The Competition Commission of India (CCI) has levied a penalty of Rs 10 lakh on Cummins for failing to notify the regulator about the acquisition of sole control of Meritor. The transaction pertains to the acquisition of sole control of Meritor by Cummins by way of a reverse triangular merger, where Rose NewCo Inc, a company newly incorporated by Cummins, merged with and into Meritor, and the latter survived as a directly wholly-owned subsidiary of Cummins, the CCI said in an order.
The combination was consummated on August 3, 2022, and Cummins was supposed to give a prior notice to the CCI in this regard, which it failed to do, according to the order.
“It is apparent that a person or enterprise proposing to enter into a combination needs to give a notice to the commission unless the requirement has been dispensed with. Such notice is required to be given before consummation of the combination,” CCI said.
CCI through its order dated March 14 2023, approved the combination under Section 31(1) of the Act.
Under Section 31(1), a combination is approved when the CCI feels that it does not, or is not likely to, have an appreciable adverse effect on competition.
However, the anti-trust regulator issued a show cause notice to Cummins on May 18, 2023 stating that based on the assets and turnover of Cummins and Meritor, the combination is as per the terms of Section 5 of the Act, and was not eligible for the De Minimis Exemption.
“Cummins-Meritor is a combination in terms of Section 5 of the Act, and does not benefit from the De Minimis exemption,” the regulator said in the order passed on August 11.
Cummins will be required to pay the fine within 60 days from the date of the order.
Cummins is a global supplier that designs, manufactures, distributes and services diesel, natural gas, electric and hybrid powertrains and powertrain-related components.
Meritor is a global supplier of axles, brakes, and other modules and components to original equipment manufacturers.
