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NAVIGATING NEW HORIZONS: THE IMPACT OF GLOBAL ECONOMIC SHIFTS ON CROSS-BORDER M&A

The landscape of cross-border mergers and acquisitions (M&A) is continually reshaped by global economic shifts. As an advisor specializing in cross-border transactions and multinational company advisories, I have observed the distinct impact of these changes, especially from the Indian perspective.

Please click here or refer the below document to read the full article by Sidharrth Shankar, published in The Sunday Guardian.

Tags Corporate, Cross border, Global Economy, JSA, Leading Law Firm, Leading Lawyers, Merger and Acquisition

Dematerialization of shares: Mandatory for private companies

Private companies (other than a ‘small company’) are required to take steps towards dematerialization of all its securities with effect from 27 October 2023. The requirement applies to fresh issuance of securities and securities already issued by the relevant private company. This is the latest diktat from the Ministry of Corporate Affairs, which notified the ‘Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2023’ (the “Amendment Rules”) on 27 October 2023 (the “Notification Date”).

Among other things, the Amendment Rules have inserted a new rule, i.e., Rule 9B, to the Companies (Prospectus and Allotment of Securities) Rules, 2014. The new Rule 9B and what it means to private companies has been examined below:

Within eighteen (18) months from the close of a “financial year” (the “Cut-off Date”), every private company other than a “small company” that intends to issue securities must issue securities only in a dematerialized form. Further, every private company must “facilitate” the conversion of securities held in physical form into a dematerialized form. Such efforts must be undertaken with immediate effect. “Financial Year” for the purpose of Rule 9B means a financial year ending on or after 31 March 2023, in respect of which audited financial statements are available.

Please click here to read the full article by Ajay G Prasad, published in Lexology.

Tags Amendment Rules, JSA, Leading Law Firm, Leading Lawyers, Merger and Acquisition, Notification Date

Arbitration clause in a purchase order prevails over a conflicting arbitration clause contained in an invoice

Please click here to download the Prism as PDF.

The Bombay High Court (“Bombay HC”) has in Parekh Plastichem Distributors LLP vs. Simplex Infrastructure Limited[1] considered two conflicting arbitration clauses and held that an arbitration clause contained in a purchase order, which sets out the terms of engagement between the parties, prevails over an arbitration clause contained in an invoice raised by a party.

Brief Facts

Parekh Plastichem Distributors LLP (“Parekh”) supplied micro silica to Simplex Infrastructure Limited (“Simplex”) pursuant to various purchase orders issued by Simplex. These purchase orders contained the terms and conditions governing the relationship between the parties and included an arbitration clause which provided that the venue of arbitration would be Kolkata.

Parekh raised its invoices after successful delivery of the micro silica to Simplex. Simplex made payment of some of these invoices, however, an amount of INR 21,78,910 (Indian Rupees twenty one lakh seventy eight thousand nine hundred ten) remained outstanding. The invoices issued by Parekh also contained an arbitration clause which provided that the venue of arbitration would be Mumbai.

Parekh sent various reminders to Simplex for payment of the outstanding sum, however, Simplex failed to make payment. Given the same, the advocates for Parekh issued a notice dated July 15, 2021 to Simplex invoking the arbitration clause contained in the invoices issued by Parekh (which provided that the venue of arbitration would be Mumbai). Simplex did not issue any response to this notice.

Parekh filed an application under Section 11 of the Arbitration and Conciliation Act, 1996 before the Bombay HC to seek appointment of an arbitrator in terms of the arbitration clause contained in the invoices issued by it to Simplex (“Application”).

Simplex inter alia contended that the Bombay HC did not have jurisdiction to entertain the Application since the purchase orders issued by it contained an arbitration clause which provided that the venue of the arbitration would be Kolkata. The arbitration clause was unilaterally inserted by the Applicant in the invoices and could not supersede the arbitration clause contained in the purchase orders.

Issue

Whether the parties intended to be bound by the arbitration clause in the purchase orders issued by Simplex or the arbitration clause in the invoices raised by Parekh?

Findings and Analysis

The Bombay HC dismissed the Application and inter alia observed as follows:

The purchase orders issued by Simplex constituted the main agreement between the parties which contained the terms and conditions for supply of goods. It cannot be disputed that the arbitration clause contained in the purchase orders was agreed to by the parties.
In order to consider whether there is any arbitration agreement between the parties and also in order to consider what is that arbitration agreement, the intention of the parties is paramount. The parties intended to be bound by the arbitration clause in the purchase orders and not the arbitration clause contained in the invoices.
The act of Simplex in accepting the supplies made by Parekh and making payment towards the supply would not have the effect of the arbitration clause in the invoices superseding the arbitration clause in the purchase orders. There was no express agreement between the parties to override or supersede the arbitration clause contained in the purchase orders with the arbitration clause contained in the invoices.
The Supreme Court’s decision in Balasore Alloys Limited v. Medima LLC[2] considered a similar situation. In that case, the Supreme Court held that there was consensus ad idem between the parties to an arbitration clause contained in the comprehensive and all-encompassing agreement to the exclusion of the arbitration clause contained in an ancillary agreement. The ratio of this decision would apply to the facts of the present case since the purchase orders were comprehensive and contained all the terms of engagement between the parties. The arbitration clause in the purchase orders would govern the parties and not the arbitration clause contained in the invoices issued by Parekh.

Conclusion

This judgment may be of significance in cases where parties have standard form purchase orders containing an arbitration clause and subsequent documents which contain a conflicting arbitration clause. In such cases, the court will look at the contents of the documents under reference and the intention of the parties to decide which arbitration clause prevails.

This Prism has been prepared by:

Farhad Sorabjee
Partner

Pratik Pawar
Partner

Siddhesh Pradhan
Senior Associate

Meher Mistri
Associate

For more details, please contact [email protected]

[1] Arbitration Application No. 250 of 2021

[2] (2020) 9 SCC 136

Tags Arbitration, Bombay HC, Corporate, Dispute Resolution, JSA, Leading Law Firm, Leading Lawyers, Legal Updates, Merger and Acquisition

JSA Newsletter | Corporate InVision | August 2023 Edition

Please click here to download the Newsletter as PDF.

SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)

Framework for voluntary delisting of non-convertible debt securities/ non-convertible redeemable preference shares

The SEBI, vide notification dated August 23, 2023 (“Notification”), has amended the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR”) and introduced a specific framework for voluntary delisting of non-convertible debt securities/ non-convertible redeemable preference shares.

Prior to the Notification, neither SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 (“NCS Regulations”) nor the LODR had any specific provisions dealing with the voluntary delisting of non-convertible debt securities/ non-convertible redeemable preference shares. In the absence of any specific provisions, Regulation 59 of the LODR which deals with restructuring of non-convertible debt securities was used by certain issuers for delisting of non-convertible debt securities.

The Notification seeks to address that concern and provides for a specific framework in relation to voluntary delisting of non-convertible debt securities/ non-convertible redeemable preference shares and specifically provides for exclusion of Regulation 59 of LODR for voluntary delisting of non-convertible debt securities/ non-convertible redeemable preference shares under the new chapter. A new Chapter VIA has been added to the LODR which deals with the voluntary delisting of non-convertible debt securities or non-convertible redeemable preference shares from any or all the stock exchanges where they are listed. The broad framework contemplated by the Notification (along with timelines) is as under:

Sr. No.	Nature of event	Timeline (in working days) latest by
1.	Approval of proposal for delisting of non- convertible securities by board of directors of the listed entity	X
2.	Application for seeking in-principle approval from the stock exchange	X+15
3.	Grant of in-principle approval by the stock exchange	(X+15) + 15
4.	Disclosure of the prescribed information on the website of the listed entity as well as to the stock exchanges	[(X+15)+15] + 2
5.	Notice of delisting to be sent to holders of non- convertible debt securities	[(X+15)+15] +3
6.	Receipt of approval from all holders of non- convertible debt securities/ no-objection letter from the Debenture Trustee	{[(X+15)+15] +3} +15
7.	Final application to the stock exchange for delisting	({[(X+15)+15] +3} +15) + 5
8.	Disposal of final application by the stock exchange	({[(X+15)+15] +3} +15) +5) + 15
9.	Intimation to the stock exchange in the event of failure of delisting proposal	1 day from the date of event of failure

The above framework is not applicable in the following cases :

a listed entity that has outstanding listed non-convertible debt securities or non-convertible redeemable preference shares issued by way of a public issue; or
a listed entity has more than 200 (two hundred) security holders (other than qualified institutional buyers); or
non-convertible debt securities or non-convertible redeemable preference shares have been delisted by the stock exchanges as a consequence of any penalty or action initiated against the listed entity or on any grounds as specified under Rule 21 of the Securities Contracts (Regulation) Rules, 1957; or
non-convertible debt securities or non-convertible redeemable preference shares have been delisted by the stock exchanges pursuant to redemption of such securities or shares; or
non-convertible debt securities or non-convertible redeemable preference shares have been delisted pursuant to a resolution plan as per Section 31 of the of the Insolvency and Bankruptcy Code, 2016.

Provisions relating to enhanced transparency in ownership of Foreign Portfolio Investors (“FPIs”)

SEBI, vide notification dated August 10, 2023 (“August 10 Notification”), has amended the SEBI (FPI) Regulations, 2019 (“FPI Regulations”), to enhance transparency in ownership of FPIs.

August 10 Notification seeks to address the concerns in relation to:

Certain FPIs hold concentrated portion of their equity portfolio in a single investee company/ corporate group. Such concentrated investments raise the possibility that promoters of such investee companies/ corporate groups, or other investors acting in concert, could be using the FPI route for circumventing regulatory requirements like disclosures required under Substantial Acquisition of Shares and Takeovers Regulations, 2011 or maintaining Minimum Public Shareholding in the listed company.
Entities with large Indian equity portfolios potentially disrupting the orderly functioning of Indian securities markets by utilizing the FPI route to circumvent Press Note 3 dated April 17, 2020 (Press Note 3 dated April 17, 2020, is not applicable to FPI investments).
Non identification of natural persons as Beneficial Owners (“BO”) of several FPIs. While the thresholds for identification of BOs of FPIs are specified in Prevention of Money Laundering (Maintenance of records) Rules, 2005 (“PMLR”), it is often observed that no natural person is identified as the BO of several FPIs based on economic interest or ownership interest, since each investor entity in the FPI may be below the threshold prescribed in the PMLR. However, there is a possibility that the same natural person may hold a significant aggregate economic interest in the FPI via various investment entities, each of which are individually below the threshold for identification as a BO as prescribed in PMLR.

To allay the above concerns, August 10 Notification has added certain additional obligations in the Regulation 22 of FPI Regulations. The additional obligations provide for provision of such information or documents in relation to the persons with any ownership, economic interest or control, as specified by SEBI, by certain objectively identified FPIs. While August 10 Notification laws down the substantial law, the procedural law including the criteria of FPIs and the documents has been detailed vide circular dated August 24, 2023 (“Circular”), which will come into effect from November 1, 2023. The Circular provides that granular details of all entities holding any ownership, economic interest, or exercising control in the FPI must be provided by FPIs that fulfil any of the following criteria:

FPIs holding more than 50% of their Indian equity Assets Under Management (“AUM”) in a single Indian corporate group;
FPIs that individually, or along with their investor group hold more than INR 25,000 crore (Indian Rupees twenty five thousand crore) of equity AUM in the Indian markets;

The following FPIs are not required to make the disclosures:

government and government related investors registered as FPIs under Regulation 5 (a) (i) of the FPI Regulations;
public retail funds as defined under Regulation 22(4) of the FPI Regulations;
exchange traded funds (with less than 50% exposure to India and India-related equity securities) and entities listed on specified exchanges of the permissible jurisdictions as may be notified by the SEBI; and
pooled investment vehicles registered with/ regulated by a Government/ regulatory authority in their home jurisdiction/ country of incorporation/ establishment/ formation.

Special rights to unitholders and role of sponsor in Real Estate Investment Trusts (“REITs”) and Infrastructure Investment Trusts (“InvITs”)

SEBI (Real Estate Investment Trusts) Regulations, 2014 (“REIT Regulations”) and SEBI (Infrastructure Investment Trusts) Regulations, 2014 (“InvIT Regulations”) were notified on September 26, 2014. The underlying principle of various provisions in both the Regulations is that the units of REIT and InvIT are equal in all respects and hence all unitholders should have equal rights and no special rights should exist with any unitholder based on the units held in REIT/InvIT. It was noted by SEBI that certain REITs/InvITs have provided the right to nominate directors on the board of Manager/Investment manager to unitholders holding certain percentage of units of REIT/InvIT. Such rights provided to the unit holders above certain percentage of units were not envisaged in the REIT Regulations and InvIT Regulations and appears to be unequal. In this context, it has been represented before SEBI that the special rights are required by institutional investors to protect their investments in the REIT/InvIT. It was further argued that these rights are in the nature of protective rights typically sought by minority unitholders to protect their investment and would not impact the day-to-day functioning, business or operations of the REIT/InvIT. It has also been represented that such investors do not seek to control the manager/investment manager or REIT/InvIT in any manner. Taking the above into consideration, SEBI issued the following notifications amending the REIT and InvIT Regulations to provide regulatory framework for the special rights in REITs and InvITs:

SEBI (REIT) (Second Amendment) Regulations, 2023 dated August 16, 2023. The key amendments are as follows:
- new definitions, such as, “group entities of the Manager”, “Self-Sponsored Manager”, have been added;
- unitholders holding at least 10% of the total outstanding units can nominate a director on the board of directors of the Manager;
- Schedule IX inserted which specifies the stewardship code. Unitholders with substantial holdings are now obligated to act in the best interests of the REIT and its unitholders, formulate stewardship policies, manage conflicts of interest, and periodically monitor and intervene when necessary;
- the sponsor(s) and sponsor group(s) collectively must hold a specified percentage of units for varying periods, ensuring a sustained commitment to the REIT’s success; and
- transition from a Manager to a Self-Sponsored Manager is allowed.
SEBI (InvIT) (Second Amendment) Regulations, 2023 dated August 16, 2023. The key amendments are as follows:
- new definitions, such as, “group entities of the Investment Manager”, “Self-Sponsored Investment Manager”, “sponsor group”, have been added;
- “Self-Sponsored Investment Manager” is now recognized, referring to an Investment Manager with dual responsibilities as the Investment Manager and sponsor;
- unitholders holding at least 10% of the total outstanding units can nominate a director on the board of directors of the Investment Manager;
- units held to fulfil the minimum unitholding requirements will be locked in and cannot be encumbered;
- Schedule VIII inserted which specifies the stewardship code. This code is applicable to unitholders holding a minimum of 10% of the outstanding units and are obligated to act in the best interests of the InvIT and its unitholders, formulate stewardship policies, manage conflicts of interest, and periodically monitor and intervene when necessary; and
- transition from a Manager to a Self-Sponsored Investment Manager is allowed.

Reduction in validity period of approval granted by SEBI to Alternative Investment Funds (“AIFs”) and Venture Capital Funds (“VCFs”) for overseas investment

The SEBI, vide circular dated August 4, 2023, has reduced the time limit for making overseas investments by AIFs/VCFs from 6 (six) months to 4 (four) months from the date of prior SEBI approval. In case the applicant AIF/VCF does not utilize the investible fund limits allocated to them within the prescribed time, then SEBI may allocate such unutilized limit to other applicant AIFs/VCFs. The reason for the change is to ensure that the allocated limit is utilised efficiently and, if unutilised, the same is again available to the AIF industry in a shorter time span.

RESERVE BANK OF INDIA (RBI)

Penal charges in loan accounts

The RBI, vide circular dated August 18, 2023 (“Guidelines”), has issued guidelines for Regulated Entities (“REs”), to ensure reasonableness and transparency in disclosure of penal interest. The prevailing issues of high penal interest rates being used by the REs as a revenue enhancement tool has been recognized by the RBI. Concerns with such penal interest rates have led to numerous disputes and grievances. The Guidelines focus on preventing REs from capitalizing on penal interest/ charges as a means of enhancing the interest rate beyond what was agreed. The following instructions are issued for adoption from January 1, 2024:

penalty for non-compliance of material terms and conditions of a loan contract by the borrower will be treated as ‘penal charges’ and will not be levied in the form of ‘penal interest’ that is added to the rate of interest charged on the advances;
- the REs will not introduce any additional component to the rate of interest;
- the penal charges in case of loans sanctioned to ‘individual borrowers, for purposes other than business’, will not be higher than the penal charges applicable to non-individual borrowers for similar non-compliance of material terms and conditions; and
- the quantum and reason for penal charges will be clearly disclosed by REs to the customers in the loan agreement and most important terms and conditions / key fact statement, will be displayed on REs website.

For a detailed analysis, please refer to the JSA Prism of August 23, 2023.

Review of regulatory framework for Infrastructure Debt Fund (“IDF”) – Non-Banking Financial Company (“NBFCs”)

The RBI, vide circular dated August 18, 2023, has introduced framework for IDF-NBFCs with the objective of empowering them to play a more substantial role in financing the infrastructure sector and to harmonise the regulations governing financing of infrastructure sector by the NBFCs. The main aspects of the revised regulatory framework are:

IDF-NBFC to maintain a minimum NOF of INR 300,00,00,000 (Indian Rupees three hundred crore) and a capital-to-risk weighted assets ratio (“CRAR”) of at least 15%, with a minimum Tier 1 capital of 10%;
For computing CRAR, the assets of IDF-NBFCs will be risk-weighted as per the risk-weights applicable to NBFC-Investment and Credit Companies;
IDF-NBFC have to raise funds through issue of either rupee or dollar denominated bonds of minimum 5 (five) year maturity. With a view to facilitate better asset-liability management, IDF-NBFCs can raise funds through shorter tenor bonds and commercial papers from the domestic market to the extent of up to 10% of their total outstanding borrowings;
IDF-NBFCs can also raise funds via loans under external commercial borrowings with minimum tenor of 5 (five) years, where the loans should not be sourced from foreign branches of Indian banks. IDF-NBFCs were earlier allowed to raise funds through rupee or dollar-denominated bonds of minimum 5 (five) year maturity, to the extent of up to 10% of their total outstanding borrowings;
The exposure limits for IDF-NBFCs have to be 30% of their Tier 1 capital for single borrower/ party and 50% of their Tier 1 capital for single group of borrowers/ parties;
Under the earlier guidelines, an IDF-NBFC was required to be sponsored by a bank or an NBFC-Infrastructure Finance Company (NBFC-IFC). The requirement of a sponsor for an IDF-NBFC has now been withdrawn and shareholders of IDF-NBFCs shall be subjected to scrutiny as applicable to other NBFCs, including NBFC-IFCs; and
Earlier, IDF-NBFCs were required to enter into a tripartite agreement with the concessionaire and the project authority for investments in the Public Private Partnership infrastructure projects having a project authority. The requirement of the tripartite agreement has now been made optional.

JSA Updates

Jan Vishwas (Amendment of Provisions) Act, 2023 (“Jan Vishwas Act”)

Amendments sought to be made to certain enactments for decriminalising and rationalising offences to further enhance trust-based governance for ease of living and doing business. The main objective of the Jan Vishwas Act is to decriminalize minor offences that do not involve any harm to the public interest or national security and replace them with civil penalties or administrative actions. Jan Vishwas Act proposes to introduce revised monetary penalties and decriminalise certain penalties under the Information Technology Act, 2000 and has introduced new monetary penalties under the Payment and Settlement Systems Act, 2007. In the pharmaceutical sector, the Jan Vishwas Act proposes revisions to the Drugs and Cosmetics Act, 1940 and the Pharmacy Act, 1948.

For a detailed summary please refer to the JSA Prism of August 10, 2023 and JSA Prism of August 11, 2023.

Impact of the Data Protection Law on Mergers & Acquisitions and Corporate Restructurings

The President of India gave her assent to the Digital Personal Data Protection Act, 2023 (“Data Protection Act”) on August 11, 2023. The Data Protection Act will come into force once the Central Government issues a notification. The Data Protection Act gives the Central Government the power to notify different provisions of the Data Protection Act on different dates. All indicators point to a swift notification of the law, given that it has been in the offing for several years. As organizations ramp up their internal processes and systems, the impact of the new law on mergers and acquisitions and corporate restructuring also needs to be analysed.

For a detailed analysis, please refer to the JSA Prism of August 24, 2023.

Delhi High Court upholds contractors’ rights: Supplementary Agreements (“SA”) signed under pressure not a barrier to claims for damages

The Delhi High Court in the case of National Highways Authority of India v. M/s T.K. Toll Road Private Limited, has inter alia held that a SA executed between parties to an infrastructure project whereby the contractor has relinquished his claim to damages, does not prevent it from seeking damages against the employer, especially if the SA was executed as a pre-requisite to obtain a Provisional Completion Certificate, which is crucial for toll collection in Build, Operate, Transfer contracts.

For a detailed analysis, please refer to the JSA Prism of August 23, 2023.

Constitution of an arbitral tribunal is not a fetter on the court to hear an application under Section 9(1) of the Arbitration and Conciliation Act, 1996 if the court has already ‘entertained’ such application prior to the constitution

The Calcutta High Court, in Jaya Industries v. Mother Dairy Calcutta & Anr , has held that though Section 9(3) of the Arbitration and Conciliation Act, 1996 (“Act”) bars a court from entertaining an application for interim measures under Section 9(1) of the Act (on constitution of an arbitral tribunal), the court can still proceed to adjudicate the application if it has already applied its mind to the issues raised.

For a detailed analysis, please refer to the JSA Prism of August 18, 2023.

A Special Leave Petition to the Supreme Court against an order passed by the National Consumer Disputes Redressal Commission pursuant to its appellate jurisdiction, is not maintainable

The Supreme Court of India, in M/s. Universal Sompo General Insurance Company Limited v. Suresh Chand Jain & Anr, has held that a petition filed before the Supreme Court under Article 136 of the Constitution of India seeking special leave to appeal against an order passed by the National Consumer Disputes Redressal Commission pursuant to its appellate jurisdiction, is not maintainable.

For a detailed analysis, please refer to the JSA Prism of August 4, 2023.

This Newsletter has been prepared by:

Lalit Kumar
Partner

Sarvesh Kumar Saluja
Partner

Neeral Jain
Associate

For more details, please contact [email protected]

Tags Foreign Investment, Leading Law Firm, Leading Lawyers, Legal Updates, RBI, SEBI

Purchase Price Adjustment Mechanisms | Shraddha Krishnan Dash

Watch our latest edition of JSA Live, where partner Shraddha Krishnan Dash discusses two key mechanisms for determining the purchase price in M&A deals: the locked box method and the closing accounts adjustment method.

In the locked box approach, the price is fixed based on past financial statements, while in the closing accounts adjustment method, a tentative price is set and adjusted based on actual financials at closing. The former offers price certainty but shifts risk to the buyer, while the latter provides a more accurate financial picture.

Shraddha concludes that in the end, the choice depends on buyer profile, accounting practices, and market conditions.

Tags Corporate, JSA, Leading Law Firm, Leading Lawyers, Mergers and Acquisitions, Private Equity

GLOBAL MERGERS & ACQUISITIONS GUIDE

A. General

1. What is the main legal framework applicable to companies in your jurisdiction?

The corporate ecosystem in India has a set of exhaustive commercial laws governing the various aspects of companies. The parliamentary statutes delegated legislations and by-laws offer a comprehensive legal framework that govern and regulate the companies in India. Some of the pivotal business regulations in India are as follows:

Please refer to the below document to read the full publication by Sidharrth Shankar and Prakriti Jaiswal.

*In case the document is not visible on the device you are using, please click the link above.

Tags Delegated Legislations, India, JSA, Leading Law Firm, Leading Lawyers, Legal Framework, Merger and Acquisition

Impact of the Data Protection Law on Mergers & Acquisitions and Corporate Restructurings

Please click here to download the Prism as PDF.

The President of India gave her assent to the ‘Digital Personal Data Protection Act, 2023’ (“Data Protection Act”) on August 11, 2023. The Data Protection Act will come into force once the Central Government issues a notification. The Data Protection Act gives the Central Government the power to notify different provisions of the Data Protection Act on different dates. All indicators point to a swift notification of the law, given that it has been in the offing for several years. As organizations ramp up their internal processes and systems, one aspect that deserves careful attention is the impact of the new law on mergers and acquisitions (“M&A”) and corporate restructuring.

The Data Protection Act: Key Concepts

The Data Protection Act is divided into 9 (nine) chapters and 44 (forty-four) sections. The Central Government has the power to prescribe rules on several aspects of the data protection framework.
The Data Protection Act regulates processing of personal data which is in digital form. It repeals Section 43A of the information Technology Act, 2000 (“IT Act”) and by implication the ‘Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011’ (“SPDI Rules“). Non-digital forms of personal data will be regulated by the IT Act and the SPDI Rules.
Before embarking on a discussion on the topic, certain key concepts of the Data Protection Act are discussed below:
- “Data Principal” means the individual to whom the personal data relates.
- “Data Fiduciary” means any person who alone or in conjunction with other persons determines the purpose and means of processing of personal data.
- “Data Processor” means any person who processes personal data on behalf of a Data Fiduciary.
- “Personal Data” means any data about an individual who is identifiable by or in relation to such data. It is pertinent that the Data Protection Act does not make any distinction between sensitive and non-sensitive personal data.
- “Personal Data Breach” means any unauthorised processing of personal data that compromises the confidentiality, integrity, or availability of Personal Data.

“Processing” in relation to Personal Data, means a wholly or partly automated operation or set of operations performed on Personal Data which implies access and use of Personal Data.

M&A: What Should Organizations Pay Attention To?

Section 17(1) of the Data Protection Act states that the provisions of Chapter II (except sub-sections (1) and (5) of section 8), Chapter III and Section 16 of the Data Protection Act (“Identified Provisions”) will not apply to the processing of Personal Data of a Data Principal by a Data Fiduciary in certain situations.
To elaborate, Section 17(1)(e) of the Data Protection Act provides that the Identified Provisions would not apply with respect to:
1. a scheme of compromise or arrangement or merger or amalgamation of two or more companies;
2. reconstruction by way of demerger or otherwise of a company;
3. transfer of undertaking of one or more company to another company;
4. division of one or more companies;
5. approved by a court or tribunal, or other authority competent under law. The scenarios enumerated in 1-4 above will hereinafter be referred to as “Exempted M&A Scenarios”.
Since Section 17(1)(e) of the Data Protection Act requires an approval from a court or competent authority to claim the exemption, the Identified Provisions will apply in other M&A situations. For instance, any processing of Personal Data pursuant to a share purchase transaction that does not require an approval of a court or a competent authority. In such a case, processing of Personal Data by a Data Processor would face the full rigor of the Data Protection Act.
The position was different under the Digital Personal Data Protection Bill, 2022 (“2022 Bill”). Under the 2022 Bill, a deemed consent was accorded to “mergers, acquisitions, any other similar combinations or corporate restructuring transactions in accordance with the provisions of applicable laws”. The language accommodated various types of M&A.

Identified Provisions:

As discussed above, the Exempted M&A Scenarios do not attract the provisions of the Identified Provisions. It is therefore pertinent to examine the Identified Provisions in more detail.

Chapter II: Obligations of a Data Fiduciary

Chapter II of the Data Protection Act requires a Data Fiduciary to process the Personal Data of a Data Principal only in accordance with the Data Protection Act, for a lawful purpose and (i) for which the Data Principal has given her consent; or (ii) for certain legitimate uses.
The key aspects of the consent framework and legitimate use are discussed below:
1. Notice to the Data Principal for consent – A request for consent by the Data Fiduciary should be accompanied by a notice to the Data Principal. This notice will detail the purpose of collection.
2. Validity of consent already obtained – If a Data Fiduciary has already obtained the consent of the Data Principal prior to the notification of the Data Protection Act, the Data Fiduciary is still required to provide the notice contemplated above. The Data Fiduciary can continue to process such information till the revocation of her consent.
3. Specified purpose – The Data Fiduciary is required to process the Personal Data of the Data Principal for a ‘specified’ purpose only. It cannot be processed for purposes not directly relevant to the object of collecting the data in the first place. The law provides several illustrations to make this point.
4. Erasure – Unless retention is required by law, the Data Fiduciary should erase the Personal Data of the Data Principal upon the earlier of (a) withdrawal of consent; or (b) the specified purpose is no longer being served.
5. Legitimate use – The Data Fiduciary can process Personal Data sans consent if the proposed use is covered as a ‘legitimate use’ in terms of the Data Protection Act.
6. Data breach – Upon occurrence of a Personal Data Breach, the Data Fiduciary is obligated to immediately notify the affected Data Principal as well as the Data Protection Board regarding such a breach.

Chapter III: Rights and duties of the Data Principal

Chapter III of the Data Protection Act enumerates the rights and duties of the Data Principal which includes:

the right to access information about personal data;
the right to seek erasure of their data; and
the right to have their grievances settled.

Section 16: Processing of Personal Data outside India

The Central Government may ‘blacklist’ certain countries / territories for the purpose of transfer of Personal Data.

Further, if any law prescribes a higher threshold of protection, or specifies any restriction on the transfer of personal data outside India, such laws and the restrictions would prevail over the Data Protection Act. For example, the Reserve Bank of India’s stipulations on storing payments data only in India would override the transfer provisions in the Data Protection Act.

Sections from Chapter II that continue to apply to Exempted M&A Scenarios

Notwithstanding the exemptions, the following provisions continue to apply to Exempted M&A Scenarios (“Applicable Provisions”):

Obligation to comply overrides the duties of the Data Principal (Section 8(1)): A Data Fiduciary cannot waive its obligations under the Data Protection Act by claiming that there exists an agreement to such effect with the Data Principal, or that the Data Principal has failed to carry out the duties provided under the Data Protection Act.
Reasonable security safeguards (Section 8(5)): A Data Fiduciary is required to protect Personal Data in its possession or control by taking reasonable security safeguards to prevent Personal Data Breach.

Our Analysis on what Organizations should focus on:

If organizations are in the middle of evaluating M&A opportunities at the time of notification of the Data Protection Act, they must evaluate the impact of the Data Protection Act on their investment plans. They would first need to evaluate whether the chosen M&A structure is covered under the ambit of the Exempted M&A Scenarios or not. If the M&A structure is covered, they can then simply focus efforts on ensuring compliance with the Applicable Provisions only. If this is not the case, they will need to undertake efforts to comply with all the relevant sections of the Data Protection Act. Such compliance will be expected to cover the entire life cycle of an M&A deal, from due diligence to post-closing integration. Some of these aspects are explored in the ensuing section.

Personal Data of customers and vendors

M&A transactions typically require parties to process a lot of Personal Data relating to the target company and its business. Such information typically covers Personal Data of employees, vendors, and customers (i.e., the Data Principals). If the seller / target is required to disclose (i.e., process) the Personal Data of such Data Principals during the due diligence stage itself, the consent requirements under the Data Protection Act must be fulfilled at that stage itself.
Further, a transfer of business (i.e., ‘slump sale’ in Indian parlance) contemplates the transfer of the entire business undertaking. The undertaking typically comprises assets, liabilities and employees relating to a particular business. The processing of Personal Data relating to customers and vendors pursuant to the sale of a business undertaking would be subject to the consent framework. This would entail the seller of the business (being the Data Fiduciary) obtaining the consent of such Data Principals before processing of their Personal Data. Unless such a consent has already been obtained, the seller or target entity is required to issue the relevant notice and obtain a fresh consent for such processing.
Obtaining consents in M&A deals can sometimes prove cumbersome. It can also be time-consuming and this calls for a slightly practical and nuanced approach. We have detailed some alternatives as follows:(i) if possible, the seller / target can consider disclosing redacted data or anonymised data sets which makes it difficult to identify the Data Principal. Such disclosure falls outside the ambit of the Data Protection Act; (ii) defer disclosure of such information / Personal Data till closing. To provide the necessary comfort and protection to the buyer, the seller / target can offer representations and warranties, backed by requisite indemnities, on the information contained in the data sets.

Personal Data of employees

Certain transactions (like slump sale) contemplate the transfer of employees from the seller to the buyer. This would require the buyer and seller entities to exchange Personal Data relating to an employee. This would have required the consent of an employee as per the consent framework envisaged in the Data Protection Act. However, the Data Protection Act provides that processing of Personal Data for employment is a ‘legitimate’ use. This means that the Personal Data of the employee can potentially be processed without the employee’s consent provided the Personal Data is used for:

The employment of the Data Principal.
Safeguarding the employer from loss or liability, such as prevention of corporate espionage, maintenance of confidentiality of trade secrets, intellectual property, and/or classified information.
Provision of any service or benefit sought by a Data Principal who is an employee.

The seller can argue that the disclosure of such information is required to ensure that the buyer makes comparable offers to the employees for joining it. Since such disclosure relates to the employment of the Data Principal, it is covered under legitimate use, and hence is exempt from the consent requirements under the Data Protection Act.

It is however not clear if the above exemption can be availed to process the Personal Data of an employee of a subsidiary by a parent. In that case, the Data Principal in question is the employee of the subsidiary and parent. For example, A (a multi-national company), which is involved in a restructuring activity affecting the entire group, exempted from the consent requirements with respect to disclosure of Personal Data of all employees of the group. Depending on the circumstance, it may therefore be prudent to obtain the consent of the employees before processing their Personal Data.

Concluding thoughts:

Once enacted, the Data Protection Act has one of the stiffest penalty regimes among commercial legislations. The Data Protection Board is empowered to levy a penalty of up to INR 250 (two hundred and fifty) Crores for Data Fiduciary’s failure to take reasonable security safeguards to prevent Personal Data Breach. Failure to report a Personal Data Breach entails a maximum penalty of INR 200 (two hundred) Crores. Given that the penalties for non-compliance of the Data Protection Act are stringent, organizations must pay careful attention to how the new law impacts M&A activity to ensure preparedness and compliance.

This Prism has been prepared by:

Ajay G Prasad
Partner

Nayonika Sinha
Associate

For more details, please contact [email protected]

Tags Corporate, Data Protection, JSA, Leading Law Firm, Leading Lawyers, Mergers and Acquisitions, Restructuring

The Use & Practice of MAC Clauses in India

Our partners, Sajai Singh, Sidharth Sethi, and Pulkit Sukhramani, hosted an engaging training session on optimizing Material Adverse Change (MAC) clauses for M&A and lending deals. The session delved into crafting effective MAC clauses tailored to the Indian market and exploring emerging drafting trends. The topics covered included the core aspects of MAC clauses, their relevance in the Indian landscape, and crucial considerations for drafting and employing them in transactional paperwork.

Tags JSA, Leading Law Firm, Leading Lawyers, MAC Clauses, Webinar Recording

JSA Newsletter | Competition Law | July 2023

Please click here to download the Newsletter as PDF.

High Court

Delhi High Court: CCI cannot investigate anti-competitive practices by a patent holder in exercise of its rights

The Division Bench (two-judge bench) of the Delhi High Court (“DHC”) allowed the writ petitions filed by Telefonaktiebolaget LM Ericsson (“Ericsson”) and Monsanto Holdings Private Limited (“Monsanto”) and held that the Patents Act, 1970 (“Patents Act”) shall prevail over the Competition Act, 2002 (“Competition Act”) on the issue of exercise of rights by a patent holder and that the Competition Commission of India (“CCI”) does not have the power to investigate issues pertaining to the licensing of patents by a patent holder.

Brief Background

Pursuant to separate complaints filed by the licensees of Ericsson and Monsanto for abusing their dominant positions in licencing of their patents, the CCI passed 2 (two) separate investigation orders against Ericsson and Monsanto on January 16, 2014 and February 10, 2016, respectively (“Investigation Orders”). Aggrieved, both Ericsson and Monsanto challenged the Investigation Orders in separate writ petitions before the single judge of the DHC (“Single Judge”), arguing that the CCI does not have the jurisdiction in matters related to the exercise of rights by a patent holder as it falls within the exclusive domain of the Controller of Patents (“Controller”) under the Patents Act.

In March 2016, the Single Judge dismissed writ petition filed by Ericsson and upheld the CCI’s jurisdiction on the ground that there is no irreconcilable repugnancy and conflict between the Competition Act and the Patents Act. Therefore, the CCI’s jurisdiction to entertain complaints regarding abuse of dominance by Ericsson does not arise (“Ericsson Judgment”). In June 2020, relying on the Ericsson Judgment, the Single Judge dismissed the writ petition filed by Monsanto. The Single Judge also noted that the Supreme Court judgment in the case of CCI v. Bharti Airtel & Ors.[1] did not invalidate the Ericsson Judgment since the Telecom Authority of India’s (“TRAI”) role could be distinguished from that of the Controller (i.e., unlike TRAI, the Controller isn’t a sectoral regulator since patents do not constitute a sector).

Aggrieved, both Ericsson and Monsanto challenged the judgements by the Single Judge (collectively referred to as the ‘Judgments’) before the Division Bench of the DHC.

Division Bench Judgment

Ericsson and Monsanto primarily contended that the CCI does not have the jurisdiction to investigate their conduct as the Patents Act, being a special law and comprehensive self-contained code, will override the Competition Act. Accordingly, the Controller has the exclusive jurisdiction to decide on issues relating to licensing of patents. The Division Bench set aside the Judgments and inter-alia held as follows:

Chapter XVI of the Patents Act was introduced in the Patents Act in 2003, which deals with unreasonable conditions imposed in agreements of licensing, abuse of status as a patentee, inquiry in respect thereof and relief that is to be granted, was enacted after the Competition Act. Further, the Controller has the power to grant compulsory licence under Section 84 of the Patents Act, which has to be examined based on similar factors as to be examined for a potential violation under the Competition Act by the CCI. Accordingly, the inquiry that the CCI proposes to conduct in respect of licensing of patents is nearly identical to that of the Controller.
After analysing the provisions, and remedies available under the Patents Act and the Competition Act, as well as the powers and duties of the Controller and the CCI, the Division Bench noted that the issue relating to licensing of patents is within the exclusive jurisdiction of the Controller which ousts the jurisdiction of the CCI.
Section 3(5)(i)(b) of the Competition Act allows a patent holder to impose reasonable conditions in exercise of its patent rights and the same is exempted from the purview of the Competition Act, whereas the Controller has the power to consider the reasonability of the conditions imposed by a patent holder. This clearly brings out the legislative intent to oust CCI’s jurisdiction.
With respect to examining the anti-competitive practices by a patent holder in exercise of its rights under the Patents Act, the Patents Act is a special law and not the Competition Act.

Accordingly, Chapter XVI of the Patents Act is a self-contained code, designed to address any anti-competitive actions carried out by a patent holder, effectively ousting the applicability of the Competition Act.

(Source: DHC Judgment dated July 13, 2023)

National Company Law Appellate Tribunal

NCLAT upholds CCI order approving HNG’s acquisition by AGI Grenpac

The National Company Law Appellate Tribunal (“NCLAT”) dismissed appeals[2] against the order dated March 15, 2023, passed by the CCI whereby it conditionally approved the acquisition and sole control of Hindustan National Glass & Industries Limited (“HNG”) by AGI Greenpac Limited (“AGI”) (referred to as the “Proposed Transaction”).

Brief Background

In October 2021, the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016 was initiated against HNG. Subsequently, AGI filed a resolution plan for acquisition and sole control of HNG (“Resolution Plan”), which was subsequently approved by the committee of creditors.

During the pendency of the Resolution Plan, in November 2022, AGI filed Form II (long form) with the CCI, thereby notifying the Proposed Transaction for its approval. In February 2023, the CCI issued a show-cause notice to AGI asking as to why the investigation with respect to the Proposed Transaction should not be conducted (“SCN“). In March 2023, AGI filed its response to the SCN and also offered certain voluntary modifications to mitigate the concerns relating to appreciable adverse effect on competition (“AAEC”) in India, which was subsequently approved and accepted by the CCI vide order dated March 15, 2023 (“CCI Order”). For a detailed summary of the CCI Order, refer to the JSA Newsletter of April 2023

Proceedings before the NCLAT

Aggrieved, the appellants approached the NCLAT and primarily contended that:

as per the scheme of Section 29 of the Competition Act, the SCN ought to have been issued to both parties and not just the acquirer i.e., AGI in the present case.
as per the scheme of the Competition Act, once the SCN was issued, the CCI is required to direct parties to publish details of the transaction under Section 29(2) of the Competition Act[3]. At that stage, the CCI is not required to form another prima facie opinion. In the present case, the CCI has failed to comply with aforesaid statutory procedure.
the CCI failed to take into consideration the objections filed by the appellants, while passing the CCI Order.

NCLAT Order

The NCLAT dismissed the appeals and held as follows:

under Section 29(1) of the Competition Act, the CCI was required to issue the SCN to both parties to the transaction i.e., AGI and HNG and not just to AGI.
the CCI can only direct parties to publish details of the proposed transaction either on receiving response from the parties to the SCN or report of the Director General (“DG”) (as the case maybe). However, in the present case, after the issuance of the SCN by the CCI, AGI submitted voluntary modifications, which was accepted by the CCI. Thus, the occasion on part of the CCI to direct parties to publish details of the Proposed Transaction never arose in the present case.
the right of third parties to participate in the proceedings only arise after the CCI directs parties to publish details of the transaction under Section 29(2) of the Competition Act, which never arose in the present case.

Accordingly, the NCLAT dismissed the appeals and held that the CCI Order has been passed in compliance with the Competition Act along with regulations framed thereunder.

(Source: NCLAT Judgment dated July 28, 2023.)

Competition Commission of India

Enforcement

CCI dismisses case against M3M India for indulging in alleged abuse of dominant position

The CCI received a complaint against M3M India Private Limited (“M3M India”)[4] for indulging in alleged abuse of dominant position, in violation of Section 4 of the Competition Act.

The complainant inter alia alleged that M3M India abused its dominant position by revising the layout of the project and constructing an additional 11^th floor in its 10 (ten) floor residential project without prior consent of its residents. This was in violation of the initial sanctioned plan on the basis of which the projects were initially sold to the residents.

The CCI defined the relevant market as the market for the provision of services of development and sale of residential flats in Gurgaon. The CCI inter alia noted that: (a) M3M India is not dominant in the relevant market due to the presence of several significant players. Further, the complainant failed to disclose any material to demonstrate the dominance of M3M India; and (b) bereft dominance of M3M India, the question of M3M India abusing its dominant position in the relevant market does not arise.

Accordingly, the CCI dismissed the case.

(Source: CCI Order dated July 19, 2023)

CCI dismisses case against DLF Gayatri Developers for indulging in alleged abuse of dominant position

The CCI received a complaint against DLF Gayatri Developers (“DLF Gayatri”)[5] for indulging in alleged abuse of dominant position, in violation of Section 4 of the Competition Act.

In 2012, the complainant booked a residential plot developed by DLF Gayatri in Mahabubnagar district of Telangana, which was delayed and handed over only in 2019. In 2019, the complainant received the relevant documents including a copy of the club agreement (“Agreement”) from DLF Gayatri.

The complainant inter alia alleged that DLF Gayatri has abused its dominant position by imposing certain one-sided, conditions in the Agreement such as: (a) club management will have absolute discretion to grant, curtail or terminate membership to the club; (b) imposing exorbitant club charges (including membership fees, annual subscription charges, security deposit); (e) conducting arbitration proceedings at DLF Gayatri’s premises, by its employees in English language only.

The CCI defined the relevant market as the market for the provision of services for development and sale of residential plots in Mahabubnagar district in the State of Telangana. The CCI inter alia noted that: (a) DLF Gayatri is not dominant in the relevant market due to the presence of several significant players. Further, the complainant failed to disclose any material to demonstrate the dominance of DLF Gayatri; and (b) bereft dominance of DLF Gayatri, the question of DLF Gayatri abusing its dominant position in the relevant market does not arise. Accordingly, the CCI dismissed the case.

(Source: CCI Order dated July 13, 2023)

Merger Control

CCI penalises Bank of Baroda for failing to notify the transaction

The CCI imposed a penalty of INR 5,00,000 (Indian Rupees five lakhs) on Bank of Baroda (“BOB”)[6] for closing its acquisition of additional shareholding of 21% in India First Life Insurance Company Limited (“IFLIC”)[7] without obtaining the approval of the CCI (“Transaction”). The Transaction was closed on March 31, 2022.

Brief Background

On May 2, 2022, BOB notified the Transaction to the CCI by filing a notice in Form III (“Form-III Notice”). Section 6(4) of the Competition Act specifies that if a transaction inter-alia involves any acquisition by a bank pursuant to a loan agreement or an investment agreement, then the bank can notify the proposed transaction, within seven days from its consummation, in a Form III. On July 11, 2022, the CCI informed BOB that Section 6(4) of the Competition Act is not applicable to the Transaction and accordingly, the same ought to have been notified to the CCI seeking its approval prior to its closing.

On August 18, 2022, BOB notified the Transaction to the CCI in a Form I (“Subsequent Notice”) and the same was subsequently approved by the CCI. Subsequently, the CCI issued a show-cause notice to BOB asking it to explain why the Transaction was consummated prior to its approval. BOB inter-alia contended that it was under the genuine belief that the Transaction falls within the ambit of Section 6(4) of the Competition Act and required to be notified in Form III post- closing.

CCI Order

The CCI inter-alia noted that: (a) BOB closed the Transaction on March 31, 2022, i.e., much before filing the Form-III Notice as well as filing the Subsequent Notice; and (b) the submissions of BOB can only be considered as mitigating factors while determining penalty. Accordingly, the CCI imposed a nominal penalty of INR 5,00,000 (Indian Rupees five lakhs) on BOB for gun jumping.

(Source: CCI Order dated June 20, 2023)

CCI approves acquisition of additional shareholding of HDFC ERGO by HDFC Limited

The CCI approved the acquisition of an additional 0.5% shareholding of HDFC ERGO General Insurance Company Limited (“HDFC ERGO”)[8] by Housing Development Finance Corporation Limited (“HDFC Limited”)[9] (referred to as the ‘Proposed Transaction’). Pursuant to the consummation of the Proposed Transaction and also the consummation of internal restructuring of the HDFC group[10], HDFC Bank Limited (“HDFC Bank”)[11] will hold 50.50% shareholding in HDFC ERGO.

The CCI examined the horizontal overlaps between the activities of the parties[12] in the market for distribution of general insurance products and services in India.

On the competition assessment, the CCI noted that: (a) the combined market shares of the parties are low; and (b) several significant players are present in each of the relevant markets which will pose competitive constraints on the parties. In view of the same, the Proposed Transaction is not likely to raise competition concerns.

Further, the CCI examined the vertical link between the parties in the upstream market for provision of general insurance products and services in India[13] and the downstream market for distribution of general insurance products and services in India[14]. However, given the low combined market shares of the parties with the presence of several significant players, the Proposed Transaction is not likely to raise foreclosure concerns.

The CCI approved the Proposed Transaction in 22 (twenty two) calendar days.

(Source: CCI order dated June 20, 2023)

CCI approves acquisition of additional minority shareholding of Acko Technology by Multiples and CPPIB

The CCI approved the acquisition of additional 0.84% shareholding of Acko Technology & Services Private Limited (“Acko Technology”)[15] each by Multiples Private Equity Fund III (“Multiples Fund III”)[16] belonging to the Multiples group and CPP Investment Board Private Holdings (4) Inc. (“CPHI-4”)[17] belonging to the Canada Pension Plan Investment Board (“CPPIB”)[18] group (“Proposed Transaction”).

The CCI noted that there are no horizontal overlaps and vertical links between the activities of the parties in India.[19] In relation to the complementary links, the CCI noted that one of the portfolio company of Multiples group, TI Clean Mobility Private Limited (“TCML”) manufactur the commercial electric vehicles (EVs). The business activity of TCML can be complementary to the activities of Acko Technology’s affiliates which are present in the market for the: (a) provision of general insurance (including motor insurance)[20]; (b) manufacture and sale of EV charging stations[21]; and (c) car servicing and repair platform[22], in India. Given that the business of TCMPL is in the early stage of commercialization, the CCI noted that the Proposed Transaction is not likely to raise foreclosure concerns.

The CCI approved the Proposed Transaction in 38 (thirty eight) calendar days.

JSA represented Multiples Fund III and led the approval process before the CCI.

(Source: CCI Order dated July 12, 2023)

CCI approves combination between Ambit and Daiwa group

The CCI approved the acquisition of: (a) 16% shareholding of Ambit Private Limited (“Ambit”)[23] by Daiwa International Holdings Limited[24] belonging to the Daiwa group; and (b) sole control of Daiwa Capital Markets (Daiwa Capital) by Ambit (“Proposed Transaction”) [25].

The CCI examined the horizontal overlaps between the activities of the parties[26] in the market for the provision of: (a) investment banking services; and (b) institutional equity services, in India. On the competition assessment, the CCI noted that: (a) the combined market shares of the parties are low; and (b) several significant players are present in each of the relevant markets which will pose competitive constraints on the parties. In view of the same, the Proposed Transaction is not likely to raise competition concerns.

The CCI approved the Proposed Transaction in 32 (thirty two) calendar days.

(Source: CCI Order dated June 13, 2023)

CCI conditionally approves acquisition of additional minority shareholding of Acko Technology by General Atlantic

The CCI conditionally approved the acquisition of additional 4.04% shareholding of Acko Technology & Services Private Limited (“Acko Technology”) by General Atlantic Singapore ACK Pte. Ltd. (“General Atlantic”)[27] (referred to as the “Proposed Transaction”).

Prior to the Proposed Transaction, General Atlantic held 15.54% shareholding of Acko Technology along with certain affirmative voting rights, information rights, and a board seat (“Board”). Pursuant to the Proposed Transaction, General Atlantic will get the right to appoint: (a) an additional director on the Board of Acko Technology; and (b) an observer on the board of Acko Technology’s subsidiaries.

The CCI examined the horizontal overlaps between the activities of the parties[28] in the market for: (a) the operation of a platform for buying, selling and renting of immovable property (“Property Platform Market”); and (b) society/gated community management solutions (“Society Management Market”), in India.

On the competition assessment, the CCI noted that the presence of Acko Technology in the Property Platform Market is insignificant to raise competition concerns.

In relational to the Society Management Market, the CCI noted that Acko Technology (through its affiliate i.e., Vivish Technologies Private Limited (“Vivish”)[29]) and General Atlantic (through its affiliate i.e., NoBroker Technologies Solutions Private Limited (“NoBroker”)[30] have significant presence in the said market. Pursuant to the Proposed Transaction, General Atlantic will gain further influence in Acko Technology and in 2 (two) prominent competitors i.e., Vivish and NoBroker, which may raise the risk of softening of competition between them.

To alleviate the competition concerns, General Atlantic offered not to directly or indirectly: (a) participate or exert influence on any matter related to Vivish or investment of Acko Technology therein; (b) access any non-public information in relation to Vivish which is available with Acko Technology; and (c) influence any person appointed by Acko Technology on the board of Vivish.

Subject to these conditions, the CCI approved the Proposed Transaction in 57 (fifty seven) calendar days.

(Source: CCI Order dated June 6, 2023)

CCI approves acquisition of majority shareholding of Manipal Hospitals by Temasek

The CCI approved the acquisition of majority shareholding of Manipal Health Enterprises Private Limited (“Manipal Hospitals”) by Kangto Investments Pte. Ltd. (“Kangto”), and Kabru Investments Pte. Ltd. (“Kabru”) belonging to Temasek Holdings (Private) Limited (Temasek). Further, TPG Inc., through its affiliate will acquire approximately 11% shareholding of Manipal Hospitals (referred to as the “Proposed Transaction”)[31].

The CCI examined the horizontal overlaps between the activities of the parties[32] in the markets for provision of:

healthcare services through hospitals in certain overlapping cities and narrow markets for: (i) primary care in overlapping cities; (ii) secondary/tertiary care in overlapping cities; and (iii) quaternary care in India;
home healthcare services in India and narrow market for skilled home healthcare services in Bengaluru;
retail diagnostic services in India and narrow market for provision of: (i) pathology diagnostic services; and (ii) imaging/radiology services, in the overlapping cities; and
tele-medical consultation services in India.

On competition assessment, the CCI noted that: (a) the combined market shares of the parties are low; and (b) several significant players are present in each of the relevant markets which will pose competitive constraints on the parties.

Further, the CCI examined: (a) vertical links between the activities of the parties in the: (i) upstream market for the manufacture and sale of medical devices[33] and downstream market for retail diagnostic services, in India [34]; and (ii) upstream market for the provision of wholesale sale and distribution of pharmaceutical products and medical devices[35] and the downstream market for the retail sale of medical devices, in India; and (b) complementary links between the activities of parties in the market for provision of pharmaceutical logistics services and retail sale of medical devices, in India; and provision of software services for inventory management and accounting for pharmacies and retail sale of medical devices, in India. However, given the low combined market shares of the parties with the presence of several significant players, the CCI noted that the Transaction will not raise foreclosure concerns.

The CCI approved the Transaction in 56 (fifty six) calendar days.

JSA represented Temasek and led the approval process before the CCI.

(Source: CCI Order dated June 6, 2023)

Miscellaneous

Cement companies approaches high courts against the impleadment of Builders’ Association of India

UltraTech Cement, India Cement and Shree Cement have filed writ petitions before the DHC, Madras High Court, and Rajasthan High Court, respectively, challenging the CCI’s order through which it has impleaded Builders’ Association of India (“BAI”) as a party to the ongoing investigation against several cement manufacturers for alleged cartelisation (“CCI Impleadment Order”).

Brief Background

On July 1, 2019, the CCI initiated suo motu investigation against several cement manufacturers for alleged cartelisation. On December 7, 2021, BAI filed an application before the CCI seeking to be impleaded as a complainant in the investigation, which was rejected by the CCI (“Rejection Order”). Aggrieved, BAI filed a writ petition challenging the Rejection Order before the DHC. The DHC granted liberty to BAI to submit an application to the CCI to seek a copy of the investigation report and provide its views/inputs, if desired. Subsequently, the CCI vide the CCI Impleadment Order impleaded BAI as a party to the ongoing proceedings and accepted BAI’s request to conduct the inspection of the case records and also to file its response to the investigation report, if desired.

Aggrieved, the cement companies filed writ petitions challenging the CCI Impleadment Order and inter alia contended that: (a) the CCI Impleadment Order does not provide any reasons as to why BAI is a necessary party to the proceedings and why it should be impleaded; and (b) if BAI is made a party to the proceedings and allowed inspection of the case record, it will have access to the confidential documents of cement companies. Accordingly, BAI should not be impleaded as a party in the present case.

On July 25, 2023, the Madras High Court passed an interim order in favour of India Cement wherein it has refrained CCI from granting inspection of case records to be conducted by BAI till the disposal of the writ petition. Subsequently, on July 27, 2023, the DHC reserved its order (to be pronounced in 3^rd week of August) on the writ petition filed by UltraTech Cement.

(Source: MHC Order dated July 25, 2023, and DHC Order dated July 27, 2023)

Central Government exempts regional rural banks from merger control requirements under the Competition Act

The Government of India (“GoI”), by way of a notification published on July 19, 2023 has exempted regional rural banks[36], defined under Section 23A(1) of the Regional Rural Banks Act, 1976 from the applicability of merger control provisions under the Competition Act for a period of 5 (five) years i.e., until July 19, 2028.

(Source: Notification dated July 19, 2023)

Competition (Amendment) Act, 2023: The DG will now be appointed by the CCI

On July 18, 2023, the GoI, by way of a notification has brought into force the amended Section 16 of the Competition (Amendment) Act, 2023 (“2023 Amendment Act”) which empowers the CCI to appoint the DG, with the prior approval of the GoI. Earlier, the DG could only be appointed by the GoI.

On April 11, 2023, the Competition (Amendment) Bill 2023 received the assent of the President of India to become the 2023 Amendment Act. On May 19, 2023, the GoI notified certain provisions of the 2023 Amendment Act with effect from May 18, 2023. For a detailed summary of the provisions of the 2023 Amendment Act enforced by the GoI, refer to the JSA Newsletter (Competition Law).

(Source: Notification dated July 18, 2023)

This Newsletter has been prepared by:

Vaibhav Choukse
Partner & Head of Practice (Competition Law)

Ela Bali
Partner

Faiz Siddiqui
Associate

For more details, please contact [email protected]

[1] (2019) 2 SCC 521.

[2] The appeals were filed by: (a)The UP Glass Manufacturers Syndicate, which represents the interest micro, small and medium glass manufacturers in Uttar Pradesh; (b) Independent Sugar Corporation Limited, which had also submitted resolution plan in the insolvency proceedings against HNG; (c) Geeta and Company, which represents the interest of workers in the Rishikesh plant of HNG; and (d) HNG Industries Thozilalar Nala Sangam, which is a workers union representing interest of workers working in HNGIL.

[3] The CCI, if it is prima facie of the opinion that combination is likely to have an AAEC, it shall, within 7 (seven) working days from the date of receipt of the response of the parties to the combination, or the receipt of the report from DG report called under sub-section (1A), whichever is later, direct the parties to the said combination to publish details of the combination.

[4] It is a real estate developer and the project under issue is M3M Merlin located in Sector 67, Gurugram, Haryana.

[5] It is a joint venture between DLF India Limited and Gayatri Infra Private Limited. DLF India Ltd. is engaged in the real estate sector. Gayatri Infra Private limited is also an infrastructure company, with projects stated to be all over India.

[6] It is a public sector bank engaged in providing banking and financial services in several sectors.

[7] It is engaged in providing life insurance, health insurance and pension services.

[8] It is registered with Insurance Regulatory Development and Authority of India and is engaged in providing general insurance products in India.

[9] It is primarily engaged in providing financing services in India.

[10] Which involves amalgamation of: (a) several group companies of HDFC Bank Limited, with and into HDFC Limited; and (b) HDFC Limited, with and into HDFC Bank Limited. The said transaction was approved by the CCI vide order dated August 12, 2022.

[11] It is engaged in providing banking and financial services including retail banking, wholesale banking and treasury operations through various branches in India.

[12] Through HDFC Limited (including its affiliates) and HDFC ERGO (including its affiliates).

[13] Through HDFC ERGO (including its affiliates).

[14] Through HDFC Bank (including its affiliates).

[15] It is engaged in the business of providing technology and outsourced services, provision of general insurance, manufacture and sale of EV charging stations and infrastructure, automobile repair and service etc.

[16] It is Category II Alternative Investment Fund registered with the Securities and Exchange Board of India and is managed by Multiples Alternate Asset Management Private Limited.

[17] It is a Canadian corporation and a wholly owned subsidiary of CPPIB.

[18] It is an investment holding company and invests in a diversified portfolio of assets.

[19] Through: (a) Multiples group (including its affiliates) and Acko Technology (including its affiliates); and (b) CPPIB group (including its affiliates) and Acko Technology (including its affiliates).

[20] Through Acko General Insurance Limited.

[21] Through Amplify Cleantech Solutions Private Limited.

[22] Through Chatpay Commerce Private Limited.

[23] It is a private company incorporated in India and provides a range of financial services.

[24] It is an intermediary management holding company incorporated in Japan. The Daiwa group is present in India through its subsidiaries which provide institutional equities services.

[25] Ambit has agreed to buyback all its securities held by one of its shareholders, Inner Mauritius Investments Limited. The buyback may lead to an increase of Daiwa International’s shareholding in Ambit from 16% to 18%.

[26] Through Daiwa group (including its affiliates) and Ambit (including its affiliates).

[27] It is an investment holding company and is a wholly owned step-down subsidiary of General Atlantic Singapore Fund Pte. Ltd. It is managed and advised by entities controlled by General Atlantic.

[28] Through General Atlantic (including its affiliates) and Acko (including its affiliates).

[29] Acko held 2.95% shareholding in Vivish along with the right to appoint an observer on the board of Vivish.

[30] General Atlantic held 32.4% shareholding in NoBroker.

[31] Manipal Education and Medical Group India Private Limited, an entity belonging to the Pai Family group will issue optionally convertible debentures to MEMG International India Private Limited, an entity belonging to the Pai Family group.

[32] Through: (a) Temasek group (including its affiliates) and Manipal Hospitals (including its affiliates); and (b) TPG group (including its affiliates) and Manipal Hospitals (including its affiliates).

[33] Through Temasek and TPG (including their respective affiliates).

[34] Through Manipal Hospitals (including its affiliates).

[35] Through Temasek and TPG (including their respective affiliates).

[36] They are Government Banks operating at regional level in different states of India. They have been established to provide basic banking and financial services primarily in the rural areas.

Tags CCI, Company law, Competition Law, Enforcement, High Court, JSA, Leading Law Firm, Leading Lawyers, Nclat

JSA Newsletter | Competition Law | June 2023

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Supreme Court

Supreme Court holds that Coal India is not immune from the applicability of the Competition Act

On June 15, 2023, in a landmark decision, the Supreme Court (“Supreme Court”) has held that the Competition Act, 2002 (“Competition Act”) applies to public sector undertakings (“PSUs”) and that the activities of Coal India Limited (together referred to as ‘Coal India’), a public sector undertaking (“PSU”), will fall within the ambit of the Competition Act.

Brief Background

In October 2014, the Competition Commission of India (“CCI”) had penalised Coal India and its subsidiaries for abusing its dominant position by imposing unfair/ discriminatory conditions in its fuel supply agreements with power producers. In appeal, the order of the CCI was upheld by the erstwhile Competition Law Appellate Tribunal (“COMPAT”).

Aggrieved, Coal India challenged the order of the COMPAT before the Supreme Court and argued that the Competition Act should not apply to its activities because those are governed by the Coal Mines (Nationalisation) Act, 1973 (“Nationalisation Act”). It further contended that it has to follow the principles of ‘common good’ under Article 39(b) of the Constitution of India to ensure equitable distribution of a scarce natural resource, and that it doesn’t operate for commercial profits.

The Supreme Court dismissed the arguments raised by Coal India and inter alia held that:

the Competition Act is applicable to an ‘enterprise’[1], a term which is defined under the Competition Act to include government departments and companies engaged in economic/ commercial activities. It only leaves out those activities of an enterprise that are related to sovereign functions of the government including atomic energy, currency, defence, and space. Coal India does not perform any sovereign functions so it cannot claim benefit of this carve-out.
for assessing dominance, the Competition Act enlists certain factors which the CCI must consider like a monopoly position acquired as a result of being a PSU/ government company. This shows that the intent of the Parliament was always to include government companies and PSUs under the purview of the Competition Act.
the Competition Act does not exclude statutory monopolies like Coal India even if they are set up to achieve the common good set out in the Constitution of India and Nationalisation Act. Further, the objectives of competition regulation must be harmoniously interpreted with the Nationalisation Act.

The Supreme Court is yet to decide the appeal filed by Coal India on merits.

(Source: Judgment dated June 15, 2023)

High Court

Calcutta High Court denies interim relief to Shyam Steel in a cartel case

The Calcutta High Court (“Calcutta HC”) dismissed the application filed by Shyam Steel Industries Limited (“Shyam Steel”) and its officers (Shyam Steel Officers) (together referred to as ‘Petitioners’), seeking stay on the summons (“Summons”) issued by the Director General (“DG”) for the recording of their statement before the DG (referred to as the “Interim Application”). The Petitioners filed a writ petition before the Calcutta HC challenging the Summons.

Brief Background

In March 2021, a complaint was filed by Coimbatore Corporation Contractors Welfare Association (“Complainant”)[2] before the Central Bureau of Investigation (“CBI”) alleging that steel companies[3]: (a) significantly increased the price of steel for illegal profit; and (b) restricted the supply of steel to create artificial scarcity.

Having received no response from the CBI, the Complainant approached the Madras High Court (“Madras HC”) seeking directions for the CBI to proceed with the investigation against the steel companies. In July 2021, the CBI informed the Madras HC that it has already shared a copy of the complaint with the DG. The Madras HC observed that since the complaint has already been forwarded to the DG, the DG must take necessary and appropriate action within a period of 4 (four) weeks (“MHC Order”).

In compliance with the MHC Order, the DG commenced the investigation in absence of a prima facie order from the CCI under Section 26(1) of the Competition Act (“Prima Facie Order”). During the investigation, the DG issued the Summons to the Shyam Steel Officers to record their statement on oath.

Aggrieved, the Petitioners challenged the Summons before the Calcutta HC on the grounds that: (a) the CCI had not passed the Prima Facie Order and hence, the DG cannot investigate the matter; and (b) Shyam Steel’s name was not mentioned in the MHC Order.

Calcutta HC Order

The Calcutta HC dismissed the Interim Application and inter alia held that:

the Madras HC, in exercising its extraordinary jurisdiction, thought it fit to bypass the requirement in the Prima Facie Hence, the DG had no option but to act on the direction of the Madras HC.
Section 26(1) of the Competition Act states that an investigation could be made into a ‘matter’, and it might not necessarily be confined to a particular company or group of companies but have a larger application covering the matters pertaining to anti-competitive activities prohibited under the Competition Act. Accordingly, the DG was right to include Shyam Steel in the investigation.

(Source: Judgment dated May 18, 2023)

Enforcement

CCI dismisses case against LG Electronics for indulging in alleged anti-competitive practices

The CCI received a complaint from Perfect Infraengineers Limited (“Complainant”) against LG Electronics India Private Limited (“LG Electronics”) for indulging in alleged anti-competitive practices, in violation of Sections 3(1) and 4 of the Competition Act.

The Complainant inter alia alleged that LG Electronics refused and prevented them from installing and integrating Hybrid Thermal Solar (“HTS”)[4] panels with LG Electronics’ Variable Refrigerant Flow/Variable Refrigerant Volume (“VRF/VRV”) air- conditioners (“ACs”), despite giving assurance to LG Electronics that its HTS panels will cause no harm to LG Electronics’ VRF/ VRV ACs. In fact, the Complainant had proposed to indemnify LG Electronics if any of the spare parts were to get worn out or deteriorate or needed repairs because of the integration.

The CCI, after taking into consideration the distinct characteristics and advantages of VRF Heating Ventilation and Air Conditioning (“HVAC”) systems over traditional ACs, defined the relevant market as the market for manufacture and sale of VRF HCAV Air Conditioners in India (“Relevant Market”). The CCI inter alia noted that: (a) LG Electronics is not dominant in the Relevant Market due to the presence of several significant players, with Daikin Airconditioning having the largest market share of 44% during the last 3 (three) years; (b) bereft dominance of LG Electronics, the question of LG Electronics abusing its dominance in the Relevant Market does not arise; and (c) the Complainant failed to provide any information as to how LG Electronics’ conduct falls under Section 3(1) of the Competition Act.

Accordingly, the CCI dismissed the case.

(Source: CCI Order dated June 20, 2023)

Merger Control

CCI approves acquisition of sole control of Credit Suisse by UBS group

The CCI approved the acquisition of Credit Suisse Group AG (“Credit Suisse”)^[5] by UBS Group AG (“UBS”)[6] by way of an absorption merger (“Proposed Transaction”). Pursuant to the Proposed Transaction, UBS will acquire complete control over Credit Suisse.

The CCI examined the horizontal overlaps between the activities of the parties^[7] in the broad market for the provision of brokerage services and the narrow market for the provision of brokerage services in: (a) cash/equity segment; and (b) equity derivatives segment (together referred to as the “Brokerage Market”).

On competition assessment, the CCI noted that: (a) the combined market shares of the parties are low; and (b) several significant players are present in the Brokerage Market which will pose competitive constraints on the parties. In view of the same, the Proposed Transaction is not likely to raise competition concerns.

The CCI approved the Proposed Transaction in 57 (fifty seven) calendar days.

(Source: CCI Order dated May 18, 2023)

CCI approves acquisition of minority shareholding of BTS Investment, Bodhi Tree Systems, and Viacom18 by Comcast Group

The CCI approved the acquisition of: (a) 15.06-18.84% shareholding of BTS Investment 1 Pte. Ltd. (“BTS Investment”)[8]; (b) 3.33-7.48% shareholding of Bodhi Tree Systems VCC (“BTS VCC”)[9]; and (c) an indirect acquisition of Viacom18 Media Private Limited (“Viacom18”)[10] by NBCUniversal Media LLC (“NBCUniversal”) belonging to the Comcast group (“Proposed Transaction”)[11].

As part of the Proposed Transaction, NBCUniversal will enter into a licensing arrangement with Viacom18 to license NBCUniversal’s content hosted on the Peacock over the top (“OTT”) streaming service to the Jio Cinema OTT Platform (“Peacock Licensing Agreement”).

The CCI examined the horizontal overlaps between the activities of the parties[12] in the markets for: (a) retail supply of audiovisual (“AV”) content through OTT platforms; (b) licensing of AV content in India; (c) supply of films to third-party distributors and exhibitors for theatrical release in India and narrow market for the supply of English films and (d) merchandise licensing in India.

On competition assessment, the CCI noted that: (a) the combined market shares of the parties are low and (b) several significant players are present in each of the relevant markets which will pose competitive constraints on the parties.

Further, the CCI examined: (a) the existing vertical relationship between the parties[13] in the upstream market for licensing of AV content in India and the downstream markets for operation and wholesale supply of TV channels in India and retail supply of AV content on OTT platforms in India; and (b) the potential vertical relationship between the parties[14] in relation to the Peacock Licensing Agreement. Basis the low combined market shares of the parties with the presence of several significant players in each of the existing and potential vertical links, the CCI noted that the Proposed Transaction is not likely to raise foreclosure concerns.

The CCI also examined the Peacock Licensing Agreement under which NBCUniversal will make available certain content exclusively on a short-term basis on Jio Cinema OTT prior to other competing platforms, thereby, introducing the Peacock brand in India. Given that: (a) NBCUniversal licenses content to other OTT platforms (like Netflix, Amazon Prime); and (b) OTT platforms also enter into arrangements with various licensors other than NBCUniversal for a wide variety of content, the CCI noted that the Peacock Licensing Agreement is not likely to raise foreclosure concerns.

The CCI approved the Transaction in 57 (fifty seven) calendar days.

(Source: CCI Order dated April 12, 2023)

CCI approves merger of Koninklijke DSM and Firmenich International

The CCI approved the merger of Koninklijke DSM N.V. (“DSM”)[15] and Firmenich International S.A. (“Firmenich”)[16] to form DSM-Firmenich (“Proposed Transaction”). Pursuant to the Proposed Transaction, the shareholders of DSM will hold 65.5% and Firmenich shareholders will hold 34.5% of DSM-Firmenich.

The CCI examined the horizontal overlaps between the activities of the parties[17] in the: (a) broad market for the sale of aroma chemicals and the narrow market for the sale of synthetic aroma chemicals; and (b) broad market for the sale of flavours and the narrow markets for the sale of natural, savoury and dairy flavours, in India.

On competition assessment, the CCI noted that: (a) the combined market shares of the parties do not exceed 25%; and (b) several significant players are present in each of the relevant markets which will pose competitive constraints on the merging parties. In view of the same, the Proposed Transaction is not likely to raise competition concerns.

Further, the CCI examined: (a) the existing vertical relationship between parties[18] in the upstream market for supply of aroma chemicals and the downstream market for manufacture and sale of flavours and fragrances, in India; (b) potential vertical links in the: (i) upstream market for savoury ingredients and the downstream market for manufacture and sale of flavours; (ii) upstream market for beta-carotene and the downstream market for food applications; and (iii) upstream market for certain vitamins and the downstream market for systems for food applications, in India; and (c) complementary link between the activities of parties as enzymes, cultures, beta-carotene, and certain vitamins sold by DSM can be complementary to the activities of Firmenich which is present in the market for flavours, in India.

Basis the low combined market shares of the parties with the presence of several significant players in each of the markets, the CCI noted that the Proposed Transaction is not likely to raise foreclosure concerns.

The CCI approved the Transaction in 19 (nineteen) calendar days.

(Source: CCI Order dated April 3, 2023)

CCI approves combination between Haldiram group entities

The CCI approved the: (a) demerger of packaged foods businesses from Haldiram Snacks Private Limited (“HSPL”)[19] and Haldiram Foods International Private Limited (“HFIPL”)[20] into Haldiram Snacks Food Private Limited (“HSFPL”)[21]; and (b) acquisition of 56% and 44% shareholding of HSFPL by HSPL and HFIPL, respectively (“Proposed Transaction”).

The CCI examined the horizontal overlaps between the activities of the parties[22] in the broad market for packaged foods in India and the narrow markets for: (a) snacks; (b) sweets; (c) biscuits; (d) non-carbonated ready-to-drink beverages; (e) ready to eat meals; and (f) pasta, in India.

The CCI approved the Proposed Transaction in 20 (twenty) calendar days.

(Source: CCI Order dated April 3, 2023)

CCI approves acquisition of shareholding of JM Baxi Ports by Hapag Lloyd

The CCI approved the acquisition of 50% shareholding[23] in JM Baxi Ports and Logistics Limited (“JM Baxi Ports”)[24] by Hapag Lloyd Aktiengesellschaft (“HLAG”)[25]. Post the acquisition, JM Baxi Ports will separate its container and non-container businesses such that HLAG and JM Baxi Ports will hold 51% and 49% shareholding in the container business, and 49% and 51% shareholding in the non-container business, respectively (“Proposed Transaction”).

The Proposed Transaction relates to the maritime supply chain. Maritime supply chain refers to the movement of cargo using both maritime and land transportation. The primary activities forming part of the maritime supply chain include: (a) freight forwarding, (b) container line shipping (“CLS”) services; (c) container terminal services (“CTS”)[26]; and (d) Land-based logistics and transportation services. HLAG is engaged in the provision of CLS and JM Baxi Ports is engaged in the provision of CTS and various ancillary land-based logistics services such as container freight station (“CFS“)[27], inland container depot (“ICD”)[28], etc.

The CCI noted that there are no horizontal overlaps between the activities of the parties[29]. Further, the CCI examined vertical links between the activities of the parties in the:

broad market for CLS and CTS services in India;
narrow market for CLS and CTS services in: (i) upper east coast which includes all major ports from Kolkata to Chennai; (ii) upper west coast i.e., ports spanning Mundra to JN Port; and (iii) south coast i.e., ports spanning Krishnapatnam on the east coast till Vallarpadam; and
narrowest market for CLS, CTS (including other ancillary land-based services such as CFS, and ICD), and CTO services at: (i) Vizag Port; (ii) Kandla Port; (iii) Paradip Port; (iv) Tuticorin Port; and (v) Jawahar Lal Nehru Port.

Basis the low combined market shares of the parties in these markets in terms of all possible metrics[30], the CCI noted that the Proposed Transaction is not likely to raise foreclosure concerns.

The CCI approved the Proposed Transaction in 48 (forty eight) calendar days.

(Source: CCI Order dated March 27, 2023)

CCI approves acquisition of sole control of Metro Cash and Carry India by Reliance Group

The CCI approved the acquisition of Metro Cash and Carry India Private Limited (“MCCIPL”)[31] by Reliance Retail Ventures Limited (“RRVL”)[32], belonging to the Reliance group (“Proposed Transaction”).

The CCI examined the horizontal overlaps between the activities of the parties[33] in the broad market for wholesale (“B2B”) trade of goods in India and in the narrow markets for B2B sale of: (a) food and groceries; (b) apparel and footwear; and (c) durable goods, in India.

Further, the CCI examined the potential vertical link between the activities of the parties[34] in the market for B2B cash and carry sales and retail (“B2C”) sales.[35] Basis the low combined market shares of the parties in these markets, the CCI noted that the Proposed Transaction is not likely to raise foreclosure concerns.

The CCI approved the Proposed Transaction in 40 (forty) calendar days.

(Source: CCI Order dated March 14, 2023)

CCI approves acquisition of Viessmann Climate Solutions by Carrier under Green Channel

The CCI approved the: (a) acquisition of Viessmann Climate Solutions SE (“Viessmann Climate Solutions”)[36] by Carrier Global Corporation (“Carrier”)[37] from Viessmann Group GmbH & Co. KG (“Seller”)[38]; and (b) acquisition of minority shareholding by the Seller in Carrier along with certain rights, as part of the consideration (“Proposed Transaction”). The parties notified the Proposed Transaction under green channel as there were no horizontal, vertical, or complementary overlaps between the activities of the parties in India.

(Source: CCI Website)

CCI approves acquisition of minority shareholding of Lenskart by Dove Investments, Defati Investments, and Infinity Partners under Green Channel

The CCI approved the acquisition of certain minority shareholding of Lenskart Solutions Private Limited (“Lenskart”)[39] by Dove Investments Limited (“Dove”), Defati Investments Holding BV (“Defati”), and Infinity Partners (“Infinity”) [40] (referred to as the ’Proposed Transaction’). The parties notified the Proposed Transaction under green channel as there were no horizontal, vertical, or complementary overlaps between the activities of the parties in India.

(Source: CCI Website)

CCI approves acquisition of minority shareholding of a Mahindra group subsidiary by International Finance Corporation under Green Channel

The CCI approved the acquisition of 9.97 – 13.64% shareholding in the subsidiary of Mahindra group[41] by International Finance Corporation[42] (“Proposed Transaction”). The parties notified the Proposed Transaction under the green channel route as there were no horizontal, vertical, or complementary overlaps between the activities of the parties in India.

(Source: CCI Website)

This Newsletter has been prepared by:

Vaibhav Choukse
Partner & Head of Practice (Competition Law)

Ela Bali
Partner

Nripi Jolly
Senior Associate

For more details, please contact [email protected]

[1] As per Section 2(h) of the Competition Act, an ‘enterprise’ means a person or a department of the Government, who or which is, or has been, engaged in any activity, relating to the production, storage, supply, distribution, acquisition or control of articles or goods, or the provision of services, of any kind, or in investment, or in the business of acquiring, holding, underwriting or dealing with shares, debentures or other securities of any other body corporate, either directly or through one or more of its units or divisions or subsidiaries, whether such unit or division or subsidiary is located at the same place where the enterprise is located or at a different place or at different places, but does not include any activity of the Government relatable to the sovereign functions of the Government including all activities carried on by the departments of the Central Government dealing with atomic energy, currency, defence and space.

[2] Its members are engaged in executing several government contracts viz., road works, construction works etc.

[3] Tata Steel Limited, JSW Steel Limited, Sail Steel, Vizag Steel, Tirumala TMT, Kamachi TMT, Agni Steels Private Limited, Indrola Steel Rolling Mills India Limited, and Kannappan Iron and Steel Company Private Limited.

[4] The Complainant, in collaboration with Suntrac, USA, introduced HTS panels in India which, when integrated with the air- conditioner results in saving 30-40% electricity consumption without causing any harm.

[5] It is a multinational investment bank and financial services company based in Switzerland. In India, it is engaged in banking and financial services, and IT and ITES to its affiliates.

[6] UBS is the ultimate controlling entity for the UBS group and is engaged in the provision of financial services and investment banking. In India, it is engaged in providing brokerage services and IT and ITES to its overseas affiliates.

[7] Through UBS (including its affiliates) and Credit Suisse (including its affiliates).

[8] It belongs to the BTS group and is currently in the process of raising capital from various investors, including reputed sovereign funds, multinationals, and global institutional investors.

[9] It belongs to the BTS group and is a non-umbrella Singapore Variable Capital Company incorporated with the purpose of raising capital.

[10] It is a 51:49 joint venture between Reliance Industries Limited (“RIL”) group and Paramount Global (through affiliates) and is present in the M&E sector. It is engaged, inter alia, in broadcasting business, OTT streaming, production and distribution of feature films, production and licensing of digital content, and other affiliated businesses. Viacom18 has a portfolio of 20 (twenty) dedicated international feeds.

[11] Under certain circumstances, NBCUniversal may reduce its shareholding in BTS Investment to approximately 6.02-7.54% and eliminate its shareholding in BTS VCC entirely. Separately, RIL group, Paramount group, and BTS Investment exercise joint control over Viacom18 (including Jio Cinema OTT).

[12] Through the Comcast group (including its affiliates) and BTS Investment and BTS VCC (including their affiliates).

[13] Through the Comcast group (including its affiliates) and BTS Investment and BTS VCC (including their affiliates).

[14] Through the Comcast group (including its affiliates) and BTS Investment and BTS VCC (including their affiliates).

[15] It is engaged in nutrition, health and bioscience business. In India, it is inter alia engaged in the sale of aroma chemicals, flavours, savoury ingredients, vitamins, nutraceuticals, carotenoids, etc.

[16] It is engaged in the production and sale of fragrances, flavours and aroma chemicals.

[17] Through DSM (including its affiliates) and Firmenich (including its affiliates).

[18] Through DSM (including its affiliates) and Firmenich (including its affiliates).

[19] It is headquartered in Delhi and primarily run by Mr. Manohar Agarwal and Mr. Madhu Sudan Agarwal. It is engaged in the manufacture and distribution of packaged food products in India.

[20] It is headquartered in Nagpur and primarily run by Mr. Kamalkumar Shivkishan Agarwal. It is engaged in the manufacture and distribution of packaged food products.

[21] It is a newly incorporated entity.

[22] FMCG business housed in HSPL (including its affiliates) and HFIPL (including its affiliates).

[23] It involves acquisition of: (a) 35% shareholding in JM Baxi Ports from Bain Capital by HLAG; and (b) additional shareholding in JM Baxi Ports by HLAG.

[24] It is engaged in providing inland and maritime logistics services in India.

[25] It is engaged in the maritime sector, offering global transport services for containerized cargo (i.e., deep-sea and short-sea container shipping services for the transport of both reefer and dry cargo). In India, it is engaged in providing container line shipping services at various ports.

[26] It includes services such as: (a) loading / unloading of the containers into / out of vessels; (b) transportation of containers from the vessel side to the container yard and vice-versa; (c) storage of the containers at the container yard prior to delivery or vice-versa; and (d) delivery / receival of containers by rail or road mode.

[27] It provides inland facilities that provide custom clearance, storage, stuffing/de-stuffing of cargoes into the containers/ out of the containers, transportation to / from the port, and services ancillaries to custom clearance, stuffing, destuffing etc.

[28] It is a custom bonded area and normally handles EXIM cargo. These facilities are located far away from port and connected by rail. An ICD provides the services of custom clearance, stuffing, destuffing, container handling activities similar to that of a CFS.

[29] Through HLAG group (including its affiliates) and JM Baxi Ports (including its affiliates).

[30] For the narrowest market, the CCI assessed the position of the parties in terms of capacity utilisation, transhipment and rail volumes handled by the parties.

[31] It is engaged in the business of cash and carry wholesale trading in India.

[32] It is engaged in retail and wholesale of products across categories such as food & groceries, durable goods, apparel & footwear and pharmaceuticals.

[33] Through Reliance group (including its affiliates) and MCCIPL.

[34] Through Reliance group (including its affiliates) and MCCIPL.

[35] RRVL may use the infrastructure of MCCIPL (which is engaged in B2B cash and carry sales) to engage in B2C sales.

[36] It is incorporated under the laws of Germany and is engaged in the development and production of products, systems and components for heating, cooling and climate control of all kinds of buildings.

[37] It is the ultimate controlling entity of the Carrier Group, a global manufacturer and distributor of heating, ventilation and air conditioning.

[38] It is engaged in business of: (a) climate solutions; (b) refrigeration solutions; (c) industrial solutions; and (d) investment activities. It does not have any direct business presence in India and has minimal indirect sales in India.

[39] It is engaged in the manufacture, wholesale and retail sale of eyewear products including eyeglasses, sunglasses, contact lenses and eyewear accessories.

[40] Dove, Defati and Infinity are private equity investors.

[41] It is proposed to be incorporated as a subsidiary of Mahindra group to undertake commercial operations pertaining to three-wheelers and small commercial vehicles catering to last mile connectivity for passenger and cargo segments. The Mahindra group is present across various sectors such as automotive, farm equipment, information technology, financial services, etc.

[42] It is a multilateral financial institution established by an international treaty called the Articles of Agreement among its member countries, which provides financial assistance and makes investments in private enterprises located in its member countries, including India.

Tags CCI, Competition Law, JSA, Leading Law Firm, Leading Lawyers, Legal Updates, Newsletter

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