MCPI Private Limited — Combination C-2020/09/767
- Case No.C-2020/09/767
Ratio decidendi
The rule this decision rests on
A proposed combination does not warrant an adverse finding under Section 20(4) where the acquirer and target are not engaged in identical, similar or substitutable products, so that no horizontal overlap arises. Where the parties are vertically related, with the acquirer's market share in the upstream product market and the target's share in the downstream segments both in low single or lower double digits, the parties lack the ability and incentive to foreclose competition in any segment or sub-segment. Where, on the material on record and the factors in Section 20(4), a combination is not likely to have an appreciable adverse effect on competition in India, the Commission may approve it under Section 31(1).
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Notice under Section 6 (2) of the Competition Act, 2002 filed by MCPI Private Limited
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 1st September, 2020, the Competition Commission of India (“Commission”) received a notice under Section 6(2) of the Competition Act, 2002 (“Act”), filed by MCPI Private Limited (“MCPI / Acquirer”). The notice was filed pursuant to the submission of the Resolution Plan by MCPI to the Resolution Professional on 28th August, 2020.
2. The Proposed Combination relates to the acquisition by MCPI through its wholly owned subsidiary, MCPI Polyester Private Limited (“MCPI Polyester”), of Garden Silk Mills Limited (“GSML / Target”), which is undergoing Corporate Insolvency
Resolution Process (“CIRP”) under the Insolvency and Bankruptcy Code, 2016 (“IBC”). [Hereinafter, MCPI and GSML are collectively referred to as “Parties”.]
3. The Acquirer vide its email dated 9th September, 2020 submitted additional information, inter alia on business verticals of TCG group, total purchase consideration and competitors.
4. MCPI is part of The Chatterjee Group (“TCG”) and is engaged in the business of manufacturing and supply of Purified Terephthalic Acid (“PTA”). It has two manufacturing plants located in West Bengal with total capacity of 1270 Kilo Tonnes / Annum (“KTPA”). MCPI has a wholly owned subsidiary, MCPI Polyester, which is newly incorporated and currently does not have any business operations in or outside India.
5. TCG group, stated to be founded by Dr. Purnendu Chatterjee in 1989, is a strategic investor with its headquarters in New York, USA. TCG holds investments in various sectors spanning several continents and industries. These include investments in sectors such as Petrochemicals, Biotech, Real Estate, Technology, Pharmaceuticals and Financial Services. TCG holds 99.4% shareholding in MCPI.
6. GSML is stated to be a part of the Praful Shah Group, which holds 57.63% shareholding in GSML. GSML is a manufacturer of polyester yarn and textile products, which falls in the category of man-made fibres. It has two manufacturing plants located in Gujarat with total production capacity of 596.2 KTPA for polyester.
7. GSML is vertically integrated and is engaged in the production and sales of (i) PET Chips (“Polyethylene Terephthalate”) and (ii) Polyester Yarn in India. It commercially supplies PET Chips as well as captively consumes the same for manufacturing different kinds of Polyester Filament Yarns (“PFY”).
8. It is submitted in the Notice that MCPI/TCG (including its group affiliates) and GSML are not directly / indirectly engaged in the manufacturing and/ or supply of similar / substitutable / identical products. Accordingly, products of Parties do not exhibit horizontal overlaps.
9. With regards to vertical relationships (actual or potential), it is submitted that MCPI is engaged in the manufacturing and sale of PTA in India (upstream market). GSML utilizes this PTA, which is used as a raw material to manufacture polyester (downstream market). Based on the presence of GSML, at a narrower level, the broad market for manufacturing and sale of PTA may be sub-segmented into manufacturing and sale of (a) PFY and (b) PET Chips.
10. Based on the submission of the Parties, it is observed that the market share of MCPI is between [15-20]% in the upstream market of manufacturing and sale of PTA, in terms of both installed capacity and actual production. The market share of GSML in the broad segment of polyester is between [5-10]% in terms of installed capacity (in KTPA) and between [0-5]% in terms of total production(in KTPA). The market share of GSML in each of the sub-segment is also in similar range.
11. In view of the above, the Parties may not have any ability or incentive to foreclose competition in any segment/sub-segment.
12. Considering the material on record including the details provided in the Notice and the assessment of the Proposed Combination based on the 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.
13. This order shall stand revoked if, at any time, the information provided by the Acquirer is found to be incorrect.
14. The information provided by the Acquirer 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 Acquirer accordingly.
This page reproduces a public judgment and a summary of it. It is research material, not legal advice, and it is no substitute for advice from an advocate on your own facts.
Research this judgment with Miss Lucy
Ask what it holds, what has followed it, and what it means for your matter — in plain English, with the citations.
Try Miss Lucy free