Infocomm Limited/Reliance Communications Limited/Reliance Telecom Limited (C-2017/06/516)

113. Order under Section 43A in Cairnhill CIPEF Limited/Cairnhill CGPE Limited/Mankind Pharma Limited (C-2015/05/276)

114. MSM India)/SPE Mauritius Holdings Limited/SPE Mauritius Investments Limited/Grandway Global Holdings Limited/Atlas Equifin Private Limited (C-2012/06/63)

115. Dunearn Investments (Mauritius) Pte. Limited/Intas Pharmaceuticals Limited (C-2014/06/184)


would secure were in the nature of minority protection rights, and therefore, the combination would not result in

the acquisition of operational control of Intas by Dunearn, as the promoters of Intas would continue to remain in

its control and management. However, the combination was notified to the CCI and not claimed as being Item 1

exempt by the parties to the combination. Similarly, some of the CCI orders do not disclose whether the combination

involved the acquisition of control or whether the transaction was made ‘solely as an investment’ or in the ‘ordinary

course of business’, and one is left wondering as to why this combination was not exempt under Item 1 or Item 1A

of Schedule I.116

• Co-investors as notifying parties

In transactions involving purely financial investment by private equity firms, venture capitals, alternate investment

funds, trusts etc., the CCI has often faced the question as to whether to include other co-investors as notifying parties

to the main combination, or to treat such other co-investors as merely passive financial investors.

– In the 2015 Sapphire/Yum! India order117, the CCI noted that Sapphire (the acquirer) had filed first notice

on 10 April, 2015 with regard to its main combination involving the acquisition of the business of running,

maintaining and operating 87 restaurant outlets (under the KFC trade name) of Yum! India. However, there were

two contingencies involved (i) firstly, Sapphire’s principal shareholder, i.e. Samara, was in negotiations with

various private equity investors, who were interested in acquiring direct or indirect shareholding in Sapphire

(Potential Investors) and (ii) secondly, Sapphire intended to acquire certain additional Pizza Hut and KFC

outlets in various cities across India, which were regarded as ancillary transactions in the first notice. The CCI

observed that the ancillary transactions and investments by the Potential Investors were also a part of the main

combination. Accordingly, the CCI invalidated the notice and Sapphire was directed to file a fresh notice along

with other acquirers, which was filed on 17 June, 2015 by Sapphire, Sapphire Mauritius, Samara, QMT, GS

Asia, IDI and CX.

– In the 2017 TPG/Intel order118, the CCI observed that as an inter-connected step to the main combination

(involving the acquisition of 51% equity stake by TPG Manta in Foundation Technology Worldwide LLC (FTW)),

GIC and Thoma Bravo Fund XII L.P. (Thoma Bravo) acquired an economic interest in FTW through co-investment

agreements with TPG Manta. The CCI noted that while neither GIC nor Thoma Bravo were granted any

affirmative voting rights or ability to cause any deadlock in relation to strategic business decisions119, Thoma

Bravo obtained certain investor protection rights and a board seat in FTW pursuant to a co-investment agreement.

116. Beige Limited/Link Investment Trust/Mankind Pharma Limited (C-2018/04/565); NHPEA Minerva Holdings B.V./NSPIRA Management Services Private Limited (C-2018/05/574); MetLife International Holdings, LLC./Elpro International Limited/IGE (India) Private Limited (C-2018/06/576)

117. Sapphire/Sapphire Mauritius/Samara/QMT/GS Asia/IDI/CX/Yum! India (C-2015/06/285)

118. TPG VII Manta Holdings/Foundation Technology Worldwide LLC/Intel Corporation (C-2016/10/439)

119. Strategic business decisions such as approval/change of business plan, approval of budget or appointment of key managerial personnel in FTW.


The CCI held that since Thoma Bravo obtained the right to appoint a board member of FTW, it fell outside the

purview of Item 1 exemption, and made Thoma Bravo a notiftying party to the combination.

– In contrast in 2016, in a similar combination in EMC/Denali120 where as an inter-connected step to the main

combination (involving acquisition of EMC Corporation by Denali Holding Inc.), certain investors121 proposed

to purchase shares of Denali Holding Inc. (acquirer), the CCI noted that the Investors were not acquiring any

affirmative voting rights/veto rights conferring control in Denali, and therefore the investors were not made a

notifying party to the transaction, and were exempted.122

– In 2018, in ChrysCapital/Mankind123, the main combination involved Beige Limited (an investment company

owned by Maize Investments Limited and indirectly controlled by ChrysCapital VII, LLC) and Link Investment Trust

acquiring 10% of the equity share capital of Mankind Pharma Limited The CCI noted that several co-investors

also proposed to co-invest in Maize as passive financial investors without acquiring any controlling rights or

board seats in Maize/Beige. The CCI approved the combination without making the co-investors as notifying

parties to the combination. Further, ancillary to the main combination, Mankind was proposing to acquire

control over certain entities viz., Penta Latex LLP; J.K. Printpack; N.S. Industries; A.S. Packers; and Pharma Force

Labs. We believe that Mankind’s acquisition of these entities was target exempt and therefore Mankind was not

made a notifying party to the notice.

– In 2018, in Zydus/Cadila/Heinz,124 the main combination involved the acquisition of 100% shareholding of

Heinz India by Zydus Wellness Limited (Zydus)/Cadila Healthcare Limited (Cadila) (both Zydus and Cadila

belonged to Zydus Family Trust (ZFT) group). However, subsequently, in order to finance this main combination,

(i) two alternate investment funds i.e. True North Funds125 and Pioneer Investment Fund (Pioneer) decided to

acquire 12.54% and 1.25% shareholding in Zydus126 and (ii) Cadila and ZFT (existing shareholders of Zydus)

also decided to acquire additional equity shares of Zydus. Since all these additional transactions were treated

as inter-connected by the parties, True North, Pioneer, Cadila and ZFT together filed a separate notice (True

North/Cadila/Pioneer/ZFT)127 in 2019 for CCI approval.

• Notificationforacquiringasingleboardseat?

Some of the recent CCI combination orders suggest that the acquisition of minority stake by private equity investors

with a right to appoint/nominate a minimum of one director on the board of the target entity is a notifiable

120. EMC Corporation/Denali Holding Inc./Dell Inc. (C-2016/01/370)

121. (i) Silver Lake Partners III, L.P. and Silver Lake Partners IV, L.P, (ii) Michael S. Dell and the Susan Lieberman Dell Separate Property Trust, (iii) MSDC Denali Investors, L.P. and MSDC Denali EIV, LLC, and (iv) Temasek.

122. EMC Corporation/Denali Holding Inc./Dell Inc. (C-2016/01/370)

123. Beige Limited/Link Investment Trust/Mankind Pharma Limited (C-2018/04/565)

124. Zydus Wellness Limited/Cadila Healthcare Limited/Heinz India Private Limited (C-2018/11/612)

125. True North Fund V LLP and True North Fund VI LLP (collectively referred to as True North Funds).

126. The CCI noted that True North Funds also acquired the right to appoint a director or an observer to the board of both Zydus as well as Heinz India (after it being acquired by Zydus).

127. True North Fund V LLP/True North Fund VI LLP/Cadila Healthcare Limited/Pioneer Investment Fund/Zydus Family Trust (C-2018/12/622)


combination as such combinations cannot be viewed as an investment made solely for investment purposes (SIP) or

as made in the ordinary course of business (OCB) and therefore, not eligible to claim Item 1 exemption. However,

this observation is still speculative since the CCI has not explicitly endorsed the above proposition in any of its orders.

For instance, in 2016 in P5 Asia/Indus Towers128, P5 Asia Holding Investments (Mauritius) Limited (P5) notified

a combination involving the acquisition by P5 from Aditya Birla Telecom Limited (ABTL) of 4.85% equity shares of

Indus Towers Limited (Indus) since P5 had the intention to nominate a director on the board of Indus. In 2016 the

combination in Black River Food/FCEL129, involving Black River Food 2 Pte. Limited acquiring 8.19% of the fully

diluted share capital of Future Consumer Enterprise Limited (FCEL) along with the right to nominate one director on

board of FCEL, was notified to the CCI. In 2017 the combination in Aceville/Flipkart130, involving the acquisition

of up to 6.02% share capital of Flipkart Limited (Flipkart) by Aceville Pte. Limited (Aceville), was notified to the CCI

as Aceville was also entitled to nominate a director on the board of Flipkart. In 2017 the combination in Copper

Technology/ANI Technologies131 was notified as it related to the subscription by Copper Technology Pte. Limited

(Copper Technology) of 9.57% share capital of ANI Technologies Private Limited (ANI) and the right to nominate a

non- executive director on the board of ANI.

The decisional practice of the CCI appears therefore to have blurred the distinction between pure investor protection

rights and control rights.

• Singleboardseatmeans‘control’?

A related question is whether minority shareholding by a private equity investor with one seat on the board of

directors of a target entity amounts to holding control over the target? In 2018 in Meru Travel Solutions vs. M/s ANI

Technologies and Ors.132, it was submitted that there were at least four common investors in Ola and Uber, namely,

Tiger LLC, Sequoia Capital, Didi Chuxing and SoftBank, out of which three investors did not seem to possess any

control over Ola and Uber. Softbank acquired shareholding of approximately 15% in Uber and a right to appoint

2 of 17 directors on its board of directors. Further, SoftBank already held more than 25% investment in Ola via its

affiliate SIMI Pacific Pte. Limited and had two directors on the board of Ola. As per Softbank’s arguments, the test

for “control” under Explanation (b)(i) to Section 5 of the Competition Act was not met. However, the CCI noted that

although Softbank was a minority shareholder in both the firms, it had the ability to exercise material influence over

them. Further, according to CCI’s order, the influence of minority shareholders like Softbank, who have made lumpy

investment in competing firms and may have a stronger voice in management, needs to be monitored carefully. In

128. P5 Asia Holding Investments (Mauritius) Limited/Indus Towers Limited (C-2016/10/452)

129. Black River Food 2 Pte. Limited/Future Consumer Enterprise Limited (C-2016/01/371)

130. Aceville Pte. Limited/Flipkart Limited (C-2017/04/501)

131. Copper Technology Pte. Limited/ANI Technologies Private Limited (C-2017/08/525)



the past, as per CCI’s decisional practice133, material influence is the lowest in the hierarchy of control and it implies

presence of factors which give an investor the ability to influence the affairs and management of the enterprise. In

UltraTech/Jaiprakash134 the CCI has observed that even a ‘single board seat’ is also highly relevant to competition

assessment and needs to be disclosed by the parties, for instance, being on the board of a competitor allows

access to competitively sensitive information which can facilitate tacit collusion.

• Controllingornon-controllingportfoliocompanies?

The CCI has, in its past orders, while identifying overlaps and undertaking competitive assessments, considered

potential horizontal overlaps and vertical overlaps between controlling135 as well as non-controlling portfolio

companies136 of private equity firms (acquirer) on the one hand and target companies on the other hand. However,

over the course of time, the CCI has shifted its focus more towards controlling portfolio investments while undertaking

competitive assessments in such transactions. For instance, in the 2019 order in BCP Acquisitions/CDPQ137, the

CCI held that prior investments by investment firms (acquirer) of less than 5% of the total equity share capital not

accompanied with any special veto/governance rights were insignificant and did not lead to any significant

horizontal overlap or a potential vertical relationship between the parties so as to cause any change in competition

dynamics. Similarly, in 2018 in ChrysCapital/Mankind138 although the investing entities had prior existing

investments in several other pharmaceuticals and companies, the CCI, based on the shareholding and rights

available to the investors, considered only two of them for identification of horizontal overlaps/vertical relationships

with the target entity. In 2018, in Lazarus/ANI Technologies139, involving the acquisition of 7% equity share of ANI

Technologies Private Limited (target) by Lazarus, the CCI identified overlaps between Temasek’s portfolio companies

Zomato Media Private Limited (Zomato) and foodpanda (operated by a subsidiary of ANI Technologies). However,

the CCI noted that this overlap was unlikely to raise any competition concern since Temasek held a minority non-

controlling stake in Zomato. Therefore, based on our review of the past CCI orders, we believe that although

the CCI is likely to review information in relation to non-controlling investments of a private equity acquirers in

the notification form, the same may not be considered too significant while identifying overlaps and undertaking

competitive assessments, unless such non-controlling investments lead to material influence of private equity investors

over the portfolio companies.

133. Order under Section 44 in UltraTech Cement Limited/Jaiprakash Associates Limited (C-2015/02/246); Meru Travel Solutions Private Limited vs. M/s ANI Technologies Private Limited and Ors. (Case No. 25-28 of 2017); Order under Section 43(A) in Telenor ASA/Telenor (India) Communications Private Limited/Telenor South Asia Investments Pte Limited/Lakshdeep Investments and Finance Private Limited/Telewings Communications Services Private Limited


135. CA Rover Holdings/State Bank of India/SBI Cards and Payment Services Private Limited/GE Capital Business Process Management Services Private Limited (C-2017/08/526); KKR Credit Advisors (US) LLC/JBF Industries Limited/JBF Global Pte Limited (C-2015/08/304)

136. Marble II Pte. Limited/Mphasis Limited (C-2016/04/391); Ageas Insurance International N.V./Royal Sundaram General Insurance Company Limited (C-2018/11/618); Mr. Bhavish Aggarwal/Mr. Ankit Bhati/Lazarus Holdings Pte. Limited/Macritchie Investment Pte. Limited (C-2018/09/598); Westminster Bidco S.a.r.l./SoftwareONE Holding AG (C-2015/09/309)

137. BCP Acquisitions LLC, CDPQ Fund 780 L.P. and CDP Investissements Inc./Johnson Controls International plc (C-2019/01/630)

138. Beige Limited/Link Investment Trust/Mankind Pharma Limited (C-2018/04/565)

139. Mr. Bhavish Aggarwal/Mr. Ankit Bhati/Lazarus Holdings Pte. Limited/Macritchie Investment Pte. Limited (C-2018/09/598)



ITEM 8 AND 9 EXEMPTIONS

DETERMINING 'CONTROL' UNDER EXEMPTIONS

Item 8 and Item 9 under the current Combination Regulations provide exemptions to combinations involving intra-group

acquisitions and mergers/amalgamations, respectively. The Item 8 exemption for combinations involving intra-group

acquisitions was brought into effect along with the original Combination Regulations, 2011 on 11 May 2011.140

However, a need for an exemption similar to Item 8 for mergers and amalgamations was felt in 2011 in Wyoming

I/Tata Chemicals141, involving the amalgamation of Wyoming 1 (Mauritius) Private Limited (Wyoming 1) into Tata

Chemicals Limited (TCL). The CCI noted that the ultimate control over the activities carried by TCL and Wyoming 1 before

and after the combination remained with the management of TCL. However, as the combination was an amalgamation

falling within Section 5(c) of the Competition Act and not an acquisition, it could not claim exemption under Item 8, as

Item 8 was applicable only in case of intra-group acquisitions of shares or voting rights. Later on 23 February 2012,

through Combination Amendment Regulations, 2012, the CCI brought into effect Item 8(A) exemption142, similar to

Item 8 exemption for intra-group mergers/amalgamations, which was subsequently omitted on 4 April 2013 and a

new exemption for intra-group mergers/amalgamations was put in place by substituting Item 9 exemption through

Combination Amendment Regulations 2013.143 Item 9 provides that ‘enterprises’ owned to the extent of more than 50%

by a common holding company can be treated as constituting part of the group, and merger/amalgamations among

them have been exempted from the scope of combination regulations, provided that the transactions do not result in

transfer from joint to sole control.144

Before the exemption for intra group mergers and amalgamations came into effect, many combinations of this nature were

notified to the CCI which could have otherwise been exempt on account of being intra-group mergers/amalgamations. In

most of these combinations, the CCI did not find any change in the competition dynamics post combination, since one of

the merging parties held sole control over the other merging parties. For instance, in the 2012 ECL/ISL order145, wherein

the combination involved the amalgamation of India Securities Limited (ISL) into Essar Capital Limited (ECL), the CCI noted

that ECL already held 95.95% equity shares in ISL, and ultimate control over the activities of ISL would continue to be

exercised by ECL before and after the combination. In the 2012 TACO/TACOCL order146, involving the amalgamation

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140. The Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 notified in the Gazette of India on 11 May 2011.

141. Tata Chemicals Limited/Wyoming 1 (Mauritius) Private Limited (C-2011/12/12)

142. Item 8A Exemption under The Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Amendment Regulations, 2012 – stated – ‘A merger or amalgamation involving a holding company and its subsidiary wholly owned by enterprises belonging to the same group and/or mergers or amalgamations involving subsidiaries wholly owned by enterprises belonging to the same group.’

143. Item 9 Exemption under The Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Amendment Regulations, 2013 – states – ‘A merger or amalgamation of two enterprises where one of the enterprises has more than fifty per cent (50%) shares or voting rights of the other enterprise, and/or merger or amalgamation of enterprises in which more than fifty per cent (50%) shares or voting rights in each of such enterprises are held by enterprise(s) within the same group: Provided that the transaction does not result in transfer from joint control to sole control.’

144. Dissent Note by Member Augustine Peter in Grasim Industries Limited/Aditya Birla Chemicals (India) Limited (C-2015/03/256)

145. India Securities Limited/Essar Capital Limited (C-2012/07/70)

146. Taco Composites Limited/Tata AutoComp Systems Limited (C-2012/01/18)


of Taco Composites Limited (TACOCL) into Tata AutoComp Systems Limited (TACO), the CCI noted that TACOCL was a

wholly owned subsidiary of TACO, and ultimate control over the activities of TACOCL would continue to be managed by

TACO after the amalgamation. Similar observations were also made in 2011-2012 CCI orders in AHIL/APIL147, IVRCL/

IVRCL AHL148, EAPL/BBTCL149 and GSSPL/PIPL150.

However, the concept of ‘joint control’ and ‘group’ under the Item 8 and Item 9 exemptions is being construed narrowly

by the CCI, as can be observed from the following CCI combination orders where exemptions could not be availed by

the parties:

• In the May 2013 Ashley Holdings/Ashok Leyland order151 involving restructuring of the parties within the Ashok

Leyland group, pursuant to which Ashley Services Limited (ASL) became a 100% subsidiary of Ashok Leyland

Limited, the CCI noted that the parties belonged to the same group and the said amalgamation was a measure of

restructuring of the parties within the Ashok Leyland group.

• In 2013 in Future/Pantaloons152 order involved series of transactions whereby the fashion businesses of FVIL, ILCL,

LEE, and PRIL, all of which belonged to the Future Group, were proposed to be integrated into a single entity FLFL,

which also belongs to the Future Group. The CCI concluded that the proposed combination is a measure of internal

re-structuring of the Future Group companies and there would be no change in the ultimate control over any of the

parties pursuant to the implementation of the proposed combination and therefore was not likely to result in any

adverse competition concern in India.

• In 2014, in Indian Express/Pune Infoport153 order involving the merger of Pune Infoport Private Limited (Pune

Infoport) into Indian Express (Mumbai) Private Limited (Indian Express) the CCI noted that (i) Pune Infoport already

held 97.322% of the equity share capital of Indian Express before the transaction and (ii) both Indian Express and

Pune Infoport were under the joint control of Premsagar Infra and Blackstone and post combination, Indian Express

was to continue to be under joint control of Premsagar Infra and Blackstone.

• In 2014, in Ruchi Soya/Ruchi Infrastructure154, involving acquisition of the oil refining business of Ruchi Infrastructure

Limited (RIL) by Ruchi Soya Industries Limited (RSIL), the combination was notified to the CCI despite the Shahra

group (common holding group) held 54.46% stake in RIL and 55.86% stake in RSIL.

• In 2015, in Taurus/Capricorn155, the parties submitted that though the combination was in the nature of an intra-

group reorganization and may consequently qualify for exemption under Item 8, the notice was filed by the parties

147. ALSTOM Holdings (India) Limited/ALSTOM Projects India Limited (C-2011/10/06)

148. IVRCL Limited/IVRCL Assets and Holdings Limited (C-2011/12/13)

149. Electromags Automotive Products Private Limited/The Bombay Burmah Trading Corporation Limited (C-2011/12/16)

150. Goldman Sachs Services Private Limited/Paternoster India Private Limited (C-2012/01/21)

151. Ashley Holdings Limited/Ashley Investments Limited/Ashok Leyland Project Services Limited (C-2013/05/123)

152. Future Ventures India Limited/Indus-League Clothing Limited/Lee Cooper (India) Limited/Pantaloon Retail (India) Limited and Future Lifestyle Fashions Limited (C-2012/12/99)

153. Indian Express Newspapers (Mumbai) Private Limited/Pune Infoport Private Limited (C-2014/10/217)

154. Ruchi Soya Industries Limited/Ruchi Infrastructure Limited (C-2014/03/159)

155. Taurus Ventures Limited/Capricorn Ventures Limited (C-2015/02/251)


as some of the entities involved within the combination were jointly controlled by Max and other enterprises that

were not part of the Max group, and the combination therefore falls outside the scope of Item 8. The CCI noted

that the combination effectively does not fall within the scope of Item 8.

• In the 2016 Fortis/SRL order156, involving internal restructuring within the Fortis group to consolidate the hospitals

and diagnostics business of the Fortis group under separate verticals, the CCI noted that the parties were not

exempt under Schedule I exemptions despite the three entities involved in the proposed combination, namely, Fortis

Healthcare Limited (FHL), Fortis Malar Hospital Limited (FMHL) and SRL Limited (SRL) being controlled by the Fortis

group, and the post-combination control of FHL, FMHL and SRL being contemplated to remain with the Fortis group.

• In 2018 in Lakshdeep/Telenor157 order, the CCI while deciding on the question that whether change in control was

a necessary condition to allow the exemption under Old Item 8 Exemption, the CCI noted that the amendment to

the Old Item 8 Exemption requiring that ‘transaction should not lead to change in control from joint to sole control’

only clarified of what was already inherent in the exemption.

156. Fortis Healthcare Limited/Fortis Malar Hospital Limited/SRL Limited (C-2016/09/433)

157. Order under Section 43(A) in Telenor ASA/Telenor (India) Communications Private Limited/Telenor South Asia Investments Pte Limited/Lakshdeep Investments and Finance Private Limited/Telewings Communications Services Private Limited



GROUP UNDER SECTION 5 AND SECTION 6DISCLOSURE OF ‘GROUP LEVEL INFORMATION’ IN NOTIFICATION FORM

Since the CCI cannot foresee various possible structural relationships of parties to a combination, parties to a combination

are better placed to themselves identify and provide complete information, at a group level, which is relevant for

competition assessment. For instance, in the 2016 Suraksha Realty and Ors./Jaiprakash Associates order158, the CCI

noted that while the notice was filed by five acquirers159, these acquirers, together as Suraksha group, directly/indirectly,

held shareholding in four entities160 engaged in overlapping markets of power generation in India. Further, the Suraksha

group had miniscule market share in the total installed capacity of power generation in India. In 2014 in TAQA India/

Indo-infra161 the CCI noted that TAQA India Power Ventures Private Limited (one of the acquirers) belonged to TAQA

group which had controlling stake in TAQA Neyveli Power Company Private Limited and 5% stake in Himachal Sorang

Power Limited, both of which operated in the relevant market of power generation in India. In 2015 in Ordain/Alkem162

involving acquisition of fertility drugs division of Alkem Laboratories Limited (Alkem) by Ordain Health Care Global Private

Limited (Ordain), the CCI noted that based on the information provided by the parties themselves in the notification

form, Ordain belonged to the Chemo group which had 40% stake in Nosch Labs Private Limited - also engaged in the

relevant market of pharmaceuticals. Therefore, the competitive assessment involved identifying overlaps between any

of the products of the Chemo group (acquirer group) sold in India and the products of target business being acquired.

In February 2015, Ultratech Cement Limited filed a notice163 with the CCI in relation to purchase of two cement plants

from Jaiprakash. In the form, Ultratech (a subsidiary of Grasim) was stated as belonging to the Aditya Birla Group,

comprising of Grasim and all enterprises controlled by it, and there was no enterprise above Grasim that could be

classified as constituting a ‘group’. Therefore, information was provided at the Grasim level. In March 2015, Grasim

Industries Limited and Aditya Birla Chemicals (India) Limited (ABCIL) jointly filed a notice164, where the parties, mentioned

that the Aditya Birla Group included the KM Family and enterprises owned/controlled by it, in order to indicate that

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158. Suraksha Realty Limited/Vijay Suraksha Realty LLP/Sejraj Financial Services LLP/Fortune Integrated Assets Finance Limited/Vision Finstock LLP (C-2015/10/335)

159. Suraksha Realty Limited, Vijay Suraksha Realty LLP, Sejraj Financial Services LLP, Fortune Integrated Assets Finance Limited, and Vision Finstock LLP

160. Alfa Infraprop Private Limited, Lakshdeep Investments and Finance Private Limited, Real Gold Developers LLP, and Real Captive Power Private Limited

161. TAQA India Power Ventures Private Limited/Indo-Infra Inc./India Infrastructure Fund-II/Jaiprakash Power Ventures Limited (C-2014/03/160)

162. Ordain Health Care Global Private Limited/Alkem Laboratories Limited (C-2015/03/259)

163. Ultratech Cement Limited/Jaiprakash Associates Limited (C-2015/02/246)

164. Grasim Industries Limited/Aditya Birla Chemicals (India) Limited (C-2015/03/256)


the proposed transaction was a merger of two enterprises (namely ABCIL and Grasim) belonging to the same group.165

Though in both transactions the group was stated to be the ‘Aditya Birla Group’, the enterprises comprising the Aditya

Birla Group were narrowed. The CCI approved the Jaiprakash transaction in April 2015. However, the CCI decided to

initiate separate proceedings under Section 44 in January 2016 against UltraTech in relation to its Jaiprakash transaction

since the Ultratech restricted definition of Aditya Birla Group to Grasim and its controlled entities failed to provide any

details in respect of shareholding/control of KM Family and the companies owned/controlled by it. The CCI stated that

if any enterprise holds shares in a competitor or a market player engaged in activities at different stages of production

chain (vertical relationship), such existing shareholding cannot be considered as in ordinary course of business/solely as

an investment and therefore the parties are expected to disclose details of such shareholdings in the notice.166

FAMILYMEMBERSCOVEREDUNDER‘GROUP’?

One of the questions that the CCI has faced in its orders is whether certain members of a ‘family’ having shareholding in

a common enterprise constitute a ‘group’ under the Explanation to Section 5 of the Competition Act. The CCI has clarified

that what is of essence is collective common control of certain individuals, along with enterprises, over an enterprise,

although the individuals may or may not comprise a family:

– In the 2014 ZFCL/ZACL167 order, involving the acquisition of 26% stake in MCFL by ZACL and ZFCL, the CCI

observed that “Further, considering the common promoter shareholding and presence of common directors

in ZACL, Zuari Global Limited (a holding company of ZACL) and Chambal Fertilisers and Chemicals Limited

(Chambal), for the purpose of competition assessment of the proposed combination, the market shares of

Chambal in respect of relevant products have been ascribed to those of the Parties”.

– Similarly, the 2014 Genext/Magna order168, involving the transfer of Magna Warehousing and Distribution

Private Limited’s (Magna) business pertaining to hotel and retail activities to Genext Hardware & Parks Private

Limited (Genext), the CCI noted that individual members and group companies of the Raheja family along with

Chalet (a company owned by the Raheja family) controlled Magna and Genext, and therefore the ultimate

control over the business activities of the parties to the combination would remain with the Raheja family only.

– In the 2014 Uttam Galva/Shree Uttam Steel order169, involving the amalgamation of Shree Uttam Steel and

165. In this regard the parties had submitted the following information: (i) voting pattern of the common promoter group, for the past 3 years, indicated that they voted as a bloc on all the resolutions passed in the shareholders’ meeting of Hindalco; (ii) there was a common leadership and executive management team of merging parties; (iii) there existed common marketing team; (iv) there was a common procurement team ; (v) there was a common human resource team,; and (vi) both Grasim and ABCIL used the same logos and therefore the customers viewed the merging parties as a part of the Aditya Birla group.


167. Zuari Fertilisers and Chemicals Limited/Zuari Agro Chemicals Limited (C-2014/06/181)

168. Genext Hardware and Parks Private Limited/Magna Warehousing and Distribution Private Limited (C-2014/04/166)

169. Uttam Galva Steels Limited/Shree Uttam Steel and Power Limited (C-2013/11/140)


Power Limited (SUSPL) with Uttam Galva Steels Limited (UGSL), the CCI considered the common shareholding

of Miglani family of 31.82% shares in UGSL and 96.98% shares170 in SUSPL.

– In the 2015 Nirma entities171 order, involving (i) amalgamation of BHPL, KHPL, Kulgam, LHPL, UHPL, KCPPL and

SVCPL into Nirma, and (ii) demerger of the healthcare division of Nirma into AHPL, the CCI noted that: “…the

ultimate control over the business activities of Nirma, BHPL, KHPL, Kulgam, LHPL, UHPL and KCPPL, both before

and after the combination remains with the promoter, Shri. Karsanbhai K. Patel, through the shareholding in

various capacities and through the immediate family members”.

– In the 2017 EMC/Mcnally Bharat order172, the CCI under 43A proceedings had noted that a news report

dated 29 July, 2014 published in Live Mint cited that “the Khaitan family of Williamson Magor Group is

ceding control of its engineering business but for now will retain a minority stake in McNally Bharat Engineering

Co. Limited” to further strengthen the fact that MBECL was looking for a strategic partner and MKN’s (EMC’s

promoter) acquisition of Mcnally Bharat was the first step in this direction.

ESTABLISHING ‘CONTROL’ OF FAMILY MEMBERS

The CCI has always considered and reviewed the shareholding of the family members in its orders since the start of

Indian merger control regime in 2011.

In one of its initial orders in 2012173 pertaining to a combination involving the acquisition of majority shares174 of Lloyds

Steel Industries Limited (LSIL) by Ultimate Logistics Solutions Private Limited (ULSPL) and Metallurgical Engineering and

Equipments Limited (MEEL), the CCI was faced with the issue of determining control over target entities through family

shareholding. The CCI noted that LSIL (the target entity) was primarily engaged in the production of steel products

whereas none of the acquirers (ULSPL and MEEL) were engaged in the same sector. However, during the review of the

combination, the CCI noted that ULSPL and MEEL were promoted by the Miglani family which comprised of individuals

including Mr. Rajinder Miglani and other members of the family (Miglani family group). Further, the Miglani family group

had existing business interests in the steel sector through group companies, namely Uttam Galva Steels Limited (UGSL)

and Uttam Galva Metallics Limited (UGML). Due to the shareholding of the Miglani family group in UGSL, the CCI noted

that the overlaps arose with LSIL in two significant flat steel product categories i.e. (i) Cold Rolled coils/steels and (ii)

Galvanized Plain (GP)/Galvanized Corrugated (GC) coils/sheets.

170. Along with two associate companies of Miglani family.

171. Nirma Limited/Banihal Holdings Private Limited/Kargil Holdings Private Limited/Kulgam Holdings Private Limited/Leh Holdings Private Limited/Uri Holdings Private Limited/Kanak Castor Products Private Limited/Siddhi Vinayak Cement Private Limited/Aculife Healthcare Private Limited (C-2014/11/221)

172. Order under Section 43A in EMC Limited/McNally Bharat Engineering Company Limited (C-2015/07/293)

173. Ultimate Logistics Solutions Private Limited/Metallurgical Engineering and Equipments Limited/Lloyds Steel Industries Limited (C-2012/08/72)

174. The combined equity shareholding of ULSPL and MEEL in LSIL would be around 51.99% which could further increase after the open offer intended to be made by ULSPL and MEEL to the shareholders of LSIL.


In the 2016 Dr. Wolfgang Porsche/Ferdinand Porsche order175 involving internal reorganization of the shareholding

of the Porsche family members, the CCI noted that both the merging parties belonged to the Porsche family before

the merger and the ultimate control over Volkswagen Aktiengesellschaft before and after the merger remained with the

Porsche family members having common shareholding over merging parties.

In one of the cases it was argued before the CCI that the definition of ‘group’ under the Competition Act does not bring

within its ambit members of a ‘family’ and the Competition Act does not contemplate that control should be inferred

from involvement, however token or miniscule, of a ‘family’. However, the CCI rejected this argument of the acquirer by

noting that the acquirer had, in earlier notices, benefitted from the argument that the said family members constituted the

single largest shareholder group in the merging parties and therefore, the merging parties did not exercise competitive

constraints on each other irrespective of the combination.

IDENTIFYING 'GROUP AND CONTROL' – FROM A THRESHOLD PERSPECTIVE:

In the following orders, the CCI has observed that the parties ought to have filed combinations with the CCI since the

parties met the thresholds under Section 5 of the Competition Act at a ‘group’ level:

– In the 2017 Section 43A order in Cerberus/Visteon176, while assessing the thresholds under Section 5 of the

Competition Act, Reydel Automotive Holdings B.V. (acquirer) argued that the target (automotive interiors business

of VASI and VISI) would belong to ‘Cerberus fund controlling the (i) Reydel investment and (ii) portfolio companies

controlled by such fund’, and not all ‘Cerberus funds and controlled portfolio companies, taken as a whole’.

However, the CCI noted that the acquirer had submitted before the European Commission that it belonged to

the Cerberus group. Further, as per information provided by Reydel, the Cerberus group, along with VISI (after

attribution of entire assets and turnover of VASI), jointly met the group-level thresholds set out in Section 5(a)(ii) of

the Competition Act.

– Similarly, in the 2018 Section 43A Bharti/Aircel order177, Bharti Airtel acquired the right to use spectrum from

Aircel, without notifying the same to the CCI. The CCI, while directing Airtel to file a notice in Form I, noted

that based on the combined assets and turnover of Bharti Airtel and the Aircel group entities, the notification

thresholds under Section 5(a) of the Competition Act were met.

175. Dr. Wolfgang Porsche Holding GmbH/Ferdinand Porsche Familien-Holding GmbH (C-2016/04/388)

176. Cerberus Capital Management LP/Visteon Interiors System India Private Limited/Visteon Automotive Systems India Private Limited (C-2015/08/298)

177. Order under Section 43A, Bharti Airtel Limited/Bharti Hexacom Limited/Aircel Cellular Limited/Dishnet Wireless Limited (C-2017/05/510)


IDENTIFYING 'GROUP AND CONTROL' – FROM COMPETITIVE ASSESSMENT PERSPECTIVE:

The CCI has observed that a clear delineation of ‘group’ and ‘control’ in a combination filed before the CCI assists the

CCI in identifying the parties’ presence in the relevant product and geographic market and taking into account of any

potential AAEC likely to arise from the combination. This observation of the CCI has been followed by the CCI in all its

combination orders. For instance:

• In 2017, while reviewing the Vodafone/Idea combination178, the CCI noted that as a condition precedent to the

combination, Vodafone India Limited (VIL) decided to dispose its 42% stake in Indus Towers Limited and therefore,

VIL’s stake in Indus Tower was excluded from the competitive assessment of Vodafone-Idea combined entity. However,

VIL subsequently decided to transfer its shareholding in Indus to VIL’s shareholders. The CCI noted that ultimately

the Indus Tower stake was going to be retained by the Vodafone group only as VIL and VIL’s shareholders were

all wholly owned subsidiaries of Vodafone Group Plc. Therefore, the competitive assessment of VIL’s stake in Indus

which was initially not undertaken by the CCI in Vodafone/Idea order was separately undertaken in this second

combination notified in 2017 i.e. VIL Shareholders/Indus Towers.179

• The 2016 combination in HCL/3DPLM180 involved the acquisition by HCL Technologies Limited (HCL) of all the

businesses and assets of Geometric Limited (Geometric), both of which were engaged in IT and IT enabled services

(IT and ITES) market. In its competitive assessment, the CCI noted that Geometric had 58% shares of a joint venture

namely 3DPLM (also engaged the IT and ITES market), whereas the remaining 42% were held by other joint venture

partner Dassault Systèmes (DS). As a result of the combination, Geometric's equity shareholding in 3DPLM will be

cancelled and DS will acquire sole control over the joint venture. However, since 3DPLM was a captive unit of DS,

the combination did not result in any vertical relationship between the parties and no AAEC in the relevant market.

• The 2016 combination in Ashok Leyland/Nissan Motors181 involved the exit of Nissan Motors Limited from three

Indian joint ventures182 between Ashok Leyland Limited and Nissan Motors Limited, and upon completion, the joint

ventures were to be wholly owned and solely controlled by Ashok Leyland Limited The CCI noted that in the Light

Commercial Vehicles (LCVs) segment, the combination did not result in the elimination of any incumbent from the

market; it merely resulted in change of ownership and control of an existing player in the market.

• The 2012 JSW Steel/JSW Ispat183 combination involved the amalgamation of JSW Ispat into JSW Steel. The CCI

noted that JSW Steel was the single largest shareholder in JSW Ispat, holding a controlling stake of 46.75% in

178. Vodafone India Limited/Vodafone Mobile Services Limited/Idea Cellular Limited (C-2017/04/502)

179. (i) Al-Amin Investments Limited; (ii) Asian Telecommunication Investments (Mauritius) Limited; (iii) CCII (Mauritius) Inc; (iv) Euro Pacific Securities Limited; (v) Vodafone Telecommunications (India) Limited; (vi) Mobilvest; (vii) Prime Metals Limited; (viii) Trans Crystal Limited; (ix) Omega Telecom Holdings Private Limited; (x) Telecom Investments India Private Limited; (xi) Jaykay Finholding (India) Private Limited; and (xii) Usha Martin Telematics Limited (referred together as VIL Shareholders) /Indus Towers Limited (C-2017/10/532)

180. HCL Technologies Limited/Geometric Limited/3DPLM Software Solutions Limited (C-2016/04/396)

181. Ashok Leyland Limited and Nissan Motors Limited (C-2016/09/432)

182. (a) Powertrain JV, (b) Vehicle JV and (c) Technology JV

183. JSW Ispat Steel Limited/JSW Steel Limited (C-2012/09/80)


JSW Ispat, along with management and control of JSW Ispat. The CCI noted that control over the activities of JSW

Ispat before and after the combination would remain with JSW Steel and therefore, along with other factors, such

a combination was not likely to cause an AAEC in the relevant market in India.

• The 2012 combination in Inox/Fame/Big Pictures184, which involved internal restructuring between the enterprises

belonging to the Inox group of companies, the CCI noted that management and control over the activities carried

on by the parties to the combination before and after the combination would remain unchanged, and therefore

the combination was not likely to result in an AAEC in India. Similar observations were made by the CCI in SKR

BPO/IGSPL/Serco BPO185, EECL/PEL/EMTICI/EPL186, WBSPL/WBBS Delhi/WBBS Kerela/WBBS Haryana187,

Siemens/Winergy188, Reckitt Benckiser/Paras Pharmaceuticals189 and IPCL/DPSC.190

• In the 2012 Sanlam/Shriram order191 involving the acquisition of 26% stake in Shriram Capital Limited by

subscribing to 49.9% equity share capital of Shriram Chennai, the CCI noted that Sanlam Group was not actively

involved in any business activity in India except for holding 26% stake in SGIC and SLIC which were the general

insurance and life insurance arms of the Shriram Group. Even after the combination, the CCI noted that there was

going to be no significant change in Sanlam Group’s presence in the insurance sector in India.

• In the 2011 Siemens Limited/Morgan/SVAI order192 relating to the merger of SVAI and Morgan with Siemens

Limited, the CCI noted that (i) 74.3% shares of Siemens Limited were held by Siemens AG, (ii) 100% shares of SVAI

were held by Siemens VAI Metals Technologies, which was a wholly owned subsidiary of Siemens AG, and (iii)

Morgan was a wholly owned subsidiary of SVAI. Thus, the ultimate control over the business activities carried by

Siemens Limited, SVAI and Morgan before and after the combination remained with Siemens AG.

• In the 2015 Strides/Shashun order193 involving the merger of Shasun into Strides pursuant to a scheme, the CCI

noted that while Shasun had transferred its domestic formulation business to Alchemist Limited in the year 2014, it

had retained 27% ownership/financial interest in the this transferred business. Therefore, the formulations business

of Shasun was considered in the competition assessment of the proposed combination.

• In other similar cases, for instance, in the 2019 combination in Arcelor/EPC194 involving acquisition of 100% equity

shares of EPC Constructions India Limited (EPC) by ArcelorMittal India Private Limited (AMIPL) under Insolvency and

184. Inox Leisure Limited/Fame India Limited/Fame Motion Pictures Limited/Big Pictures Hospitality Services Limited/Headstrong Films Private Limited (C-2012/10/84)

185. Serco BPO Private Limited/SKR BPO Services Private Limited/Intelenet Global Services Private Limited (C-2012/10/81)

186. Elecon Engineering Company Limited/Prayas Engineering Limited/Elecon EPC Projects Limited/EMTICI Engineering Limited (C-2012/08/77)

187. Wireless Business Services Private Limited/Wireless Broadband Business Services (Delhi) Private Limited/Wireless Broadband Business Services (Kerela) Private Limited/Wireless Broadband Business Services (Haryana) Private Limited (C-2012/07/66)

188. Siemens Limited/Winergy Drive Systems Private Limited (C-2012/08/74)

189. Reckitt Benckiser Investments India Private Limited/Paras Pharmaceuticals Limited/Halite Personal Care India Private Limited (C-2012/02/39)

190. India Power Corporation Limited/DPSC Limited (C-2012/03/41)

191. Sanlam Emerging Markets (Mauritius) Limited/Shriram Capital Limited/Shriram Financial Ventures (Chennai) Private Limited (C-2012/07/67)

192. Siemens VAI Metals Technologies Private Limited/Morgan Construction Company India Private Limited/Siemens Limited (C-2011/11/09)

193. Strides Arcolab Limited/Shasun Pharmaceuticals Limited (C-2014/10/218)

194. ArcelorMittal India Private Limited/EPC Constructions India Limited (C-2018/12/624)


Bankruptcy Code, 2016 (IBC), the CCI noted that while there were no horizontal overlaps between the activities

of the AMIPL and EPC, but at group level ArcelorMittal Design and Engineering Centre Private Limited (AMDEC),

an entity belonging to the ArcelorMittal Group was engaged in the provision of engineering, project management,

and inspection services related to mining, steel manufacturing, energy, and environment. However, since AMDEC’s

services were dedicated to ArcelorMittal Group companies only, it did not raise any AAEC concerns. The CCI

followed the same standard of competitive assessment when notice in relation to the acquisition of sole control of

EPC was filed by another potential acquirer i.e. Royale Partners Investment Fund Limited under the IBC in Royale

Partners/EPC Constructions.195 In its assessment, the CCI considered the overlaps between RPMG Group (acquirer’s

group) and EPC.

195. Royale Partners Investment Fund Limited/EPC Constructions India Limited (C-2019/01/632)



GROUP UNDER 'SECTION 3' AND 'SECTION 4'

Section 3 of the Competition Act deals with allegations of anti-competitive agreements or cartelization made against an

‘enterprise’ or an ‘association of enterprise’, whereas Section 4 of the Competition Act deals with allegations of abuse

of dominance made against an ‘enterprise’ or ‘group’. The CCI has observed that the concept of ‘group’ as provided in

clause (b) of the Explanation to Section 5 can be further extended to apply to the concept of “group” under Section 4 of

the Competition Act.196

'GROUP' UNDER SECTION 4

The CCI has, while reviewing the allegations made under Section 4 of the Competition Act in the following cases,

analysed the concept of ‘group’ in detail:

• In the 2011 Mr. Mohammed Tariq Sultan vs. HSBC and Ors. order197, which involved an allegation of cartelization

by various banks, the CCI noted that various banks did not qualify to be called as enterprise falling in same the

group.

• In the 2014 Mr. Om Datt Sharma vs. M/s. Adidas and Ors. order198 involving allegations of abuse of dominance

by Adidas and Reebok, the CCI observed that Adidas AG had acquired 100% equity in the Reebok International

Limited, which, through its wholly owned subsidiary Reebok (Mauritius) Company Limited, owned 93.15% of the

equity shares in Reebok India Company. Thus, the CCI held that all the opposite parties could be treated as ‘a

group’ for the purpose of Section 4 of the Competition Act.

• In the 2016 XYZ vs. REC Power Distribution Company Limited order199, involving allegations of abuse of dominance

under Section 4(2)(c) and (e) against Rural Electrification Corporation Limited (REC) and REC Power Distribution

Company Limited (RECPDCL) as a group, the CCI made the following observations in order to establish that

RECPDCL and REC formed a group under the Competition Act: (i) RECPDCL is a wholly owned subsidiary of REC,

(ii) the Chairman of RECPDCL is the Chief Managing Director of REC, (iii) both REC and RECPDCL shared common

board affiliations, (iv) REC officials have been seconded to RECPDCL, etc.

7CHAPTER

196. Mr. Mohammed Tariq Sultan vs. HSBC Limited and Ors. (Case No. 39 of 2011)

197. Mr. Mohammed Tariq Sultan vs. HSBC Limited and Ors. (Case No. 39 of 2011)

198. Mr. Om Datt Sharma vs. M/s. Adidas AG, M/s. Reebok International Limited and M/s. Reebok India Company (Case No. 10 of 2014)

199. XYZ vs. REC Power Distribution Company Limited (Case No. 33 of 2014)


• In the 2016 Turbo Aviation vs. Bangalore International Airport and Ors. order200, which involved allegations of

abuse of dominance by Bangalore International Airport Limited (BIAL) and GVK Power & Infrastructure Limited (GVK),

as a group, in the market of ground handling services at Kempegowda International Airport, the CCI observed that

GVK, through one of its subsidiaries (i.e. Bangalore Airport & Infrastructure Developers Private Limited) held 43%

shares in BIAL.

Therefore, BIAL and GVK constituted a group as: (i) Explanation (b)(i) to Section 5 of the Competition Act stipulates

the requirement of exercise of 26% or more of the voting rights in another company; and (ii) the MCA has exempted

‘Groups’ exercising less than 50% voting rights in other enterprise only from provisions of Section 5, and not Section

4, of the Competition Act. Accordingly, the dominance of BIAL and GVK, together as a group, was analysed in this

matter.

• In 2017, in Usha Roy vs. ANS Developers201, which involved allegations of contravention of Section 4 provisions,

Ms. Usha Roy (the informant) tried to prove that ANS Developers Private Limited (ANS Developers) and Shalimar

Corp. Limited (Shalimar) were part of same group based on the fact that Shalimar owned 63.04% of shareholding

of ANS Developers. Further, ANS Developers and Shalimar had the same registered address and corporate office.

Therefore, the CCI went on to assess the allegations against ANS Developers and Shalimar individually and as a

group.

• In 2018, in House of Diagnostics vs. Esaote202, which involved allegations of contravention under Section 3 and

4 of the Competition Act against Esaote S.p.A. and Esaote Asia Pacific Diagnostic Private Limited (Esaote Asia

Pacific), while assessing the dominance of the two enterprises, the CCI noted that Esaote S.p.A. was a world leader

in ‘Dedicated Standing/Tilting MRI machine’ whereas Esaote Asia Pacific was a 100% step-down subsidiary of

Esaote S.p.A. in India, and dealt exclusively with the machines manufactured by Esaote S.p.A., including marketing

and after-sale services in India. Therefore, according to the CCI, Esaote S.p.A. and Esaote Asia Pacific belonged

to the same group, and the Esaote group commanded a virtual monopoly i.e. 100% market share in the market for

dedicated standing/tilting MRI Machines in India.

• In 2018 in K.C. Marketing vs. OPPO Mobiles MU Private Limited203, the CCI noted from the information available

in the public domain that OPPO, Vivo, and OnePlus brands of smartphones were owned by a single entity i.e.

BBK Electronics. However, the CCI realised that even if the combined market share of OPPO, Vivo, and OnePlus

in the relevant market is looked at as a ‘group’ as defined under Section 4 Explanation (c) read with Section 5

Explanation (b) of the Competition Act, BBK Electronics, though a significant market player, is not dominant in the

relevant market. Hence, in the absence of dominant position of the OPPO Mobile MU Private Limited in the relevant

market, any question of abuse of dominance did not arise.

200. Turbo Aviation Private Limited vs. Bangalore International Airport Limited and Ors. (Case No. 59 of 2015)

201. Usha Roy vs. ANS Developers Private Limited and Ors. (Case No. 96 of 2016)

202. House of Diagnostics LLP vs. Esaote S.p.A and Anr. (Case No. 09 of 2016)

203. K.C. Marketing vs. OPPO Mobiles MU Private Limited (Case No. 34 of 2018)


GROUP UNDER SECTION 3

IS'GROUP'ASAMEAS'SINGLEECONOMICENTITY'?

In line with the international practice, the CCI orders under Section 3 of the Competition Act often refer to the term ‘single

economic entity’ instead of the term ‘group’. Generally, entities belonging to the same group e.g. holding-subsidiary

companies are presumed to be part of a ‘single economic entity’, however the presumption is not irrebuttable.204 Under

Section 2(h) of the Competition Act, the term ‘enterprise’ has been defined in a comprehensive way to consist of ‘units’,

‘divisions’ and ‘subsidiaries’. Thus, a ‘subsidiary’ and a ‘holding company’ could constitute one enterprise for Section

3 analysis. Similarly two subsidiaries of the same holding company/entity could also be treated as part of the same

group and will be covered under ‘single economic entity’. As regards non-subsidiaries, the Indian law is unequivocal and

unambiguous that they are not part of a single ‘enterprise’ (‘single economic entity’).

The concept of single economic entity was first explained in the Exclusive Motors case205, concerning an alleged anti-

competitive agreement between Automobili Lamborghini S.p.A. (a foreign company) and Volkswagen India (its Indian

group company), wherein the CCI held that an ‘agreement’ between entities constituting one enterprise cannot be

assessed under the provisions of the Competition Act, in accordance with the internationally accepted doctrine of ‘single

economic entity’. As per the CCI’s order, when an entity is controlled by a single legal entity (natural person or juridical

person) there is certainty and stability as regards ‘control’. From a competition perspective what is important is to carefully

look at whether the parties are a single entity in substance and not just in form, especially since competition laws apply

to economic activity.

FACTORS FOR ‘SINGLE ECONOMIC ENTITY’

In order to prove that two entities constitute a ‘single economic entity’, the following factors need to be considered: (i)

the extent of shareholding of the parent in the subsidiary; (ii) whether the parent has control over the board of directors

of the subsidiary, (iii) whether the parent and the subsidiary have been consistently representing themselves as part of

the ‘single economic entity’ for other regulatory compliances; (iv) the extent to which the parent had a share in the profits

of the subsidiary; (v) whether the combining parties have been presenting themselves as one entity to the customers and

competitors, (vi) whether they had a unity of control as regards marketing and procurement, and (vii) how long has such

unity of purpose been in existence and has it been consistent.206

Further, in one 2018 CCI combination order in Unilever PLC/Unilever NV207 the combination involved subsuming two

ultimate holding companies of Unilever Group i.e. Unilever PLC and Unilever NV into New NV. The parties claimed that

both Unilever PLC and Unilever NV have been operating as a single economic entity as can be seen from the special

provisions in their respective articles of associations, together with a series of agreements. The CCI noted that post the

proposed combination there will be no change in the shareholding pattern or management of any of the Unilever Group

of Companies.

204. Shri Shamsher Kataria vs. Honda Siel Cars India Limited and Ors. (Case No. 03/2011)

205. Exclusive Motors Private Limited vs. Automobili Lamborghini S.P.A. (Case No: 52/2012)

206. Dissent Note – Grasim Industries Limited/Aditya Birla Chemicals (India) Limited (C-2015/03/256)

207. Unilever PLC/Unilever NV (C-2018/05/569)


In 2017 in Delhi Jal Board vs. Grasim Industries208, allegations of bid rigging were made against Aditya Birla Chemicals

(India) Limited (ABCIL) and Grasim Industries Limited (Grasim). Grasim and ABCIL submitted that they did not exercise

competitive constraints on each other as they were a part of the Aditya Birla group and formed a single economic

entity. However, the CCI observed that Grasim and ABCIL submitted separate bids to the invited tenders and further

mentioned that ‘Where two or more entities of the same group decide to separately submit bids in the same tender, they

have consciously decided to represent themselves to the procurer that they are independent decision making centers and

independent options for procurement….Any argument by such entities to the effect that they decided to submit separate

bids but the prices were decided by the same person, which fact is not known to the procurer, cannot be used to escape

the provisions of law. ABCIL and GIL cannot avoid the responsibility cast under Section 3(3)(d) read with Section 3(1) of

the Act under the garb of belonging to the same group’.

In 2014, in Shamsher Kataria vs. Honda Cars209, the CCI observed that the exemption of single economic entity stems

from the inseparability of the economic interest of the parties to the agreement. The CCI observed that original equipment

manufacturers (OEMs)210 such as BMW, Fiat, Ford, General Motors, Honda, Mercedes-Benz, Volkswagen, Toyota, and

Skoda who had agreements/arrangements with their respective overseas suppliers need not be scrutinized under Section

3 of the Competition Act in view of the ‘single economic entity’ justification claimed by them. However, OEMs like Maruti

and Hindustan Motors, which imported spare parts from overseas suppliers which were not part of the same corporate

group, could not claim the protection of the aforesaid doctrine of a ‘single economic entity’ and such agreements/

arrangements could be scrutinized under Section 3 of the Competition Act.

IS‘ASSOCIATION’A'GROUP'?

The term ‘association of enterprise’ under Section 3 of the Competition Act is not same as the expression ‘group’ under

Section 4 of the Competition Act. The definition of ‘group’ covers only ‘enterprises’ and therefore, ‘associations’ which

do not form an enterprise do not get covered under the definition of ‘group’.

In Eros International Media Limited vs. Central Circuit Cine Association, Indore, Film Distributors Association, Kerala,

Northern India Motion Pictures Association and Motion Pictures Association (Case No. 52 and 56 of 2010), the

director general (DG) and the CCI found that the film associations did not qualify to be called ‘enterprise’ and once the

associations are not ‘enterprise’ in terms of Section 2(h), their conducts also cannot be examined under Section 4 of the

Act since it is only the conduct of an ‘enterprise’ or a group of enterprise as defined in Section 5 of the Act...”. 211

The CCI has also mentioned in Shri V. Ramachandran Reddy vs. HDFC Limited212 that where the association of persons

or enterprises is publicly identified as a group with a unity of purpose they are named a ‘cartel’.

208. Delhi Jal Board vs. Grasim Industries Limited and Ors. (Ref. Case Nos. 03 and 04 of 2013)

209. Shamsher Kataria vs. Honda Siel Cars India Limited Ors. (Case No. 03/2011)

210. BMW, Fiat, Ford, General Motors, Honda, Maruti, Mercedes-Benz, Volkswagen, Hindustan Motors and Toyota, Skoda

211. Motion Pictures Association vs. Reliance Big Entertainment Private Limited (Appeal No. 69 of 2012); Reliance Big Entertainment Limited etc. etc. vs. Karnataka Film Chamber of Commerce and Ors. etc. (Case Nos. 25, 41, 45, 47, 48, 50, 58 and 69 of 2010)

212. Shri V. Ramachandran Reddy and Ors. vs. HDFC Limited and Anr. (Case Nos. 7/28 and 8/28)


In 2018, in India Glycols Limited vs. Indian Sugar Mills Association and Ors.213, wherein it was alleged that Indian

Sugar Mills Association (ISMA) was forcing the public sector undertaking (PSU) oil manufacturing companies (OMCs)

to purchase ethanol at an artificially higher price and violating provisions of Section 4 of the Competition Act, the CCI

noted that the primary activities of ISMA are: (i) to provide a platform to its constituent members to discuss matters of

common interest related to the sugar industry besides; and (ii) making representations in the form of correspondence

and presentations with/before the various Indian government authorities and agencies relating primarily to matters of

policy and procedures governing the sugar industry. Thus, the CCI held that ISMA is not engaged in any economic or

commercial activity as enumerated under Section 2(h) of the Competition Act for an entity to qualify as an ‘enterprise’,

and further it would be subversion of law if ISMA is held to be an ‘enterprise’ for providing its platform to the members

as ‘services’.

Further, the CCI has clarified that the Hon’ble Supreme Court of India’s observation in the case of CCI vs. Coordination

Committee of Artistes and Technicians of W.B. Film and Television214, stating that “…Thus, any entity, regardless of its

form, constitutes an “enterprise” within the meaning of Section 3 of the Act when it engages in an economic activity”

was rendered in the context of anti-competitive conduct of trade associations which was examined under Section 3 of

the Competition Act. Further, the judgment emphasizes the nature of the activity undertaken by an entity (i.e. economic

activity) to qualify as an ‘enterprise’.

Similarly, the CCI clarified that where it stated in Shivam Enterprises v. Kiratpur Sahib Truck Operators Cooperative

Transport Society Limited215 that ‘normally associations do not themselves engage in any economic activities and as such,

such associations are usually not ‘enterprises’’, it had examined the functional aspect of the associations to reach such

conclusions.

ARE'GOVERNMENTDEPARTMENTS'COVEREDUNDER'GROUP'?

In Jindal Steel and Power vs. SAIL216, the CCI noted that the definition of enterprise under Section 2(h) of the Competition

Act includes a department of the government which is engaged in activities relating to economic functions, and it is

possible and conceivable that even a government department being an enterprise may enter into an anti-competitive

arrangement or abuse its dominant position. Further, the definition also covers those institutions connected with activities

relating to the provision of services of ‘any kind’, and not only the provision of goods.217

However, certain government departments, due to the nature of their functions, do not qualify as an ‘enterprise’.

For instance,

• In Cupid Limited vs. Ministry of Health & Family Welfare, Government of India and Anr.218 CCI observed that

213. India Glycols Limited vs. Indian Sugar Mills Association and Ors. (Case No. 94 of 2014)

214. Competition Commission of India v. Coordination Committee of Artistes and Technicians of W.B. Film and Television, ((2017) 5 SCC 17)

215. Shivam Enterprises v. Kiratpur Sahib Truck Operators Cooperative Transport Society Limited, (Case No. 43 of 2013)

216. Jindal Steel and Power Limited vs. Steel Authority of India Limited (Case No. 11/2009)

217. Biswanath Prasad Singh vs. Director General of Health Services (DGHS), Ministry of Health and Family Services and Ors. (Appeal No. 63 of 2014)

218. Cupid Limited vs. Ministry of Health and Family Welfare, Government of India and Anr. (Case No. 45 of 2018)


219. M/s Bio-Med Private Limited vs. Ministry of Health and Family Welfare, Government of India, New Delhi and Ors. (Case No. 26 of 2013)

220. Om Prakash vs. Central Bureau of Narcotics Ministry of Finance and Narcotics Control Bureau Ministry of Home Affairs (Case No. 41/2013)

221. Jupiter Gaming Solutions Private Limited vs. Government of Goa and Anr. (Case No. 15 of 2010)

222. All India Genset Manufacturer Association vs. Chief Secretary, Government of Haryana Civil Sectt. Chandigarh, Haryana and Ors. (Case No. 38/2012)

223. Dr. Biswanath Prasad Singh vs.Director General of Health Services (DGHS) and Ors. (Case No.20/2014)

the Ministry of Health & Family Welfare, a ministry of the Government of India, which is, inter alia, engaged in

formulation of guidelines, regulations and policies for those matters that are incidental and ancillary to the health

and public welfare sector in India cannot be said to be commercial in nature and therefore, Ministry of Health &

Family Welfare under the Government of India does not fall within the definition of ‘enterprise’ as defined in Section

2(h) of the Competition Act. Similar observations were made in relation to Ministry of Health & Family Welfare

under the Government of India for not qualifying as an enterprise in M/s Bio-Med Private Limited vs. Ministry of

Health & Family Welfare, Government of India and Ors.219

• In Om Prakash vs. Central Bureau of Narcotics Ministry of Finance and Narcotics Control Bureau Ministry of Home

Affairs220, where a farmer alleged that practices adopted by the Central Bureau of Narcotics (OP1) and Narcotics

Control Bureau (OP2) in implementing the EXIM Policy 2009-14, EXIM Code No. 12079100, for registration of

import contracts of opium were anti-competitive, the CCI noted that OP 1 and OP 2 were only agencies appointed

by the Government of India to regulate and control the import of poppy seeds into India to ensure that illegally

cultivated poppy seeds are not smuggled into India. As such, owing to the nature of activities of OP1 and OP2, they

could not be compared to a commercial organization and do not qualify to be an enterprise within the meaning of

Section 2(h) of the Competition Act. Thus, where such government departments cannot be classified as enterprises,

they also cannot fall under the ambit of definition of ‘group’.

However, not all government departments are engaged in activities relating to sovereign functions of the Government of

India, which can be understood from the following CCI orders:

• In the 2011 Jupiter Gaming vs. Government of Goa order221 involving allegations of abuse of dominance against

the Government of Goa for depriving smaller parties from participating in the Lottery Tender, the CCI noted that

lottery is a ‘service’ for the purposes of the Competition Act and the Government of Goa has been given the

exclusive authority to run lotteries in the State of Goa, and it is engaged in the activity of appointing operators for

this purpose. Therefore, the Government of Goa was held to be covered within the definition of the term ‘enterprise’.

• In the 2012 All India Genset Manufacturer Association vs. Chief Secretary, Government of Haryana Civil Sectt.

Chandigarh, Haryana222 order, which involved allegations of abuse of dominance against the Director of Supplies

and Disposals, Haryana in relation to the purchase of diesel gen-sets by way of putting unfair and discriminatory

conditions, the CCI noted that Director of Supplies and Disposals, Haryana had floated tenders on behalf of

different Government Departments of Haryana for the purchase of Gensets, and the purchase of Gensets obviously

is a commercial activity of the department, and the Director of Supplies and Disposals, Haryana would satisfy the

definition of an ‘enterprise’ as given in Section 2(h) of the Competition Act.

• One of the most notable cases includes the 2014 order in Dr. Biswanath Prasad vs. DGHS and Ors.223 where the


224. Biswanath Prasad Singh vs. Director General of Health Services (DGHS), Ministry of Health and Family Services and Ors. (Appeal No. 63 of 2014)

225. Association of Third Party Administrators vs. General Insurers’ (Public Sector) Association of India and Ors. (Case No. 107 of 2013)

226. New India Assurance Co. Limited, National Insurance Co. Limited, United India Insurance Co. Limited, Oriental Insurance Co. Limited

227. The same informant had filed similar information against same opposite parties in 2010 and the CCI vide its majority order dated 08 July 2011 had opined that it would be premature to anticipate or imagine the emergence of dominance by only considering the invitation for an EOI floated by GIPSA for a yet to be formed new TPA.

principal allegation was that the Director General of Health Services (DGHS) under the Central Government Health

Scheme discriminated between hospitals on the basis of their accreditation to the National Accreditation Board for

Hospitals and Healthcare Providers (NABH). According to the CCI in its 2014 order, the activities being performed

by DGHS cannot be covered in the definition of enterprise because it is not directly engaged in any economic

and commercial activities. However, in the 2016 appeal order224, the COMPAT observed that the CCI noted that

DGHS is an attached office of the Department of Health and Family Welfare under the Ministry of Health and

Family Welfare, Government of India and was involved in (i) rendering technical advice on all medical and public

health matters, (ii) implementation of various health services, and (iii) prescribing the rates of reimbursement to the

hospitals under the CGHS scheme. COMPAT noted that the DGHS is clearly in the nature of a service provider and

it could not be said to be performing a sovereign function and, therefore, warranting exclusion from the definition

of enterprise. Accordingly, COMPAT remitted the matter to the CCI for reconsideration for the CCI to take a prima

facie view on whether a case is made out for investigation under Section 26(1) recognizing that the DGHS is

covered under the definition of ‘enterprise’ under Section 2(h) of the Competition Act.

ARE PSUsCOVEREDUNDER'GROUP'?

An ‘enterprise’ as defined in Section 2(h) of the Competition Act means ‘a person or a department of the Government

......’ and ‘person’ as defined in Section 2(l) of the Competition Act includes individuals, HUFs, Companies etc. So

every company, even a PSU, comes within the purview of Section 3 and Section 4 of the Competition Act. However, if

the Government is exercising control over the management or affairs of any PSU without itself engaging in the activities

required to be undertaken as an ‘enterprise’, in such a situation, the Government would not be considered as an

enterprise for that particular purpose.

INSURANCE SECTOR

Two important orders passed by the CCI in the insurance sector provides guidance on the concept of enterprise and single

economic entity. In one case, Association of Third Party Administrators vs. General Insurers’ (Public Sector) Association

of India and Ors.225, involving primary allegations of public sector general insurance companies (PSGICs)226 acting

in anti-competitive manner by forming a joint venture captive third party administrator (HITPA) and using association of

PSGICs (General Insurers’ (Public Sector) Association of India) as a platform for sharing data between horizontally placed

players.227, the CCI was faced with the question of whether the Government of India and the PGSICs constituted a ‘single

economic unit’. The CCI noted that ‘…..if the Government is exercising control over the management or affairs of any PSU

without itself engaging in the activities required to be undertaken as an ‘enterprise’, in such a situation, the Government

would not be considered as an enterprise for that particular purpose”. Further, the CCI observed that ‘All PSGICs are

independent in their operational decisions. The prerogatives exercised by a State acting as a public authority rather than


228 Cartelization by public sector insurance companies in rigging the bids submitted in response to the tenders floated by the Government of Kerala for selecting insurance service provider for Rashtriya Swasthya Bima Yojna (Suo Moto Case No. 02 of 2014)

229 Arshiya Rail Infrastructure Limited vs. Ministry of Railway and Ors. (Case No. 64/2010, 12/2011 and 02/2011)

230 DG had stated the following reasons for its conclusion: (i) MoR and CONCOR are an ‘enterprise’ as per the relevant provisions of the Act, (ii) CONCOR is a government company in which the President of India holds more than 50% share through the MoR. Further, the part-time non-executive Chairman is a government nominee and so is one of the 5 part-time directors, and (iii) the Chairman of CONCOR is - Member Traffic, Railway Board, MoR who deals with the policy on container train operations.

as a shareholder, in so far as they are limited to the protection of the public interest; do not constitute control within the

meaning of the Act. Further even the PSGICs cannot be considered to be a group as none of them have cross holding

in terms of voting rights, power to appoint board of directors or control on the management or affairs inter se. Therefore,

the question of them being part of the single economic entity does not arise.’

In yet another case, Cartelization by public sector insurance companies in rigging the bids228, where the same 4

PSGICs were found guilty of bid rigging by the CCI and the CCI’s decision was upheld by COMPAT in 2016, the

main contention of the insurance companies in this case was that they were under the Central Government which held

100% shareholding and as such were a single economic entity within the meaning of the Competition Act. It was argued

that Central Government, through the Department of Finance Services (DFS), was providing general insurance services

through these four insurance companies. However COMPAT observed that DFS, which is the part of Ministry of Finance

discharging functions of the Central Government, is separated by a statutory wall from the insurance companies.

RAILWAYS SECTOR

In the August 2012, Arshiya Rail Infrastructure Limited (ARIL) vs. Ministry of Railways (MoR) through the Chairman, Railway

Board (KB) and Container Corporation of India Limited (CONCOR) order229 the DG had concluded that that CONCOR

and MoR constituted a ‘group’ (railway entity)230 in the relevant market, in terms of Explanation (b) to Section 5 of the

Competition Act as (i) the President of India held more than 50% share in CONCOR (a government company) through

MoR; (ii) the part-time non-executive Chairman and one of the 5 part-time directors is a government nominee; and (iii)

Member Traffic, Railway Board, MoR is also the Chairman of CONCOR. However, the CCI held that, they both cannot

be considered to constitute a ‘group’ for the following reasons:

(i) the shares in CONCOR are owned by the Government of India but no decisional control is exercised by the

Government in day to day affairs of the CONCOR.

(ii) The appointment of the board of directors of CONCOR is done by the Government only on the basis of

recommendations of the PESB, a body which works independently. Therefore, the ultimate decision in this regard

rests with the Cabinet Committee on Appointment and not with the MoR.

(iii) The independence of the Board of Directors of CONCOR has been preserved since the directives to the Board can

only be issued by the Government, albeit on the specific approval of the minister in-charge and in practice, it is an

extremely rare occurrence.

(iv) The number of Board of Directors of CONCOR connected with MoR is only two, which is less than 50%. The Board

has a total of 10 directors as on date, of which five are full time directors appointed on the recommendations of the

PESB, and three are part time independent directors, and only two are connected with the MoR.


231. Shri Sharad Kumar Jhunjunwala vs. Union of India and Ors. (Case No. 100/2013), Shri Ismail Zabiulla vs. Union of India, Ministry of Railways and Ors. (Case No. 49/2014), Shri Yaseen Basha vs. Union of India and Ors. (Case No. 89/2014)

232. North East India Petroleum Dealers Association vs. Ministry of Petroleum and Natural Gas and Ors. (Case No. 95 of 2013)

233. M/s. Royal Energy Limited vs. M/s. Indian Oil Corp. Limited (Case No. 1/28 (C-97/2009/DGIR))

Therefore the CCI observed that while it was true that 63.09% of the equity of CONCOR is held by the Government

of India, however, MoR/IR and CONCOR cannot be said to be part of the group. Further, for the purposes of Section

4, two enterprises would normally be considered part of a group if they are operating in the same relevant market.

However, in Shri Sharad Kumar Jhunjunwala vs. Union of India and Ors., Shri Ismail Zabiulla vs. Union of India, Ministry

of Railways and Ors. and Shri Yaseen Basha vs. Union of India and Ors.231, it was alleged that the Indian Railway Group

was abusing its dominant position by imposing unfair and discriminatory conditions in sale of e-tickets, and also imposing

unfair and discriminatory prices in the sale of these tickets. The CCI, while establishing the dominance of IR and IRCTC

as a group, noted that MoR through Railway Board administers IR. Further, IRCTC was stated to be incorporated as an

extended arm of IR, and being 100% owned subsidiary of MoR. Therefore the CCI was in agreement with the DG that

MoR (IR) and IRCTC formed “group” for the purposes of the Competition Act.

OIL COMPANIES

Similarly, in the Oil and Gas Sector, in North East India Petroleum Dealers Association vs. Ministry of Petroleum & Natural

Gas and Ors.232 , the CCI observed that “As the public sector undertakings, which are controlled by the Government,

are not controlling the management or affairs of each other, they may not be considered as ‘group’ inter se for the

purposes of the Competition Act. Thus, the oil companies do not constitute a ‘group’ as envisaged under Explanation (b)

to Section 5 of the Competition Act.” However, in a dissenting order by Member Prasad, in it has been observed that

“Thus, the OMCs233 and the Ministry of P&NG form a group of enterprises in accordance with the definition of group

in Explanation (b) of Section 5 read with Explanation (c) of Section 4 of the Act. This group together has a market share

of 95% in petroleum and related products.”


APPENDIX A

The following affirmative voting/veto rights which require prior approval from the acquirers/investors/shareholders, may

on a standalone or a consolidated basis, tantamount to control as per the CCI’s decisional practice in (Multi Screen

Media Private Limited (MSM India)/SPE Mauritius Holdings Limited/SPE Mauritius Investments Limited/Grandway Global

Holdings Limited/Atlas Equifin Private Limited (C-2012/06/63); Century Tokyo Leasing Corp./Tata Capital Financial

Services (C-2012/09/78); Diageo Plc./Relay B.V./United Spirits Limited (C-2012/12/97); Alpha TC Holdings Pte

Limited/Tata Capital Growth Fund I (C-2014/07/192); Caladium Investment Pte. Limited/Bandhan Financial Services

Limited (C-2015/01/243); Order under 43A Piramal Enterprises Limited/Shriram Transport Finance Company/Shriram

Capital Limited/Shriram City Union Finance Limited (C-2015/02/249); AXA India Holdings/Société Beaujon/Bharti

AXA Life Insurance Company Limited/Bharti AXA General Insurance Company Limited (C-2015/04/267); Order 43A

Cairnhill CIPEF Limited/Cairnhill CGPE Limited/Mankind Pharma Limited (C-2015/05/276); Caladium Investment Pte.

Limited/Bandhan Bank Limited/Bandhan Financial Services Limited (C-2015/05/278); Mitsui & Co. (Asia Pacific)

Pte. Limited/Keimed Private Limited (C-2015/06/282); Westminster Bidco S.a.r.l./SoftwareONE Holding AG (C-

2015/09/309); FAL Corporation/ICICI Lombard General Insurance Company (C-2015/11/343); AIA International

Limited/Tata AIA Life Insurance Company Limited (C-2015/12/346); Nippon Life Insurance Company/Reliance Life

Insurance Company Limited (C-2015/12/358); Sun Life Financial (India) Insurance Investments Inc./Birla Sun Life

Insurance Company Limited (C-2015/12/362); Sanlam Emerging Markets (Mauritius) Limited/Shriram Life Insurance

Company Limited/Shriram General Insurance Company Limited (C-2016/03/379); NYLIM Jacob Ballas Indian

Holdings IV/Jacob Ballas Capital India Private Limited/Centrum Direct Limited/Centrum Retail Services India Limited/

Centrum Capital Limited (C-2017/02/482); Bayer Aktiengesellschaft/Monsanto Company (C-2017/08/523);

Macritchie Investment Pte. Limited/UST Holdings Limited (C-2018/05/567):

(i) entry into a new line of business/division or any diversification or change in the nature of business by target entity

or its subsidiaries or cessation of any current business (for instance: opening locations in any city in India);

(ii) decisions relating to strategic affairs such as approval of business plans, annual operating plan which includes

proposed annual budget or amendment and modification of any budget including but not limited to annual, medium

and/or long term business plans, financial strategies, product development proposals and the investment policy

etc.);

(iii) appointment and removal of key personnel (such as chief executive officer, chief financial officer, head of marketing,

head of programming and general counsel or any other employee whose salary is or is proposed to be greater than

some specific amount per year) of target entity, material terms of employment of such officers;

(iv) appointment of independent director(s) on the board of target entity;


(v) to dispose of or close the whole or any substantial part of any undertaking or undertake, merger, de-merger,

amalgamation, acquisition, reconstruction, re-organisation or consolidation, strategic sale or other similar

transaction or any arrangement or compromise with any creditors or shareholders, any demerger and the terms

thereof concerning target entity or any of its subsidiaries;

(vi) to create any new subsidiaries and/or affiliates of target entity or to permit any company to become its subsidiary,

or permit the target entity to enter into any joint venture, partnership or technology transfer arrangements and the

termination thereof etc.;

(vii) creation of or entering into or termination of joint ventures or partnerships and/or creation or sale/liquidation of its

significant strategic investments, direct/indirect joint ventures or its subsidiaries;

(viii) changes/amendments to the memorandum and/or articles of association;

(ix) changes in the capital structure, including through new issues of equity or equity linked securities, buy back, rights

issue, bonus issue, stock/share split, sweat equity shares, redemption of securities, capital reductions etc.;

(x) significant changes to the incentive structure of the senior management and appointment or removal of any member

of the senior management;

(xi) changes to the dividend policy;

(xii) decisions in respect of any of the above matters relating to the subsidiaries of target entity, which amounts to

acquisition of control as per the jurisdictional practice of the CCI.


ABOUT THE AUTHORS

NANDISH VYAS

Nandish Vyas specializes in Corporate and Competition law with an experience

of over 14 years. He has assisted the Ministry of Corporate Affairs, Government

of India and CCI in the drafting of India’s M&A related competition regulations.

He was involved in the first CCI filing in India and many thereafter. He regularly

represents clients for M&A related filings, issues pertaining to anti-competitive

agreements and behavioural issues before the CCI. He has been recognized as

a “Notable Practitioner” by IFLR1000 for M&A.

Email: [email protected]

GEET SAWHNEY

Geet Sawhney specializes in Competition Law. He deals with all aspects of Indian

competition law, with particular emphasis on merger control proceeding, abuse

of dominance and cartel matters. He has assisted clients operating in a broad

spectrum of industries including pharmaceutical, fast-moving consumer goods,

agro-chemicals, energy, retail, clothing, telecoms, and financial services etc. in

obtaining regulatory clearance, including for several complex and high-stake

M&A transactions.

Email: [email protected]

Forbes Building, 1st Floor, Charanjit Rai Marg, Fort, Mumbai 400 001 | Telephone: +91-22-43686700

Website: www.veritaslegal.in | Email: [email protected]

https://www.veritaslegal.in/home.html

DISCLAIMER

All information given in this handbook has been compiled from credible and reliable sources. Although reasonable care has been taken to ensure that the information in this handbook is true and accurate, such information is provided ‘as is’, without any warranty, express or implied as to the accuracy or completeness of any such information. Veritas Legal shall not be liable for any losses incurred by any person from any use of this publication or its contents. This handbook has been prepared for informational purposes only and nothing contained in this handbook constitutes legal or any other form of advice from Veritas Legal. The position of law expressed here

are only valid as on 12 July 2019.

Documents

Key concepts of GROUP and CONTROL under the Competition