CDC Group Plc, UK — Combination C-2016/07/417
- Case No.C-2016/07/417
Ratio decidendi
The rule this decision rests on
A combination notified under s.6(2) of the Competition Act, 2002 is approved under s.31(1) where, on the facts in the notice and the factors listed in s.20(4), the Commission is of the opinion that it is not likely to have an appreciable adverse effect on competition in India. Where the parties do not provide identical or substitutable products or services, directly or indirectly, and the acquirer's non-controlling stakes in other entities do not alter that position, no horizontal overlap is established that would support a finding of appreciable adverse effect on competition. Where none of the parties has direct or indirect shareholding or control over an enterprise operating at a different stage or level of the production or supply chain, no vertical or complementary overlap is established that would support such a finding. The approval so granted is conditional, and it stands revoked if at any time the information furnished by the acquirer is found to be incorrect.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
21st September 2016 Notice under Section 6 (2) of the Competition Act, 2002 given by CDC Group Plc. CORAM: Mr. Devender Kumar Sikri Chairperson
Mr. S. L. Bunker Member
Mr. Sudhir Mital Member
Mr. Augustine Peter Member
Mr. U.C. Nahta Member
Mr. M.S. Sahoo Member
Legal Representative: M/s Platinum Partners Order under Section 31(1) of the Competition Act, 2002 1. On 29th July 2016, the Competition Commission of India (hereinafter referred to as the "Commission") received a notice from CDC Group Plc (“CDC”) under sub-section (2) of Section 6 of the Competition Act, 2002 (“Act”) in relation to subscription1 by CDC of approximately upto 15.45 percent of the total share capital of India Infoline Finance Limited (“IIFL”). (Hereinafter, CDC and IIFL are collectively referred to as “Parties”.) The proposed combination has been filed pursuant to execution of an Investment Agreement (‘IA’) dated 20th July 2016 executed by and between CDC and IIFL and IIFL Holdings Ltd.2 (‘IIFL Holdings’).
2. It is observed that the IA provides that prior consent of CDC would be required for, inter alia,
1 As per notice, CDC shall subscribe to around 43,334,409 compulsorily convertible preference shares and 100 Equity Shares. 2 IIFL Holdings, itself and through its nominees holds 100 percent of the paid-up equity share capital of IIFL.
COMPETITION COMMISSION OF INDIA For Greater Good commencement of any new business by IIFL and/or its subsidiaries and/or cessation of any portion of business or variance of more than 20 percent in the product mix of the business from the business plan.
3. In terms of Regulation 14 of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (‘Combination Regulations'), the Acquirer, vide Commission’s letter dated 12th August 2016, was required to provide certain information. Response to the same was provided on 18th August 2016. Thereafter, Acquirer, through emails at different times, made certain submissions relating to non-compete covenants, its stake and control in other entities engaged in similar business.
4. CDC, a public limited company wholly owned by United Kingdom Government, is a Development Finance Institution. It is present in India through CDC India Advisors Private Limited, CDC Emerging Markets Ltd. and CDC India Opportunities Ltd.
5. IIFL, a wholly owned subsidiary of IIFL Holdings, is a non-deposit accepting systemically important NBFC registered with the RBI. It has been stated in the notice that IIFL provides various loans including home loans, loans against property, loans secured against gold, commercial vehicle finance, medical equipment finance, small and medium enterprise loans, corporate loans and capital market finance.
6. With regards to the horizontal overlaps, it has been submitted that the Parties to the combination do not provide identical or substitutable products or services either directly or indirectly. However, CDC, currently, hold a non-controlling stake in certain NBFC-Micro Finance Institutions and in a scheduled commercial bank.
7. It has also been submitted that none of the Parties to the combination have direct or indirect shareholding and/or control over another enterprise engaged in any activity relating to the production, supply, distribution, storage, sale and service or trade in products or provision of services which are at different stages or levels of the production chain.
8. Considering facts on record, details provided in the notice and assessment of the combination on the basis of factors stated in sub-section (4) of Section 20 of the Act, the Commission is of the opinion that combination is not likely to have an appreciable adverse effect on competition in India and therefore, the Commission hereby approves the same under-section (1) of section 31 of the Act.
9. This order shall stand revoked if, at any time, the information provided by the Acquirer is found to be incorrect.
COMPETITION COMMISSION OF INDIA For Greater Good
10. The information provided by the Acquirer is confidential at this stage in terms of and subject to provisions of Section 57 of the Act.
11. The Secretary is directed to communicate to the Acquirer accordingly.
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