M/s Aditya Birla Fashion and Retail Limited, Mumbai — Combination C-2023/05/1030

Notice under Section 6(2) of the Competition Act, 2002, filed by Aditya Birla Fashion and Retail Limited CORAM: Ms. Ravneet Kaur Chairperson Ms. Sangeeta Verma Member Mr. Bhagwant Singh Bishnoi Member

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

1. On 19th May 2023, the Competition Commission of India (Commission) received a notice under Section 6(2) of the Competition Act, 2002 (Act), given by Aditya Birla Fashion and Retail Limited (Acquirer) regarding its proposed acquisition of and merger with TCNS Clothing Co. Limited (TCNS). In relation to the Proposed Combination, the concerned parties have entered into a Share Purchase Agreement (SPA) and an Implementation Agreement, both executed on 5th May 2023.

2. In terms of Regulation 14(3) of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011, the Commission, vide communication dated 1st June 2023, sought certain information and clarifications regarding the activities of the parties, market presence, etc. In response, the Acquirer filed its written submission on 5th June 2023.

3. By way of the Proposed Combination, the Acquirer contemplates acquisition of a shareholding between 22% and 30.81% in TCNS from its promoters. In view of the requirements of the regulations issued by the Securities and Exchange Board of India on substantial acquisition of shares and takeover, the Acquirer also proposes to issue an open offer to public shareholders to acquire up to 29% of the shareholding of TCNS. Pursuant to the acquisitions under the SPA and open offer, the Acquirer will hold 51% of shareholding in TCNS.

4. Following the above acquisitions, TCNS is proposed to be merged into the Acquirer by way of merger (by absorption), as a going concern, as per the terms of the Scheme of Amalgamation between TCNS, Acquirer and their respective shareholders and creditors. In consideration of the merger, the eligible shareholders of TCNS will receive shares of the Acquirer in exchange for their shares in TCNS based on a predetermined share exchange ratio.

5. The Acquirer is a listed entity and is part of the Aditya Birla conglomerate. The Acquirer is engaged in business-to-business (B2B) and business-to-consumer (B2C) sales of branded products within the apparel, footwear and accessories (AFA) segment through its retail stores, online retail platforms and e-commerce marketplaces. It comprises several brands such as Louis Phillippe, Van Heusen Pantaloons, Allen Solly and Peter England, amongst others. While the Acquirer is primarily engaged in business activities within India, it also undertakes white label sales of certain products (contract manufacturing) for customers situated outside India and some minor brand sales outside India through store and own e-commerce.

6. TCNS is a public listed company engaged in the business of manufacturing, distribution and sale of women’s apparel, jewellery, footwear and beauty products, under the brands W, Aurelia, Wishful, Elleven and Folk Song. TCNS also sells these products in wholesale cash-and-carry trading, including through franchisee outlets. TCNS further operates exclusive business outlets in Mauritius, Nepal, Bangladesh and Sri Lanka for the sale of apparel and footwear. Additionally, TCNS generates export sales on a B2B basis in Canada and generates revenue internationally from its own website.

7. The Proposed Combination primarily concerns the apparel industry in India. Both the Acquirer and TCNS are engaged in wholesale (B2B) and retail (B2C) sale of AFA products through different distribution modes such as e-commerce and brick-and-mortar retail stores. While the product portfolio of the Acquirer is relatively wider and includes menswear and kidswear, the operations of TCNS is largely limited to womenswear. Taking into consideration the business activities of the Parties, the Acquirer has submitted that, for each of B2B and B2C sales, the relevant market could be delineated as sale of retail products at a broader level, as sale of AFA products at a narrower level and as organised sale of AFA products at the narrowest level.

8. The Commission notes that the AFA market in India could be classified on the basis of gender—menswear, womenswear and kidswear; mode of distribution—offline and ecommerce; and organisation—branded and unbranded. Sine TCNS is largely engaged in womenswear, it may also be relevant to look at sub-segments therein, viz., Indian wear, innerwear and activewear and western wear. However, a precise definition of the relevant market is considered not necessary, as the incremental market position resulting from the Proposed Combination is not significant in any of the plausible market segmentations. Further, the womenswear market also features the presence of known brands such as Fabindia, Biba, Madame, Zara, Label, Chemistry, 109°F, Soch, Global Desi and And.

9. The activities of the parties also exhibit vertical interface. The Acquirer group is a known player in the manufacture and sale of viscose in India. Some of the women’s apparel sold by TCNS are manufactured using the said viscose. Further, TCNS has supplied apparel to the retail stores of the Acquirer, viz., Pantaloons. However, the value of procurements between the Parties and the incremental market position that they gain as a result of the Proposed Combination is not significant. Thus, the Proposed Combination does not appear to result in any ability or incentive to engage in input foreclosure by any of the Parties.

10. Considering the material on record, including the details provided in the notice and the assessment of the Proposed Combination based on factors stated in Section 20(4) of the Act, the Commission is of the opinion that the Proposed Combination is not likely to have any appreciable adverse effect on competition in India. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act.

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

12. The information provided by the Acquirer shall be treated as confidential in terms of and subject to the provisions of Section 57 of the Act.

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