Bank of Baroda — Combination C-2022/08/962

COMPETITION COMMISSION OF INDIA 29.09.2022 Notice given by Bank of Baroda under Section 6(2) of the Competition Act, 2002

CORAM: Mr. Ashok Kumar Gupta Chairperson

Ms. Sangeeta Verma Member

Mr. Bhagwant Singh Bishnoi Member

Order under Section 31(1) of the Competition Act, 2002

1. On 18.08.2022, the Competition Commission of India (Commission) received a notice under Section 6(2) of the Competition Act, 2002 (Act), given by the Bank of Baroda (Bank/Acquirer). The notice has been filed in relation to the acquisition of 21% shares of IndiaFirst Life Insurance Company Limited (IFLIC/Target) from the Union Bank of India (Combination). It is also submitted in the notice that the Combination was consummated on 31.03.2022, resulting in the current shareholding pattern of IFLIC wherein 65% is held by the Bank, 9% is held by the Union Bank of India and 26% is held by Carmel Point Investments India Private Limited (Hereinafter, the Acquirer and the Target are together referred to as Parties).

2. In order to carry-out the competition assessment of the Combination, the Acquirer was required to provide certain information(s)/clarification(s); responses to the same were received on 16.09.2022 and 28.09.2022.

Combination Registration No. C-2022/08/962

Background

3. Earlier, in relation to the Combination, the Acquirer had filed Form-III under Section 6(5) of the Act (Form-III) with the Commission on 02.05.2022. Subsequently, vide its letter dated 18.07.2022, the Acquirer, inter alia, requested the Commission for withdrawal of Form-III and undertook to file the notification of the transaction to the Commission within a period of one month from the date of their application (Application). The Commission, in its meeting held on 18.07.2022, took note of the Application.

Bank/Acquirer

4. The Acquirer is a Public Sector Bank which was nationalised on 19.07.1969 under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. It provides various banking and financial services, such as commercial banking, investment banking, retail banking and wealth management. The Acquirer is also engaged in providing asset management services through its subsidiaries. It is also engaged in providing services related to home loans, personal loans, vehicle loans, education loans, etc.

5. The Acquirer is also engaged in the distribution of insurance products such as life insurance, general insurance, health insurance and government sponsored insurance schemes such as the Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana.

IFLIC

6. IFLIC is a public company limited by shares incorporated in India and had licence to transact life insurance business in India from the Insurance Regulatory and Development Authority of India (IRDAI). It carries on business in the areas of life insurance, health insurance and pension. It is submitted by the Acquirer that, under the licence granted for life insurance business by IRDAI, IFLIC can provide life insurance and certain related products such as health insurance products and pension. It is also stated that life insurance companies can only offer fixed benefit health plans, while standalone health insurance companies can offer indemnity-based plans apart from fixed benefit health plans. Similarly, in case of Combination Registration No. C-2022/08/962 pension, life insurance companies are permitted to offer pension plans, immediate or deferred annuity plans.

Identification of Overlaps and Relevant Markets

7. It is submitted in the notice that there are no horizontal overlaps between the products/services offered by the Parties in India. Further, with respect to the vertical relationship, it is submitted that there is a vertical overlap between the business activities of IFLIC and the Acquirer. Further, it is submitted that IFLIC operates at the upstream level, i.e., provides life insurance and related products in India, and the Acquirer operates at the downstream level, i.e., distributes insurance products in India.

8. The Acquirer submitted that the relevant market may be delineated at the upstream market as the ‘market for life insurance in India’ (Life Insurance Market) and at downstream level as the ‘market for distribution of insurance in India’ (Insurance Distribution Market).

9. The Commission decided to leave the exact delineation of the relevant market open, as it is observed that the Combination, is not likely to cause an appreciable adverse effect on competition in India in any of the possible alternative relevant markets that could be delineated.

10. Based on the submissions, it is noted that the market share of IFLIC at the upstream level in the Life Insurance Market and market share of Acquirer at downstream level in the Insurance Distribution Market, are minuscule. Further, it is submitted that the relevant markets are characterised by the presence of other players such as Life Insurance Corporation, SBI Life Insurance Corporation, HDFC Life Insurance Corporation and ICICI Prudential Life Insurance Corporation in the Life Insurance Market, and State Bank of India, ICICI Bank and HDFC Bank in the Insurance Distribution Market, who will continue to pose competitive restraints to the Parties post the Combination.

11. Considering the material on record, including details provided in the Notice given under Section 6(2) of the Act and assessment of the Combination based on the factors stated in Combination Registration No. C-2022/08/962

Section 20(4) of the Act, the Commission is of the opinion that the Combination is not likely to have any appreciable adverse effects on competition in India in any of the relevant market(s) and therefore, the Commission approves the same under Section 31(1) of the Act. This approval, however, is without prejudice to proceedings under Section 43A of the Act.

12. This order may be revoked if, at any time, the information provided by the Acquirer is found to be incorrect.

13. The Secretary is directed to communicate to the Acquirer, accordingly.