CCI issues guidance note for combination applications to ease M&A filings

Competition Commission has revised its guidance note for filing applications seeking approvals for combinations, a move that will help in having a more standardised review process.

The guidance note for Form I has been revised with a view to incorporate the changes made with respect to green channel, an official release said on Saturday.

Generally, Form I is used for applications seeking nod for combinations. In competition law parlance, mergers and acquisitions are termed as combinations.

Green channel provides for automatic approval of combinations subject to certain conditions.

"The guidance notes provide the scope of information and documents to be submitted along with the form. It also provides clarification regarding eligibility criterion for green channel. The Competition Commission of India (CCI) issues guidance notes for parties to facilitate them to make a filing before it," the release said.

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Karan Chandhiok, Partner and Head (Competition Practice) at Chandhiok & Mahajan said the revised guidance note would help in making the review process more standardised.

"It lays out the expectations of the CCI from parties in terms of documents, data points and information. Parties filing an application seeking approval for a combination will have to pay more attention in preparing the notice, especially the additional information now sought by the CCI, as it will also help in ensuring that their application for approval is not invalidated," he said.

In August 2019, the watchdog introduced an automatic system of approval for combinations under green channel and revised Form I. The move was part of ongoing efforts to streamline M&A (Merger & Acquisition) filings process as well as make it simpler.

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According to Karan Chandhiok, the guidance note assumes significance in the backdrop of proposed changes to the Competition Act, especially on timeline for clearing an application.

The bill to amend the Act has proposed that a combination will be deemed approved if the CCI does not give its view in 150 days of filing a notice for approval. The time period can be extended by a maximum of 30 days to accommodate time taken by parties to file additional information or respond to defects pointed out by the CCI.

"Currently, the timeline is 210 days, but in case of defects or if the parties request for additional time, the clock stops (i.e. remains suspended) till such time as the defects are cleared or additional information is provided," he said.

CCI keeps a tab on anti-competitive practices across sectors in the market place and combinations beyond a certain threshold require the regulator's clearance.

Competition Commission allows pre-consultation for filing needs amid crisis

The Competition Commission of India (CCI) has allowed pre-filing consultation to those seeking informal guidance on determining filing-related requirements and information to be given for a proposed combination and the green channel.

As a safeguard against the coronavirus pandemic, CCI has allowed such consultations through video conferencing so travel from Mumbai to Delhi can be avoided.

The video conferencing will be done at the office of the regional director, registrar of companies, Ministry of Corporate Affairs.

A CCI note said, “Realisation of these benefits is largely dependent upon the parties’ willingness to engage in full and frank communications with the case team or staff of the Commission, and to proactively participate in the process by furnishing the desired information.”

CCI assessing 17 legislations for possible anti-competition effects

Fair trade regulator Competition Commission of India (CCI) is assessing 17 legislations from the competition perspective to ensure that there is no anti-competition impact due to them.

CCI keeps a tab on anti-competitive practices in the marketplace across sectors.

CCI Chairman Ashok Kumar Gupta said regulatory and policy framework could inadvertently impede competition.

Against this backdrop, he said the watchdog is reviewing various legislations.

Speaking at an event here, he said 17 legislations, rules and regulations of various ministries and departments are being assessed from the competition perspective.

The assessment is being done by institutions empanelled by the CCI.

Details about the legislations that are being assessed could not be immediately ascertained.

Gupta also noted that there is often a fine line between good, hard-nosed competition and anti-competitive practices.

"We need to balance anti-competitive effects and efficiencies...," he said, adding that the regulator's approach has to match economic realities of the time.

According to him, competition enforcement is not to help competitors that have fallen by the wayside but to preserve competitive opportunities for efficient enterprises.

NTPC's acquisition of entire stake in NEEPCO, THDC India gets CCI nod

Fair trade regulator CCI on Monday said it has given nod to acquisition of government's entire stake in THDC India and North Eastern Electric Power Corporation Ltd (NEEPCO) by state-owned NTPC Ltd.

As part of transactions, NTPC will acquire 100 per cent of the issued and paid-up share capital of the NEEPCO and 74.5 per cent stake in THDC India, the Competition Commission of India (CCI) noted in separate releases.

Apart from the government's 74.5 per cent stake in THDC India, the rest 25.5 per cent stake is held by the Uttar Pradesh government, it added.

NTPC is a maharatna company having presence in the power generation business. Among other activities, it is engaged in the business of electric power generation through coal based thermal power plants, CCI said.

In November 2019, Finance Minister Nirmala Sitharaman had said the government will sell its stake in THDC India and NEEPCO to NTPC Ltd.

CCI sees no evidence of collusion by IndiGo, others in price fixing: Report

Investigators with India's antitrust watchdog have found no evidence that the country's biggest airline, IndiGo , and four rival carriers colluded to fix ticket prices, three sources with direct knowledge of the matter told Reuters.

The Competition Commission of India (CCI) in 2015 ordered a probe into allegations of anti-competitive practices after similar fares were being offered on certain routes by IndiGo, SpiceJet , GoAir, state-run Air India [AIN.UL] and now-defunct Jet Airways .

The CCI inquiry, which included an analysis of the algorithms airlines to determine ticket fares, found that all five airlines were working independently, the three sources said.

"No direct evidence of cartelisation was found," said one of the sources, who added the investigation also did not reveal any communication amongst airline executives to fix prices.

Budget airline IndiGo, the country's biggest carrier, said in a statement "the case is without merit" and added that it has been cooperating with the investigation.

The second-biggest airline, SpiceJet, GoAir, Air India and Jet Airways did not respond to a request for comment. The CCI did not respond to questions from Reuters.

 

An adverse finding could have led to a fine of up to three times the profit made in each year prices were fixed, or 10% of annual revenue, whichever is higher. Indian airlines are already grappling with slow growth in air traffic.

Details of the CCI case, which was investigated in two phases, have not been made public in line with the watchdog's practice.

The agency, whose senior members are reviewing the investigation findings, has not made a final ruling and could further extend the investigation. But two of the sources said the airlines were likely to be cleared.

The CCI's investigation arm had already produced a report in 2016 saying no antitrust practices were detected. The agency directed a further probe into fare-determining software and seat-allocation patterns, a second source said.

Antitrust lawyer Gautam Shahi, who is not involved in the case, said a finding of no antitrust misconduct would be a big relief for a sector that has faced intense scrutiny.

In a separate antitrust case in 2018, the CCI found that IndiGo, Jet Airways and SpiceJet had colluded over fuel surcharge rates on cargo flights, fining them a total of 544 million rupees ($7.61 million). The airlines have appealed that judgment.

 

Our duty is to ensure fair competition, CCI tells Karnataka High Court

Counsel for the Competition Commission of India (CCI) and Delhi Vyapar Mahasangh (DVM) on Thursday defended the watchdog’s order to initiate a probe against e-commerce firms, including Amazon and Flipkart, in the Karnataka High Court. Amazon had moved high court challenging CCI’s order.

The matter pertains to a complaint filed by DVM, which alleged that these players were giving deep discounts on online sales of smartphones, and cherry-picking sellers. In its petition, Amazon made CCI, DVM and Flipkart respondents.

Senior lawyer Harish Narasappa, appearing for CCI, told the court that it was the watchdog’s duty to ensure that there were no practices that had an adverse effect on competition. Narasappa said the arguments made by Amazon’s counsel on Wednesday were like building a “fantastic castle”, but it won’t survive. Arguing against the CCI order on Wednesday, Amazon’s counsel Gopal Subramanium told the court that the CCI did not have prima facie evidence to order a probe into his client’s business practices.

Narasappa on Thursday objected to the jurisdiction point and said that writ petition filed under Article 226 of the Indian Constitution does not intervene in the investigations of the CCI director general as directed by the competition watchdog. He quoted from the Consolidated FDI (foreign direct investment) Policy, 2017, saying that merely satisfying FDI norms did not exempt anyone from other laws of land.

Senior Counsel KG Raghavan, who appeared for DVM, argued that violations of FDI norms and competition law can be looked at by the respective authorities without the CCI having to wait for the investigation by the Enforcement Directorate.

He said Amazon’s petition had no merit and needs to be rejected. Giving examples of how Amazon was promoting seller firms, where it owned a stake, Raghavan said the relationship between Amazon and preferred sellers on its platform such as Cloudtail and Appario were like the “tentacles of the octopus” and “this has to be deciphered by the investigation”.

Narasappa also referred various cases to state that a petition filed before the court under Section 226 of the Constitution cannot influence the order passed under section 26 (1) of the Competition Act, which states that investigation can be ordered if prima facie case exists. Cloudtail is a joint venture between Amazon and Catamaran Ventures, which is owned by Infosys founder NR Narayana Murthy. Appario is a subsidiary of Frontizo, which is a joint venture between Amazon and Patni Group.

Nippon Express gets CCI nod to acquire 22% stake in Future Supply

The country’s competition watchdog Competition Commission of India (CCI) on Tuesday approved Nippon Express’s proposed acquisition of 22 per cent stake in Kishore-Biyani-led Future Supply Chain for Rs 641 crore.

This is the second time in two weeks that the CCI has given its nod to a foreign investment in a Future group company.

On November 28, the CCI had approved Amazon’s proposed Rs 1,500-crore deal to acquire 49 per cent stake in Future Coupons, a Future Retail promoter entity. The transaction will give Amazon a 3.5 per cent stake in Future Retail. In a statement to the exchanges, Future Supply Chain said, “The proposed combination pertains to the acquisition by Nippon Express of about 22 per cent of the total issued and paid up share capital of Future Supply Chain on a fully diluted basis.”

Singapore-based Nippon Express will buy 14.6 per cent stake of the existing share capital held by special situations fund SSG Capital in Future Supply Chain.

CCI to probe MakeMyTrip, Oyo for unfair business practices, deep discounts

The Competition Commission of India (CCI) has launched an investigation against Oyo Hotel & Homes and MakeMyTrip (MMT-Go) on charges of predatory pricing, creating a monopoly and deep discounting.

A CCI order says there is enough substance to warrant a probe, on evidence that the two are charging excessive commissions from hotel partners and demanding deep discounts which have led to the destruction of competitive pricing in the market.

The complaint in this regard came from the Federation of Hotel and Restaurant Associations of India (FHRAI). And, CCI has directed its director-general, investigations, to do a detailed investigation in the matter and give a report within 150 days.

“The there exists a prima facie case for investigation for alleged violation of the provisions of Section 3(4) of the Act. Further, a prima facie case for investigation under Section 4 is made out against MMT-Go, as elucidated in the earlier parts of this order. The DG is, thus, directed to carry out a detailed investigation,” goes the CCI order.

Oyo Hotels & Homes claim an earlier CCI investigation has cleared it of all allegations on market dominance and predatory pricing. The company, recently in the news for its billion dollar fund raise rounds and expansion abroad, has lately been facing a tough time. Over the past few months, it has faced protests from hotel and asset owners at various places in the country — Bengaluru, Pune, Jaipur, Shimla, Manali, Ahmedabad, Bhopal, Bareilly, Vizag, Gangtok, Delhi.

The Ritesh Aggarwal-led entity says CCI had acknowledged that OYO and MakeMyTrip-GoIbibo (MMT-Go) operate in different segments. And, that OYO as a budget hotel chain is in a vertical relationship with MMT, which is essentially a distribution platform for hotels.

“CCI has directed to investigate the complaint filed by FHRAI against MMT, Go-Ibibo and OYO as it pertains to alleged violation of the provisions of Section 3(4) of the Act only. The concern expressed is around whether OYO’s contractual relationship with MMT, as part of an arrangement, may have an adverse effect on competition. OYO stands ready to extend full support to the investigation and as a law-abiding corporate citizen, has full faith in the administrative and the judicial process,” the company said.

MakeMyTrip spoke similarly, that it would cooperate with CCI and demonstrate that the allegations are unfounded.

FHRAI has alleged that chain hotels and hotel aggregators such as Treebo and Fab Hotels have been denied market access.

“They have been allegedly removed from the platform of MMT-Go as they did not agree to pay the exorbitant commission brokerage charged by the latter. Further, it has also been alleged that MMT and OYO have entered into confidential commercial agreements, wherein MMT has agreed to give preferential treatment to OYO on its platform, further leading to a denial of market access to Treebo and Fab Hotels in contravention of Section 3, as well as Section 4, of the Act,” goes the CCI order.

FHRAI said it would be helping the CCI investigation with supporting material from across the country. “E-commerce companies are managing to disrupt traditional businesses, which are suffering. The online travel agents (OTAs) have managed to disrupt the market in the last two years. Illegal activity is going on in the garb of deep discounts. OTAs have been armtwisting local businesses, charging high commissions and offering big discounts. Whether a hotel owner likes it or not, they have to take part in the business of OTAs because these have a dominant position. Small players are in the stronghold of these guys,” said Pradeep Shetty, joint secretary at FHRAI and vice-president of FHRAI's western region arm.

CCI approves Amazon's 0.51% equity share acquisition of Quess Corp

Fair trade regulator Competition Commission of India (CCI) on Monday said it has cleared the acquisition of equity share capital of Quess Corp by Amazon.com NV Investment Holding LLC.

Quess Corp in a regulatory filing on July 12 had said its board has approved the issuance of over 754,000 equity shares to Amazon.com NV Investment Holdings LLC for an aggregate amount of around Rs 51 crore at an issue price of Rs 676 apiece by way of a preferential allotment.

It had further added that the investment will be going to Quess Corp's wholly-owned subsidiary Qdigi Services Ltd.

The regulator in a tweet on Monday said it "approves acquisition of 0.51% of the equity share capital of Quess Corp Limited by Amazon.com NV Investment Holding LLC."

"The proposed transaction involves the acquisition of a minority non-controlling investment by the acquirer, undertaken solely as an investment in the ordinary course of its business," according to a combination notice filed with the CCI.

Amazon.com NV Investment Holding LLC is an "investment holding company which is globally engaged in the business of making investments and is also registered as a foreign portfolio investor in India," the notice added.

Quess Corp Group and its subsidiaries are engaged in various activities in the market for provision of facilities management services in India, CCI said.

Competition Commission must study foreign firms' conduct, says Sitharaman

Corporate Affairs Minister Nirmala Sitharaman on Friday asked the Competition Commission of India (CCI) to look into the behaviour of companies overseas that affects Indian consumers.

Addressing an event organised to mark ten years of the CCI, Sitharaman said the commission should study global practices of companies and should take cognizance if such practices lead to competition issues in India.

She also said the commission should look at taking suo motu cognizance more often to ensure that nobody abuses dominant position or creates competition issues. “New economy is a challenge now.”

The CCI is already studying the new economy segment to understand how some companies abuse dominant positions.

Google has been one of the new-age firms that has been under the CCI scanner for its popular Android mobile operating system allegedly blocking its rivals.

According to Sitharaman, it is just not the number of suo motu cases but also the way in which the commission has to keep itself alert to many developments happening globally.

Corporate Affairs Secretary Injeti Srinivas said the commission should withdraw excessive control. The expert committee that reviewed the competition law and submitted its findings has recommended that there should be more branches of the commission.

The panel also suggested that a board be set up within the commission which will have representatives from other regulators so that there is no turf war. The Telecom Regulatory Authority of India (Trai), the Central Electricity Regulatory Commission, the Insurance Regulatory and Development Authority and the Petroleum and Natural Gas Regulatory Board will be part of this forum, which will resolve disputes with the CCI.

In the past, regulators — like Trai — have had issues with the CCI about jurisdiction over companies pertaining to their sectors.

Amazon, Flipkart unlikely to participate in CCI's fact-finding exercise

Amazon.com Inc and Walmart Inc's Flipkart are unlikely to fully participate in an Indian antitrust body's study of the e-commerce sector for fear of revealing trade secrets, two people with direct knowledge of the matter said.

The Competition Commission of India (CCI) is engaged in what it describes as a "fact-finding exercise" aimed at better understanding the e-commerce sector, showed a document distributed to several e-commerce firms and reviewed by Reuters.

The CCI document features 88 questions over 12 pages requesting recipients volunteer pricing strategies, product information and the identities of their biggest-selling vendors.

Amazon and Flipkart are among India's largest e-commerce companies so their participation in any such survey could carry significant weight. Yet the pair are unlikely to answer questions in full as doing so would involve disclosing commercially sensitive information, the two people told Reuters.

"This survey is very detailed," said one of the people, who declined to be identified as they were not authorised to speak publicly on the matter. "Companies are worried because these are competitive, confidential things which are business critical."

Amazon, Flipkart and the CCI did not respond to Reuters requests for comment.

CCI's study comes about four months after the government implemented new rules regulating foreign investment in e-commerce, including barring the sale of products on their platforms from vendors in which they have an equity interest.

The rules saw scores of products vanish from Amazon's Indian website overnight, and shocked Walmart which just months earlier had bought the majority of Flipkart for $16 billion in the U.S. retailer's biggest-ever acquisition.

U.S. officials and e-commerce companies have protested the rules, which were widely seen as aimed at winning the support of small traders ahead of a general election. The incumbent government won the election this month by a landslide.

To better understand the e-commerce sector, the CCI in its document asks companies basic details such as the number of employees, but asks online marketplace operators more sensitive questions such as how they charge vendors on their platforms.

It also asks questions regarding contractual agreements struck between e-commerce companies and vendors.

There is no indication of compulsory participation in the survey, with the CCI in the document saying it "does not form a part of any investigation and/or inquiry in any of the proceedings pending" before the watchdog.

CCI approves L&T's proposal to acquire up to 66.15% stake in Mindtree

The Competition Commi­ssion of India (CCI) on Friday approved engineering and construction major Larsen & Toubro’s (L&T’s) proposal to acquire up to 66.15 per cent stake in Mindtree.

With this nod, L&T has overcome the first major regulatory hurdle in its bid for ‘hostile’ takeover of the Bengaluru-headquartered IT services firm. “CCI approves acquisition of up to 66.15 per cent of the total equity shareholding of Mindtree, on a fully diluted basis, by Larsen and Toubro,” the India’s competition watchdog announced on Twitter.

According to legal experts, though the proposed deal has been okayed by the Indian regulator, it would still require approvals from anti-trust authorities in foreign jurisdictions such as the US and Germany as Mindtree operates in those geographies.

“For transactions that exceed prescribed thresholds, the approval of the CCI becomes a crucial step. Particularly, it is a key regulatory approval for the acquirer,” said Archana Tiwary, partner at J Sagar Associates. Experts also said that as obligation of receiving the competition watchdog’s approval lies with the acquirer, the consequence of a refusal could lead to complete failure of the deal.

After sealing a deal to purchase V G Siddhartha’s 20.32 per cent stake in Mindtree on March 18, L&T has mounted a takeover bid on the mid-tier IT services firm by placing orders to buy a further 15 per cent stake from the open market, besides making an open offer to buy an additional 31 per cent stake at Rs 980 per share.

For a controlling stake of 66 per cent in Mindtree, L&T is likely to spend around Rs 10,700 crore.

The panel of four independent directors of the IT services firm is evaluating the open offer of L&T for providing reasoned recommendations to shareholders. On Tuesday, this committee appointed Khaitan and Co the legal advisor and ICICI Securities as the financial advisor for assisting it in this process.

While Mindtree can give a counter offer by April 16, the committee of independent directors will give its recommendations to shareholders on L&T’s open offer by May 10. The open offer, according to L&T’s disclosures, will be between May 14 and May 27.

Meanwhile, after opposing L&T’s takeover bid, founders of the company recently indicated they were open to negotiations, marking a significant change to their earlier stance. In an interview to Business Standard, Krishnakumar Natarajan, executive chairman of Mindtree, had said a ‘middle ground’ could certainly be explored through mutual discussions to protect the interests of Mindtree’s stakeholders.