Strides Shasun Limited — Combination C-2015/10/324
- Case No.C-2015/10/324
Ratio decidendi
The rule this decision rests on
The relevant product market for pharmaceutical formulations is defined at the molecule level: medicines or formulations based on the same active pharmaceutical ingredient constitute a separate relevant product market. Where the acquirer and the target business overlap horizontally at that molecule level, and their combined market share in each overlapping market is insignificant, the combination is unlikely to raise competition concerns in those markets. Where the acquirer supplies an active pharmaceutical ingredient that is an input to the target business, and its market share in that ingredient market is not significant and other suppliers are present, the combination raises no concern of vertical foreclosure. A combination that is not likely to cause an appreciable adverse effect on competition, assessed on the factors in sub-section (4) of Section 20, is approved under sub-section (1) of Section 31.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Notice under sub-section (2) of Section 6 of the Competition Act, 2002 given by Strides Shasun Limited1
Order under sub-section (1) of Section 31 of the Competition Act, 2002 (“Act”)
CORAM: Mr. Ashok Chawla Chairperson
Mr. Sudhir Mital Member
Mr. M.S. Sahoo Member
Mr. U. C. Nahta Member
Mr. G. P. Mittal Member
Legal representative: DSK Legal
1. On 13.10.2015, the Competition Commission of India (“Commission”) received a notice given under sub-section (2) of Section 6 of the Act (“Notice”), by Strides Shasun Limited (“Acquirer”). The Notice has been filed pursuant to the execution of a Business Transfer Agreement (“BTA”) between the Acquirer and Sun Pharmaceutical Industries Limited (“Sun Pharma”) on 19.09.2015. As per the information given in the Notice, the proposed 1 Originally the Notice was filed by Strides Arcolab Limited (“Strides”). However, it has been submitted that Shasun Pharmaceuticals Limited (“Shasun”), has been amalgamated/merged into Strides with effective date as 19.11.2015. After the said amalgamation/merger, Strides has been renamed as Strides Shasun Limited.
COMPETITION COMMISSION OF INDIA For Greater Good combination relates to the acquisition of certain specific assets and business of Sun Pharma operating in central nervous system segment in pharmaceutical sector (“Target Business”).
2. The proposed combination falls under Section 5(a) of the Act.
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 (“Combination Regulations”), vide letter dated 23.10.2015, the Acquirer was required to remove certain defects and provide information/document(s). The Acquirer filed its response on 02.11.2015. However, the said response was incomplete and therefore in terms of Regulation 14 of the Combination Regulations, vide letter dated 20.11.2015, the Acquirer was again required to remove these defects and provide complete information. The Acquirer filed its responses on 27.11.2015.
4. The Acquirer is a public limited company and is stated to be engaged in the development and manufacturing of pharmaceutical products. Sun Pharma is also a public limited company which is stated to be engaged in the development and manufacturing of pharmaceutical products.
5. In relation to the pharmaceutical formulations business, the Commission in its previous orders defined the relevant product market at the molecule level i.e. the medicines/formulations based on the same active pharmaceutical ingredient (API) constitute a separate relevant product market. It is observed from the information given in the Notice that at the molecule level, the Acquirer and the Target Business have horizontal overlaps in three relevant markets i.e. formulations based on Levetiracetam, Citicoline and Pregabalin + Mecobalamin. In this regard, it is noted that the combined market share of the Acquirer and the Target Business in these three relevant markets is insignificant and is unlikely to raise any competition concerns.
6. It is also noted that the Acquirer is also engaged in the API business which is the primary input in the manufacturing of formulations. Thus, the Commission has analysed the possibility of any vertical foreclosure resulting from the proposed combination. In this regard, it has submitted that the Acquirer sells three APIs in India which can be used as an COMPETITION COMMISSION OF INDIA For Greater Good input in the Target Business i.e. Olanzapine, Levetiracetam and Pregabalin. It is observed from the information given in the Notice that the market share of the Acquirer in the market for these APIs is not significant enough to result in any competition concern in these markets. Further, there are various other players who are supplying these APIs in the market.
7. Considering the facts on record and the details provided in the Notice given under sub-section (2) of section 6 of the Act and assessment of the proposed combination on the basis of factors stated in sub-section (4) of Section 20 of the Act, the Commission is of the opinion that the proposed combination is not likely to have an appreciable adverse effect on competition in India and therefore, the Commission hereby approves the same under sub-section (1) of section 31 of the Act.
8. This order shall stand revoked if, at any time, the information provided by the Acquirer is found to be incorrect.
9. 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