M/s S.B. Packagings Private Limited — Combination C-2023/02/1003

Notice under Section 6(2) of the Competition Act, 2002 jointly given by S.B. Packagings Private Limited and Constantia Flexibles Sales B.V.

CORAM:

Ms. Sangeeta Verma Acting Chairperson

Mr. Bhagwant Singh Bishnoi Member

Order under Section 31(1) of the Competition Act, 2002 1. On 10th February 2023, the Competition Commission of India (Commission) received a notice (Notice) under Section 6(2) of the Competition Act, 2002 (Act), jointly given by S.B. Packagings Private Limited (SBP/Acquirer) and Constantia Flexibles Sales B.V. (C-Flex/Seller).

2. The proposed combination envisages the following:

(i) Acquisition of the entire shareholding of C-Flex in: (a) Parikh Packaging Private Limited (Parikh Packaging); (b) Creative Polypack Private Limited (Creative Polypack); (c) Aparna Paper Processing Industry Private Limited (Aparna Paper); (d) Vibgyor Printing and Packaging Private Limited (Vibgyor); and (e) Parikh Flexibles Private Limited (Parikh Flexibles) by SBP (Proposed Transaction); and (ii) Acquisition of 30–35% shareholding in SBP by C-Flex as consideration for the Proposed Transaction (Additional Transaction).

The Proposed Transaction and the Additional Transaction are together referred to as the Proposed Combination. Parikh Packaging, Creative Polypack, Aparna Paper, Vibgyor and Parikh Flexibles are collectively referred to as the Targets or the C-Flex India Entities. C-Flex, SBP and C-Flex India Entities have been collectively referred to as Parties.

3. The Notice was given pursuant to execution of, inter alia, Share Subscription and Purchase Agreement between SBP, PI Opportunities Fund I Scheme II (PIOF – Scheme II), Amit Banga, C-Flex and the Targets on 16th January 2023 (SSPA); and Amended and Restated Shareholders Agreement between SBP, PIOF Scheme II, Amit Banga, C- Flex and Gross Holdings LLP on 16th January 2023 (SHA). 4. The Commission, vide its communication dated 7th March 2023 and 23rd March 2023, issued under Regulation 14(3) of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011, required the notifying parties to remove defects in the Notice and furnish certain information relevant for the purpose of assessment of the Proposed Combination. Notifying parties furnished their responses vide submissions dated 13th March 2023 and 27th March 2023.

5. SBP is engaged in the manufacturing of flexible packaging materials. It offers a large variety of flexible packaging materials for different applications, including for products in the food and non-food segments. SBP is a portfolio entity of PIOF Scheme II which, in turn, is owned and controlled by Premji Invest Limited (Premji Invest). Premji Invest is the private equity and venture capital investment arm of Premji Foundation. Premji Foundation was set up to advanse the philanthropic initiatives of Premji Invest and is ultimately controlled by Mr. Azim Premji. SBP and the various controlled entities of PI Opportunities Fund I and PI Opportunities Fund II are collectively referred to as the Premji Invest Group.

6. C-Flex group is engaged in the production and sale of flexible packaging materials. The ultimate holding company of C-Flex is WENDEL S.E. (WENDEL). WENDEL is engaged in the acquisition and management of investment portfolios. It is involved in long-term investment in a diversified portfolio of industrial, media and services companies.

7. Targets are engaged in the production and sale of flexible packaging materials and prominently cater to customers that operate in the food and beverages segment and the home and personal care segment (within the non-food and beverages segment). Targets belong to the Seller, which is ultimately owned by the WENDEL group.

8. Flexible packaging is any package or part of a package whose shape can be readily changed when filled or during use. Flexible packaging is produced from paper, plastic, film, aluminium foil or any combination of those materials, and includes bags, pouches, liners, wraps, rollstock and other flexible products. The process of manufacturing flexible packaging materials begins with film extrusion and followed by printing/coating, after which lamination and slitting are carried out to produce the finished product. The finished product can be in the form of roll form laminate that is directly sold to the customers or further converted into pouches. It has been submitted that Parties are engaged in the capacity of “converters” who print, laminate, split and pouch the films to convert them into flexible packaging materials such as bags, pouches, wraps, rolls and laminates, which are then sold to manufacturers of all kinds of consumer goods across various industries such as food and beverages, healthcare, home and personal care, hygiene and others (textiles, etc.).

9. Based on the submissions, the Parties’ activities horizontally overlap in the broad market of flexible packaging material for food products and non-food products. At the narrow level, the market may be segmented into: (i) the market for production and sale of flexible packaging materials for the food products segment in India (Food Market) and (ii) the market for production and sale of flexible packaging materials for the non-food products segment in India (Non-Food Market). At the narrowest level, the market may be sub segmented into: (i) the market for production and sale of flexible packaging materials used for packaging home and personal care products in India (HPC Market) and (ii) the market for production and sale of flexible packaging materials used for packaging healthcare products in India (Healthcare Market). The markets for flexible packaging material may be further categorised based on the material used and type of flexible packaging. However, the precise delineation of the relevant market is left open considering the activities of the Parties and since the Proposed Combination is not likely to raise competition concerns irrespective of the way in which the relevant market is delineated.

10. The combined market shares of the Parties do not exceed 10% based on value and volume in any of the markets submitted by the Parties. Further, the flexible packaging sector consists of a large number of market players such as Uflex, Huhtamaki, Amcor, Shrinath Rotopack and Uma Polymers.

11. With regard to vertical interfaces, it has been submitted that there is no vertical relationship between the Acquirer and Targets. However, WENDEL group has an investment in the Stahl group, which has a plant in India. Stahl is a minor supplier of polyurethane coating systems, which are used in the production of laminate films by film extruders within the flexible packaging industry. It has been submitted that Stahl has insignificant sales in India. With regard to potential vertical relationship, it has been submitted that Premji Invest group has certain equity holdings in enterprises that may require flexible packaging materials for the supply of their goods in the downstream market. The potential vertical relationships are not such as to create any foreclosure concerns.

12. 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 in any of the relevant market(s), and therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act.

13. This order may be revoked if, at any time, the information provided by the notifying parties is found to be incorrect.

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

15. The Secretary is directed to communicate to the notifying parties accordingly.