In case of combination by way of Merger or Acquisition coming under the purview of the Competition Act 2002, when Competition Commission of India (CCI) on receipt of notice from the Parties under Section 6 of the Act or on its Suo moto inquiry, makes its prima facie opinion that the combination is causing or likely to cause appreciable adverse effect on the competition (AAEC), it starts investigation in to the combination. In that case, the parties to the combination must publish required information in Form IV and if found desired, CCI may invite comments from any person or member of public on the proposed combination by publishing the details provided in Form IV.
Now, it is important to understand when and how CCI forms it prima facie opinion that the combination is causing or likely to cause appreciable adverse effect on the competition.
Section 20 (4) of the Competition Act, 2002 states various factors, any or all which CCI takes into consideration to form the prima facie opinion. Also, Schedule I of the Competition Commission of India (Procedure regarding the transaction of business relating to combinations) Regulations, 2011 (Regulations) enumerates certain categories of combinations which ordinarily not likely to cause an appreciable adverse effect on competition in India.
As per reg. 25 of the regulations, CCI after forming prima facie opinion of combination causing AAEC, may propose appropriate modification to the combination to the parties to such combination, which once accepted by the parties, CCI passes Order approving the combination.
Analysis of Recent decisions of CCI
Approval of Linde – Praxair Merger
CCI after inviting comments from public, approved the combination between Linde Aktiengesellschaft and Praxair, Inc. subject to modifications.
Linde and Praxair (parties) filed a notice for their proposed combination under a newly incorporated holding company Linde PLC, which will be owned by the Parties’ current shareholders.
CCI observed that the parties are selling various kinds of gases i.e. (i) industrial gases; (ii) medical gases; (iii) specialty gases; and (iv) helium in India which as a product are not substitutable to each other and hence have separate product markets.
Since gases can be supplied in liquid and gaseous form and through different supply modes, there would be different categories of customers based on their demanding specific supply mode. Hence, here gas market is further classified by the mode of supply.
As regard to Industrial & Medical gas market, CCI observed that there are mainly 3 market leaders in the market including these 2 parties and other competitors are weak. Hence Proposed Combination would further widen the gap between the market leader and other competitors. This will also reduce competition for market leaders in the market. Hence CCI observed that the combination would likely cause AAEC in this market.
As regard to helium market in India, CCI observed that helium is sourced from outside India (mainly Qatar) by Sellers in India to sell. Even after this combination the number of competitors would be three. CCI also considered details of divestitures of helium sources that would be required by other jurisdictions. Based on this CCI observed that combination is not likely to cause AAEC in this market. As regard to various specialty gases, CCI did not find any anti-competitive concerns in the markets.
Here, to avoid causing AAEC in Industrial & Medical gas market, as only two suppliers remained post combination CCI advised parties to make suitable modification in combination to eliminate overlaps in various gases markets and approved the combination subject to this modification.
Here, determining factors for AAEC were extent of elimination of competitors in the market, overlapping of activities of the parties in the market and present existence of competitors in the market.
Accordingly, through the modification, CCI proposed divestiture of on-site plants in East and South Region engaged in production and supply of tonnage and bulk gases and cylinder filling stations engaged in production and supply of various cylinder gases and required parties to divest their certain businesses in the East Region and South Region of India respectively. Read the full notice from CCI.
Global Acquisition of Monsanto by Bayer AG
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