Patanjali Foods Limited — Combination C-2024/08/1176

Notice under Section 6(2) of the Competition Act, 2002 given by Patanjali Foods Limited

CORAM:

Ms. Ravneet Kaur Chairperson

Mr. Anil Agrawal Member

Ms. Sweta Kakkad Member

Mr. Deepak Anurag Member

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

1. On 21st August 2024, the Competition Commission of India (‘Commission’) received a notice (‘Notice’) under sub-section (2) of Section 6 of the Competition Act, 2002 (‘Act’) given by Patanjali Foods Limited (‘PFL’/ ‘Acquirer’). The Notice was filed pursuant to the execution of the Business Transfer Agreement and License Agreement between PFL and Patanjali Ayurved Limited (‘PAL’), both dated 1st July 2024.

2. The Proposed Combination envisages the acquisition of Home and Personal Care (‘HPC’) business division (‘Undertaking’) of PAL by PFL (hereinafter, PFL and Undertaking are collectively referred to as the ‘Parties’). PFL has submitted that the Acquirer, Undertaking and PAL are all part of the Patanjali group and the Proposed Combination is an intra-group transfer.

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, vide letter dated 29th August 2024, certain information and clarifications were sought from the Acquirer. The Acquirer submitted the response dated 5th September 2024. Since the response was not complete, another letter was issued on 11th September 2024 and the response dated 18th September 2024 was furnished by the Acquirer. The Acquirer also submitted certain voluntary submissions vide email dated 26th September 2024.

4. PFL, a public listed company, is engaged in the processing of oilseeds, refining of crude oil for edible use, production of oil meal, food products from soya and value-added products from downstream and upstream processing. It is also engaged in the business of fast-moving consumer goods; fast-moving health goods comprising mainly of food, biscuits and nutraceutical products; generation of power from wind energy; and trading in various products.

5. PAL is engaged in the business of manufacturing, trading, packing and labelling of ayurvedic medicines, HPC items, dairy items, bulk trading of rice, etc. Its offering includes a wide range of ayurvedic products, personal care items and health supplements. It is also engaged in contract manufacturing of nutraceutical products.

6. The Undertaking is engaged in HPC business division which encompasses the products under haircare, skincare, dental care and home care segments. HPC business is primarily carried out from the manufacturing plant located at Patanjali Food & Herbal Park, Haridwar.

7. It is submitted that there is no horizontal overlap between the business activities of the Parties. Further, there is an existing vertical relationship in the upstream market for the production and sale of oleochemicals and its segments, namely soap noodles and glycerine by PFL and the downstream market for the production and sale of beauty and personal care products and its segment, viz. soap by the Undertaking. It is submitted that soap is Undertaking’s only product that uses oleochemicals (soap noodles and glycerine) produced by PFL as raw materials.

8. The Commission decided to leave the delineation of the relevant market open, as it was observed that the Proposed Combination is not likely to cause appreciable adverse effect on competition in any of the plausible relevant market(s) in India.

9. The Commission noted that the Proposed Combination is in the nature of an internal transfer of the Undertaking. As mentioned previously, the Parties as well as PAL are all part of the Patanjali group and accordingly, the Commission observed that there is no change in the market dynamics as a result of the Proposed Combination.

10. Based on the submissions of the Acquirer, the Commission noted that the market share of PFL, in terms of volume, in the oleochemicals market is in the range of [5-10]%, soap noodles segment is in the range of [10-15]%, and glycerine segment is in the range of [0- 5]%. Further, the Commission also observed that the market share of Undertaking, in terms of value, in the beauty and personal care products market and the soap segment is in the range of [0-5]%. There are various competitors present in both upstream and downstream markets in India. Based on the foregoing, it appears that the Proposed Combination is not likely to foreclose competition.

11. 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 appreciable adverse effect on competition in India. 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 Acquirer is found to be incorrect.

13. The information provided by the Acquirer 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 Acquirer accordingly.