Ms. Shobana Kamineni and Prime Time Logistics Technologies Private Limited (PTL); — Combination C-2022/10/978

Notice under Section 6(2) of the Competition Act, 2002 jointly given by Ms. Shobana Kamineni and Prime Time Logistics Technologies Private Limited

CORAM:

Ms. Sangeeta Verma Acting Chairperson

Mr. Bhagwant Singh Bishnoi Member

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

1. On 20 October 2022, the Competition Commission of India (Commission) received a notice (Notice) under Section 6(2) of the Competition Act, 2002 (Act), jointly given by by Ms. Shobana Kamineni (Ms. Kamineni) and Prime Time Logistics Technologies Private Limited (PTL)1 (collectively, the Acquirers).

2. The proposed combination relates to the acquisition of 20% of the issued equity share capital of Keimed Private Limited (Keimed/Target) from Mitsui & Co. (Asia Pacific) Pte. Ltd. (Mitsui/Seller) by Ms. Kamineni through PTL, and resultantly, the acquisition of sole control of Keimed by Ms. Kamineni (Proposed Combination) (Hereinafter, the Acquirers and the Target are collectively referred to as the Parties).

3. The Notice was given pursuant to the Share Purchase Agreement dated 12 September 2022, executed between PTL, Target, and Seller (SPA), and the draft Shareholders’ Agreement (SHA), inter alia, between Keimed, Ms. Kamineni, and others. The Proposed Combination changes the level of control enjoyed by Ms. Kamineni in Keimed from joint control to sole control over Keimed.

1 PTL changed its name from Prime Time Recreations Private Limited to Prime Time Logistics Technologies Private Limited.

4. The Commission, vide its communication dated 27 October 2022, issued under Regulation 14 of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (Combination Regulations), sought certain information(s)/clarification(s). The response to the same was received on 2 November 2022. Since the response filed was incomplete and/or contained certain additional submissions, the Commission issued another letter dated 11 November 2022. The response was filed on 17 November 2022.

5. Ms. Kamineni has shareholding and/or holds directorship in numerous entities (collectively referred to as Associated Entities). She is the majority shareholder of PTL (holding more than 99% shareholding), which was incorporated in 1991 and has its registered office in Hyderabad, Telangana. She is also director of Keimed and currently holds 25.85% shares in Keimed, with joint controls of Keimed with the Seller. Ms. Kamineni also holds certain optionally convertible preference shares (OCPS) in Keimed. She is also the executive vice chairperson and director of Apollo Hospitals Enterprise Limited (AHEL) and a member of its founding family. She holds 1.56% shareholding in AHEL. AHEL is engaged in the provision of healthcare services in India.

6. Keimed, along with its subsidiary companies, is engaged in the business of wholesale sale and distribution of pharmaceutical products/drugs, healthcare and wellness products, medical consumables, and surgical/hospital consumables across India. It is currently jointly controlled by Ms. Kamineni and Mitsui.

7. One of the key aspects for examination from the competition perspective in cases involving change in control from joint to sole or changes in degree or quality of control is the change in the ability/incentive of the entity acquiring sole control resulting from lifting of the restraining influence of exiting shareholder(s), arising from their potentially different interests. It may also be noted that such potential differences in interests are more likely in the event of involved entities having separate presence in related area(s) apart from entity(ies) under joint control. Further, such potential differences would also depend upon various factors, such as the extent of shareholding, nature of rights, and overall presence of the entity.

8. It is observed that there are horizontal overlaps between the activities of Keimed2 and the Associated Entities of Ms. Kamineni in the market for the retail sale of drugs. In this regard, it has been submitted that the retail sale of drugs comprises an extremely limited business vertical for Keimed, whose primary business is the wholesale sale and distribution of drugs. With respect to the geographic market, it has been submitted that the relevant market for the retail sale of drugs and pharmaceuticals is the whole of India. The geographic market for the retail sale of pharmaceuticals and drugs may be segmented at narrower levels on the basis of region, state, city, etc. However, the precise delineation of the relevant market is left open as the Proposed Combination is not likely to cause competition concerns, irrespective of how the relevant market is delineated.

9. The combined market share of the Parties in the market for retail sale of drugs is in the range of [0–5]%, and the incremental market share is insignificant. Further, it has been submitted that Keimed is not active across the entire spectrum of retail sale of drugs and merely provides the retail sale of specialty drugs to patients. There are several entities that are active across the entire spectrum of retail sale of drugs that pose competitive constraints on Keimed, such as MedPlus, Sastasundar Ventures, Frank Ross Pharmacies, Zota Healthare, and Wealth Forever Medicare. Therefore, the Proposed Combination is not likely to cause an appreciable adverse effect on competition in the market for retail sale of drugs in India.

10. With regard to vertical overlaps, it is observed that there are supply relationships between Keimed and certain Associated Entities of Ms. Kamineni. Keimed is engaged in the upstream market for the wholesale sale and distribution of drugs in India and supplies certain quantities of pharmaceutical products to some of the Associated Entities.

2 Through certain subsidiaries and associates of Keimed, namely, Medihauxe International Private Limited, Medihauxe Pharma Private Limited, Vasu Vaccines & Speciality Drugs Private Limited, Adeline Pharma Private Limited and Vardhman Pharma Distributors Private Limited.

Correspondingly, some of the Associated Entities are engaged in: (i) the downstream market for the provision of healthcare services in India and (ii) the downstream market for the retail sale of drugs in India. The market shares of Parties in both upstream and downstream markets are in the range of [0–5]%, and therefore, the Proposed Combination is not likely to raise foreclosure concerns.

11. 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.

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

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

14. The Secretary is directed to communicate to the Acquirers accordingly.