Antitrust and Competition Newsletter | September 2024

The month of September marks a seminal shift in the Indian Competition Law regime, specifically in respect of the Merger Control regime. A series of notifications were issued by the Ministry of Corporate Affairs, Government of India ("MCA") and Indian Antitrust Authority, Competition Commission of India ("CCI") that revamped Indian merger control rules and introduced new procedural regulations. The notifications were issued to ensure effective implementation of the provisions of the Competition Amendment Act, 2023 ("Amendment Act"), which was introduced in April 2023. From the procedural standpoint, the CCI repealed the old regulations and introduced new set of Competition Commission of India (Combinations) Regulations, 2024 ("Combinations Regulation") and Competition Commission of India (General) Regulations, 2024 ("General Regulations, 2024").

On the enforcement front, according to sources in print media, CCI has requested for financial statements of e-commerce giants Amazon and Flipkart and is likely to pass its final order soon in an anti-trust probe launched in 2020 against Amazon and Flipkart [1]. Additionally, a probe is also expected to be initiated soon against quick commerce platforms like Zepto, Blinkit at the instance of the Department for Promotion of Industry and Internal Trade (DPIIT) following complaints from local retailers[2]. Apart from this, CCI has also closed two anti-trust information(s) and has approved merger of Tata Motors Finance Limited and Tata Capital Limited, among other combination approvals.

Our introductory Competition Law newsletter seeks to capture a quick overview of regulation of open offers under Indian merger control regime followed by a snapshot of the above-mentioned developments in Indian competition law, orders passed & combinations approved by the CCI, and other upcoming events.

I. Regulation of Open Offers under Indian Merger Control Regime

Open Offers are regulated distinctly under the Competition Act, 2002 ("Act"). Section 6A was interested vide Amendment Act in 2023 to accord certain relaxations to open offers etc. The provision of Section 6A is applicable to -

(i) implementation of open offers made in accordance with the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulation, 2011 (the "Takeover Code"); or

(ii) acquisition of shares or securities convertible into other securities from various sellers, through a series of transactions on a regulated stock exchange.

Such transactions may include hostile takeovers of the target entities without their consent. An open offer/transaction falling under Section 6A are not subject to an obligation under Section 6 (2A) which means that there is no requirement for open offers to be notified to the CCI before consummation, and that there does not exist any penalty for gun-jumping under Section 43A of the Act.
However, as per Regulation 5(4) of the Combinations Regulations, such open offers/transactions are mandatorily required to be notified to the CCI in an appropriate form within thirty (30) days from the date of first acquisition of shares pursuant to the implementation of an open offer/ transaction. In addition to the form, a declaration specified under schedule II of the Combinations Regulations is also to be filed.

Until the approval of CCI is received, the acquirer(s) are required to observe certain limitations with respect to exercise of their rights. Regulation 6 of the Combinations Regulations stipulate such limitations. As per the regulation, an acquirer can only enjoy economic benefits to the extent of receiving dividend, bonus shares, stock- splits etc., and can exercise voting rights only in matters related to liquidation or insolvency proceedings. The acquirer, its affiliate, and group entities are further restricted from exercising any influence over the target or any of its affiliates.

II. New Competition Law Framework

MCA and CCI have issued notifications that revamped the Indian merger control regime. Among other changes, the most prominent has been the introduction of Deal Value Threshold ("DVT") for combinations notification to the CCI. As per the new regime, the enterprises would not only have to assess their financial thresholds in terms of "Assets" and "Turnover" but also in terms "value of the transaction" under DVT. A DVT threshold would be met if the value of transaction exceeds INR 2000 crores, and the target enterprise has substantial business operations in India. The overall timeline for CCI's combination approval have also been reduced from 210 days to 150 days and the enterprises are also relaxed to notify a combination to CCI any time before consummation. In addition to these changes, the MCA has further codified -

(i) Exempted transactions under the Competition (Criteria for Exemption of Combinations) Rules, 2024;

(ii) Criteria for green channel route under Competition (Criteria of Combinations) Rules, 2024; and

(iii) De minimis exemption under Competition (Minimum Value of Assets or Turnover) Rules, 2024. New Combinations Regulations, 2024 and General Regulations, 2024 have also been issued by the CCI in the month of September.

A detailed overview of the said notifications can be assessed here (click here).

III. Orders Passed and Combinations Approved by the Competition Commission of India

a) Competition Commission of India closes information against Mitera Hospital, Kerala

In Re: Sabine S. And Mitera Hospital (Case No. 17 of 2024)

The CCI vide order dated 10.09.2024, closed an information against Mitera Hospital filed by Dr. Sabine S., Managing Director of Sabine Hospital and Research Centre Private Limited for alleged abuse of dominance under Section 4 of the Act. The informant alleged that the respondent hospital specializing in infertility care has abused its dominant position by uploading certain video(s) on its YouTube channel comprising of misleading statements/mis-information about the cost of IVF and fertility care. Informant alleged that these vides are detrimental to a competitive market and prejudice market players who are willing to offer quality treatment at an affordable rate. The CCI in its order noted that the nature of allegations concerning mis-information /mis-statements about the cost of IVF treatment do not fall under the ambit of the Act and hence, closed the information under Section 26(2) of the Act.

b) Competition Commission of India closes information against Cable TV Network Operators in State of Chhattisgarh

In Re: M/s Vande Mataram Cable TV Network and Ors. And Union of India and Ors. (Case No. 19 of 2024)

The CCI vide order dated 25.09.2024 closed an information filed by a registered Multi System Operator ("MSO") and a Local Cable Operator ("LCO") ("the informants") against another MSOs/LCOs situated in State of Chhattisgarh. Union of India, State of Chhattisgarh, and broadcasters Start India Pvt. Ltd and Zee Entertainment Enterprises Limited were also made party to the case by the informants. It was alleged by the informants that the opposite party MSO/LCO have infringed Section 3 and Section 4 of the Act by filing false criminal complaints against other cable TV network operators in Chhattisgarh and using police to intimidate them to forcefully acquire their cable TV networks.

With respect to allegations pertaining to anti-competitive agreements, CCI noted that in present case, the provisions of Section 3(1) read with Section 3(3) of the Act cannot be applied as the opposite parties are engaged in distinct roles. CCI noted that for application of Section 3(3) it requires two or more enterprises engaged in identical or similar trade of goods or provision of services, and even if they are not engaged in identical or similar trade, they must be presumed to be a part of an agreement if they participate or intend to participate in furthering such agreement, which is not the case in the present scenario. Further with respect to applicability of Section 4 of the Act, CCI noted that considering the facts and circumstances of the case, it does not find it imperative to define a relevant market. CCI also noted that informants have alleged violations of Section 4 against all the opposite parties and the Act does not provide for joint/collective dominance. Thus, no case of Section 4 of the Act is made out.

c) Combinations Approved by Competition Commission of India

i. CCI approved acquisition of 100% of the issued and paid-up share capital (on a fully diluted basis) of Home Credit by the acquirers - TVS Holdings Ltd; Srinivasan Trading Pvt. Ltd.; Mr. K. Gopala Desikan; Mr. Anuraag Agarwal; Mr. V. Ganesh; GWC Family Fund Investments Pte. Ltd; and PI Opportunities Fund-II.[3]

ii. CCI approved acquisition of less than 10% equity shareholding (on fully diluted basis) in Vastu Housing Finance Corporation Limited by Naspers Ventures B.V. [4]

iii. CCI approved merger of Tata Motors Finance Limited into Tata Capital Limited("TCL") with TCL being the surviving entity.[5]

iv. CCI approved acquisition of 100% share capital (on fully diluted basis) of Sunbeam Lightweighting Solutions Pvt. Ltd. (target) by Craftsman Automation Ltd (acquirer) in pursuance of an agreement entered with the seller Kedaara Capital Fund II LLP. [6]

v. CCI approved divestment of stake of Dixon Technologies (India) Limited ("DTIL") in AIL Dixon Technologies Pvt. Ltd. ("ADTPL"), a joint venture between DTIL and Aditya Infotech Ltd. ("AIL") by approving subscription of shares of AIL by DTIL, and acquisition of shares of ADTPL held by DTIL by AIL.[7]

vi. CCI approved intra-group acquisition of balance 51% shareholding of Rane NSK Steering Systems Private Limited by Rane Holdings Limited by way share purchase from the seller NSL Limited (Japan). [8]

vii. CCI approved acquisition of 100% shareholding of the Actis Holdings S.à.r.l. by GAP Arthur Holdco, L.P. [9]

viii. CCI approved acquisition of certain shareholding of Utkarsh CoreInvest Limited by Citrine Inclusion Limited. [10]

ix. CCI approved acquisition of 100% equity stake, management and control in 12 special purpose vehicles of PNC Infra-tech Limited and PNC Infra Holdings by Highways Infrastructure Trust("HIT"). 2452991 Ontario Limited envisaged to fund a part of the said acquisition to participate in the issuance of additional units by HIT. [11]

Deemed Approvals

x. APAC Company XXIX Limited and BC Asia Investments XX Limited received deemed approval of CCI to acquire shareholding and certain rights in the RSB Transmissions (I) Limited. [12]

xi. Tiga Acquisition Corp. III received deemed approval of CCI to purchase certain preferred stock of Dream Sports Inc. [13]

xii. TowerBrook Capital Partners L.P and Ascension Health Alliance (through their joint venture TCP-ASC ACHI Series LLLP) and Clayton, Dubilier & Rice Holdings LLC, received deemed approval of CCI for acquisition of voting securities in R1 RCM.[14]

xiii. India - Japan Fund received deemed approval of CCI to acquire certain Series G Compulsorily Convertible Preference Shares (CCPS) of Ather Energy Limited. [15]

IV. Mark Your Calendar: Upcoming Events!

• 6th Annual BIICL/Linklaters Tech Antitrust Roundtable scheduled on 19th November 2024. (click here)
• LIDC Annual Congress in London scheduled from 7th November to 9th November 2024. (click here)
• Crowell & Moring and King's College London Sixth Annual EU Competition Law Conference scheduled on 6th November 2024. (click here)

References

• Amazon, Flipkart to be penalised? CCI seeks financial statements from e-commerce giants: Report (deccanherald.com)
• Blinkit, Zepto to face CCI scrutiny after complaints from local retailers | Mint (livemint.com)
• C-2024/08/1178
• C-2024/08/1175
• C-2024/08/1174
• C-2024/08/1172
• C-2024/07/1169 C-2024/07/1167
• C-2024/07/1166
• C-2024/05/1154
• C-2024/05/1148
• C-2024/09/1189
• C-2024/09/1187
• C-2024/09/1182
• C-2024/09/1181

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