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Wednesday, December 12, 2012

Competition Law Newsletter - October, 2012



ORDERS By COMPETITION COMMISSION OF INDIA

A.            Anti-Competitive Agreements
Synopsis of the legal provisions
Section 3 of the Competition Act, 2002 (“Act”) prohibits an enterprise or association of enterprises or persons to enter into agreements in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause appreciable adverse effect on competition in India.
Following kinds of agreements between enterprises, persons or association of persons or enterprises, or practices or decisions taken by association of persons or enterprises, including cartels, engaged in similar or identical trade of goods or provision of services is presumed to have appreciable adverse effect on competition:
a)      Agreements or decisions that directly or indirectly determine purchase or sale price.
b)      Agreements that limit or control production, supply, market, technical development, investment or provision of services.
c)      Agreements to share market or source of production or provision of services by way of allocation of geographical area of market or type of goods or services, or number of customers in the market or any other similar way.
d)      Agreements that, directly or indirectly, result in bid-rigging or collusive bidding.
However, agreements entered into by way of joint ventures are excluded from above restriction if such agreements increase the efficiency in production, supply, distribution, acquisition, or control of goods or provision of services.
Under the Act, ‘cartel includes an association of producers, sellers, distributors, traders, or service providers who, by agreement amongst themselves, limit control or attempt to control the production, distribution, sale or price of, or trade in goods, or provision of services’.
Further, under section 19(3) of the Act, following factors are to be considered by Competition Commission of India (“CCI”) in determining whether an agreement has appreciable adverse effect on competition:
a)      Creation of barriers to new entrants in the market.
b)      Driving existing competitors out of the market.
c)      Foreclosure of competition by hindering entry into the market.
d)      Accrual of benefits to consumers.
e)      Improvement in production or distribution of goods or provision of services.
f)       Promotion of technical, scientific and economic development by means of production or distribution of goods or provision of services.
B.            Abuse of Dominant Position

Synopsis of legal provisions

Section 4 of the Act prohibits any enterprise or group to abuse its dominant position. ‘Dominant position’ has been defined to mean ‘a position of strength enjoyed by an enterprise, in the relevant market, in India, which enables it to –
(i)                 operate independently of competitive forces prevailing in the relevant market; or
(ii)               affect its competitors or consumers or the relevant market in its favor’.

In light of the above provisions, we produce the summary of CCI’s orders passed in the month of October, 2012:

1.        CA Shreeram Murthy  v. Shriram Chits Limited decided on October 4, 2012
Shri Shreeram Murthy (“Informant”), a Chartered Accountant by profession participated in chit fund transactions from the year 1993 onwards, which was managed by Shriram Chit Funds Limited (Respondent Fund”). The Respondent Fund initiated several civil suits in various courts against the Informant alleging default in payments by Informant and obtained decrees in 25 of such cases. However, in 2009, both the parties negotiated a settlement, whereby the Informant agreed to pay a sum of Rs. 29 lakhs over a period of 7 years to the Respondent Fund. Subsequently, certain disputes arose between the parties, and the Respondent Fund in contravention to the settlement filed execution petitions in several civil courts to enforce the decree against the Informant. Informant alleged that this action of the Respondent Fund amounted to abuse of dominant position covered under Section 4 of the Act.
On the basis of the information, CCI concluded that the Respondent Fund is a large chit fund company in the State of Andhra Pradesh, which may even be in a dominant position. However, mere dominance per se cannot be acted against by CCI. CCI further noted that the relief sought by the Informant, i.e. to direct the Respondent Fund to settle the issues amicably does not fall under the ambit of the Act. Therefore, as there was no competition concern raised by the Informant, CCI ordered closure of the case under Section 26(2) of the Act.  

2.        Shivang Agarwal and Another. v. Supertech Limited Noida, decided on October 4, 2012
Shivang Agarwal and Shubham Agarwal (together referred to as “Informants”) booked one flat each in Supertech Cape Town project developed by Supertech Limited, Noida (“Developer”). Informants alleged that Developer always maintained that there will be no preferential location charges levied on the flats opted by the Informants; however, it later charged Rs. 50 per sq. ft. and Rs. 150 per sq. ft. from both the Informants, respectively. The Informants also alleged that the Developer arbitrarily increased per square feet rate of the flats and raised erroneous and inflated demand letters thereafter. On the basis of the above allegations, Informant alleged that the Developer contravened section 4 of the Act.
CCI observed that in order to attract provisions of section 4 of the Act, dominant position of an enterprise, i.e. strength to operate independently of competitive forces, needs to be proved. CCI noted that the Developer operates along with many other developers, catering to the similar requirement in the Noida and Greater Noida region. CCI further observed that as there was nothing on record to establish that Developer was in a dominant position in the relevant market, no prima facie case was made out under Section 4 of the Act.

3.        Shri Ram Niwas Gupta and Mrs. Prianka Gupta v. M/S. Omaxe Limited, decided on October 5, 2012
Shri Ram Niwas Gupta (“Informant”) filed a case against M/S Omaxe Limited (“Omaxe”) alleging contravention of section 3(4)(a) of the Act. Omaxe allotted a plot to the Informant in one of its residential project in district Sonepat, Haryana and subsequently executed an agreement (“Buyer’s Agreement”) to this effect with the Informant.
As per the Buyer’s Agreement, Omaxe was entitled to nominate a maintenance agency of its choice to maintain the said residential project and thereby nominated M/s Shanvi Estate Management Services Private Limited (“Maintenance Company”) as the maintenance agency.
CCI noted that Section 3(4)(a) of the Act prohibits tie-in arrangement amongst enterprises or persons at different levels of production/supply chain in different markets, if such agreement causes or is likely to cause appreciable adverse effect on competition in India. ‘Tie-in arrangement includes any agreement requiring a purchaser of goods, as a condition of such purchase, to purchase some other goods’.
CCI held that an agreement with the end-consumers does not fall under the production or the supply chain, as the end-consumers are not in a position to impair supply side of the market. The agreement between Omaxe and the Informant regarding Maintenance Company is in the nature of agreement with the end-consumers, which does not fall under section 3(4) of the Act.
As far as the agreement between Omaxe and the Maintenance Company was considered, CCI referred to the provisions of Haryana Development and Regulations of Urban Areas Act, 1975 and Haryana Apartment Ownership Act, 1983 and the rules made there under, where a developer is bound to give maintenance services after construction, till the time a resident welfare association is formed. Accordingly, CCI held that Omaxe in furtherance of the provisions of the above-mentioned applicable laws, has appointed the Maintenance Agency for providing maintenance services for a period of 5 years.  Residents thereafter, upon formation of the resident welfare association are entitled to appoint a maintenance provider of their own choice.
CCI on the basis of the above analysis held that no infringement of provisions of section 3 of the Act was established against Omaxe and the Maintenance Company.

4.        Subhash Yadav  v. Force Motor Limited & Others, decided on October 5, 2012
Shri Subhash Yadav (“Informant”) purchased a Sports Utility Vehicle (“SUV”) from M/s. Tempo Automobiles, an authorized dealer of Force Motors Limited (“Opposite Party”), an automobile manufacturer. The Informant alleged that the performance of SUV was much below satisfaction and the workshops and service stations of the Opposite Party also did not give much assistance to the Informant. Informant further alleged that the Opposite Party by providing its vehicles at a very competitive price (as compared to similar vehicles of other manufacturers) has created a dominant position in the Indian market and is abusing such dominant position by imposing unfair and discriminatory conditions in the purchase and sale of goods.
CCI while elaborating on the aim and objective of the Act observed that the purpose of the Act is to protect and promote fair competition in India. CCI further emphasized on the existence of the Consumer Protection Act, 1986, which has been enacted for protection of the consumer interests in case of deficient goods and services. CCI held that the Informant did not substantiate any contravention of the provisions of the Act. Accordingly, CCI ordered closure of the case under Section 26(2) of the Act.

5.        M/s. PDA Trade Fairs v. India Trade Promotion Organization decided on October 11, 2012
M/s. PDA Trade Fairs (“PDA”) filed a complaint against India Trade Promotion Organization (“Defendant Organization”) alleging abuse of dominant position by the Defendant Organization. Defendant Organization, a government agency has the control of, and manages the venue bookings at, Pragati Maidan, New Delhi. PDA entered into an agreement with Defendant Organization in the year 2010, wherein it booked certain exhibition halls at Pragati Maidan, Delhi for a trade fair to be held in the year 2013.
PDA alleged that Defendant Organization imposed unfair, discriminatory and one-sided conditions under the allotment letter, for example provision for further revisions in the rent, compulsory payment of booking amount at the time of signing the licencing agreement, forfeiture of the whole amount in case booking is cancelled by the allottee, high and arbitrary interest payment on non-adherence of payment schedule etc. PDA also alleged that subsequently in April 2012, Defendant Organization hiked the rent by 15.7% as against past trend of 10% annual hike.
CCI observed that Pragati Maidan is un-substitutable venue for trade fairs because of its easy accessibility and capacity. CCI further observed that as Defendant Organization is in the control over the management of Pragati Maidan, it makes Defendant Organization a dominant player in the relevant market of providing venue for trade fairs in New Delhi. However, CCI held that mere dominant position in a relevant market is not actionable, unless its abuse is established. CCI observed that the rates and the conditions for booking venue were same for all allottees and therefore PDA was not discriminated against. CCI further held that mere increase of rental by 15.7% could not amount to abuse of dominant position. Therefore, CCI held that there was no prima facie case of abuse of dominant position against the Defendant Organization.   

6.        Shri A.K.Jain v. The Dwarkadhis Projects Private Limited Delhi decided on October 11, 2012
Mr. A.K. Jain (“Mr. Jain”) filed a complaint against Dwarkadhis Projects Private Limited (“Developer”) alleging abuse of dominant position. Mr. Jain had purchased a dwelling unit in the group housing project of the Developer, who promised to complete such construction within a period of 3 years. However, even after expiry of more than 5 years, and collection of 95% of the total price by the Developer, possession was not given to Mr. Jain. Mr. Jain alleged that the Developer further sought payment of further Rs. 3,29,012/-, as charges for conducting improvement work.   
Mr. Jain also alleged that the buyers agreement executed between Mr. Jain and the Developer contained unfair and unilateral conditions such as change in lay-out plan without allottee’s consent, unconditional undertaking in regard to the correctness of title deeds and plan, right to mortgage the whole project etc.
CCI observed that the relevant market in this case was ‘provision of services of development and sale of residential units in Dharuhera in State of Haryana’. On the basis of the information available in the public domain, CCI noted that the dominance of the Developer in the relevant market is not proved, due to the presence of many other players, for example Vipul Gardens, M2K Country, Vardhman Springdale, Lotus Green City, Tivoli Holiday Village, Cubix etc. Therefore, CCI held that that there was no prima facie case of abuse of dominant position against the Developer.

7.        All India Genset Manufacturer Association v. Chief Secretary, Government of Haryana and Others.  decided on October 18, 2012
The All India Genset Manufacturer Association (“Informant Association”) filed a complaint against Directorate of Supplies and Disposals, State of Haryana (“Directorate”) alleging violation of section 4 of the Act. The Directorate invited tenders for the sale of Diesel Generating Sets (“DG Sets”). As per the terms of the tender, only Original Equipment Manufacturers/Original Equipment Assemblers (“OEM/OEA”) were entitled to submit the tender. An authorized dealer could submit the tender, only when it produces a certificate from OEM/OEA to demonstrate that it does not supply directly to the end consumers. Informant Association submitted that the aforementioned condition of producing the certificate to the effect that the authorized dealers do not supply DG Sets directly to end consumers is impossible to comply.
Informant Association contended that Directorate is the sole body for the purchase of DG Sets for all government departments in the State of Haryana and therefore is in a dominant position in the relevant market of ‘purchase of DG Sets to various government departments in the State of Haryana’. Informant Association further contended that the Directorate has abused its dominant position by putting the above-mentioned unfair and impossible conditions, in the tender document.
CCI observed that the DG Sets can be sold to private enterprises as well. Further, since the government purchase and private purchase are substitutable and interchangeable, the relevant market for the instant case was held to be the ‘market for purchase of DG Sets by enterprises in State of Haryana’ as against ‘purchase of DG Sets to various government departments in the State of Haryana’. CCI further observed that Directorate is only a single enterprise among the numerous enterprises, which purchases DG Sets in the State of Haryana. As the Informant Association did not file any information to establish the dominant market share of Directorate in the relevant market, CCI refused to consider the issue of abuse of dominant position.

8.        All India Tyre Dealer’s Federation v. Tyre Manufacturers decided on October 30, 2012.
The case was filed by the All India Tyre Dealers’ Federation (“AITDF”) against certain tyre manufacturers, such as Apollo Tyres Limited, MRF Limited, Ceat Tyre Limited, Birla Tyre Limited and J.K. Tyre Limited (“Respondent Manufacturers”) before the MRTP Commission alleging formation of cartels by the Respondent Manufacturers. Subsequent to the repeal of the MRTP Act, 1969 (“MRTP Act”), the case was transferred to CCI.
AITDF alleged that the Respondent Manufacturers formed cartel and controlled the production and supplies of the tyre in the domestic industry. Thereafter, the Director General (“DG”) was ordered to conduct an inquiry into the alleged behaviour of the Respondent Manufacturers. The DG inter alia concluded that price parallelism existed amongst the Respondent Manufacturers and that they did not utilize their full capacity, which resulted in limiting the supply of the tyre. Respondent Manufacturers challenged the findings of the DG both on the grounds of lack of jurisdiction and on merits. 
Jurisdiction
The Respondent Manufacturers alleged that since the present case arose before the MRTP Commission from the complaint dated December 28, 2007, both DG and CCI do not have jurisdiction on the matter. Rejecting this contention and reiterating its well established position, CCI held that if an anti-competitive practice has continued after coming into the force of the Act, CCI is entitled to take cognizance of the same, for the period post repeal of the MRTP Act.
CCI on the basis of the above legal position held that as in the instant case, alleged anti-competitive practices of the parties were found by DG to be continuing, post repeal of the MRTP Act, there was no illegality in the proceedings before CCI.
Cartelization
Considering the allegation of cartelization, CCI observed that price parallelism per se may not fall foul of the provisions of the Act. However, if the same is a result of concerted and coordinated actions between parties to the cartels, then such actions are covered within the purview of the Act. In this particular case, CCI analyzed the below actions of the Respondent Manufacturers to ascertain, if there were any price parallelism plus, other relevant factors to establish cartelization.
Underutilization of the capacity
DG alleged that the overall capacity utilization of the Respondent Manufacturers had shown a downward trend in the successive years of the investigation period. Negating this allegation of the DG, CCI observed that the fall in capacity utilization of the Respondent Manufacturers in the 2008-09 was in line with the recession. Further, there was no trend of low capacity utilization uniformly amongst the Respondent Manufacturers for a same year. For some, it increased, while for others it decreased in a particular year. CCI observed that this variation and lack of clear trend in capacity utilization amongst Respondent Manufacturers suggests that it was not result of any concerted action. CCI further observed that it will not make any economic sense for the Respondent Manufacturers to willfully suppress their capacity, as the only beneficiary of the same would have been the importers.   
Margin on the Sale
CCI noted that the trade margins for each Respondent Manufacturer showed a healthy upward trend. However, at the same time due to huge variation in the individual margins of each of the Respondent Manufacturer, CCI opined that it would be difficult to presume meeting of minds on the part of Respondent Manufacturers. CCI also noted that bigger the range between the margins of manufacturers, lower would be the chance of sustaining a cartel, as with lower margins parties have no incentive to collude and will deviate.
Market Share
CCI noted that Apollo Tyres Limited, CEAT Limited, Goodyear India Limited and JK Tyres & Industries Limited lost their market share to Birla Tyre Limited. Birla Tyre Limited’s market share increased from 8.9% in 2005-06 to 19.74% in 2009-10. CCI observed that this factor is inconsistent with general cartel behavior, where market shares of parties to cartels remain consistent. It is also against the rational business behavior, to lose market share to a rival in a cartel set up. CCI further opined that such trend in market share movement is possible only in case of competitive environment.
On the basis of the above observations, CCI held that there was not enough evidence to prove cartelization against the Respondent Manufacturers.

C.            Combination Registrations

1.        Combination Registration No C-2012/08/75 decided on October 1, 2012
SG Indian Holding (NQ) Co. I Pte. Limited (“SG I”), SG Indian Holding (NQ) Co. II Pte. Limited (“SG II”), SG Indian Holding (NQ) Co. III Pte. Limited (“SG III”), Pune Dynasty Projects Private Limited (“PDPPL”) and Embassy Property Developments Limited (“EPDL”) jointly filed a notice of combination to CCI. The said notice was filed pursuant to the execution of an investment agreement between SG I, SG II, SG III (“SG Investors”), EPDL, PDPPL, Manyata Promoters Private Limited (“MPPL”) and Pune Embassy Projects Private Limited (“PEPPL”) on August 14, 2012.
As per the notice, SG Investors, incorporated in Singapore are owned by Blackstone Group L.P (“Blackstone”). Blackstone is a global alternative asset manager and provider of financial advisory services. EPDL through its project specific companies like PDPPL, PEPPL, MPPL and GSPPL is engaged in development and management of commercial and office spaces.
EPDL currently holds 51%, 51.90%, 35.77% and 48.75% of equity share capital in PDPPL, PEPPL, MPPL and Golflinks Software Park Private Limited (“GSPPL”), respectively. The remaining 49% and 48.99%, of share capital in PDPPL and PEPPL respectively, is held by Atlas Vista Investment Limited (“Atlas Vista”). Further, prior to the proposed combination, EPDL would acquire remaining 49% of share capital in PDPPL from Atlas Vista. As a result, PDPPL will become the wholly owned subsidiary of EPDL. Subsequent to this acquisition, EPDL would transfer its 51.90%, 35.77% and 48.75% of equity share capital in PEPPL, MPPL and GSPPL, respectively to PDPPL. After the proposed combination, PDPPL would acquire the remaining 48.99% stake in PEPPL from Altas Vista.
Pursuant to the proposed combination, the SG Investors will subscribe to certain compulsorily convertible debentures of PDPPL. Upon conversion of such compulsorily convertible debentures, the SG Investors will hold 50% of the total equity share capital of PDPPL, on fully diluted basis. As a result, Blackstone and EPDL would have joint control over PDPPL.
CCI noted that the combined shares of the parties to the combination out of total commercial stock of commercial and office spaces held in eight major cities of India stands in single digit. CCI further noted that even if the local markets of Pune and Bangalore are considered, the combined market share of the parties to the combination would still be insignificant to give rise to any adverse competition concern.
CCI held that there were no significant entry barriers in the market for development and management of commercial and office space in India and accordingly approved the proposed combination.
2.        Combination Registration No C-2012/09/78 decided on October 4, 2012
The notice for combination was jointly filed by Century Tokyo Leasing Corporation (“CTLC”) and Tata Capital Financial Services Limited (“TCFSL”) to CCI. The said notice related to the proposed acquisition of joint control by CTLC of the leasing division of TCFSL.
As per the information, CTLC is a public listed company incorporated under the laws of Japan and has no business presence in India. TCFSL is incorporated under the provisions of Companies Act, 1956 (“Companies Act”) and is a wholly owned subsidiary of Tata Capital Limited. TCFSL is also registered with the Reserve Bank of India as a non-deposit accepting non-banking financial company.
On the basis of the information provided, CCI observed that CTLC and TCFSL are not in competition with each other. On the basis of the annual report of TCFSL, CCI noted that TCFSL’s revenue from the leasing business is very small. CCI also emphasized that the market share of parties to the proposed combination in the relevant market was insignificant in comparison to other players of the market. Hence, CCI held that the proposed combination would not have appreciable adverse effect on the competition and approved the proposed combination.
3.        Combination Registration No C-2012/08/72 decided on October 4, 2012
Ultimate Logistics Solutions Private Limited (“ULSPL”), Metallurgical Engineering and Equipments Limited (“MEEL”) and Lloyds Steel Industries Limited (“LSIL”) filed a joint notice of combination to CCI. The said notice was given pursuant to the execution of an investment agreement between ULSPL, MEEL, LSIL and existing promoters of LSIL in July, 2012.
Currently, ULSPL and MEEL together hold approximately 24.53% of the paid-up equity share capital of LSIL. As per notice, the proposed combination related to the acquisition of equity shares of LSIL by ULSPL and MEEL, by way of preferential allotment of equity shares of LSIL to both MEEL and ULSPL, constituting 27.46% of equity shares of LSIL. As this acquisition will trigger the provisions of the SEBI (Substantial Acquisition of Shares & Takeovers) Regulations, 2011, MEEL and ULSPL will further acquire 26% of shares of LSIL under an open offer.
Both ULSPL and MEEL are promoted by the Miglani family. As per the notice, the Miglani family group has existing business interest in manufacture/production of steel and therefore the proposed combination would create synergies between the existing business of LSIL and other Miglani Family group companies such as Uttam Galva Steels Limited (“UGSL”) and the Uttam Galva Metallics Limited (“UGML”).
CCI noted that both UGSL and LSIL manufacture, (i) cold rolls coils/sheets and (ii) Galvanised Palin (GP)/ Galvanised Corrugated (GC) coils/sheets. As the domestic sale of cold rolls coils/sheets by LSIL (after substantial captive consumption) is negligible, CCI held that the proposed combination does not give rise to any competitive concern in the market for cold roll flat steel market in India. As far as the production and sale of GP/GC coils/sheets is concerned, the total domestic sale together by LSIL and UGIL would constitute only 10-11% of the total consumption of galvanized steel products in India. CCI further noted that there are large numbers of domestic and global players in the market of galvanized steel products in India, which provides alternate sources of supply.
CCI also considered various vertical linkages between LSIL and UGSL in respect of the products consumed by them, such as hot metal, coke and hot rolled flat steel. However, CCI concluded that the market share of LSIL and UGSL in production and sale of such products is negligible. Therefore, CCI held that the proposed combination will not give rise to any adverse competition concern in India and approved the proposed combination.
4.        Combination Registration No C-2012/08/76 decided on October 11, 2012
A joint notice under section 6(2) of the Act was filed by Glory Investments A Limited (“GI A”), Glory Investments B Limited (“GI B”) and Glory Investments IV Limited (“GI IV”) in relation to the proposed acquisition of approximately 30% of the fully paid up share capital of Genpact Limited (“GL”) by GIA.
CCI noted that as per the information, GI A is a financial investment company, incorporated under the laws of Mauritius, whose ultimate holding company is Bain Capital Investors, LLC (“Bain Capital”). Bain Capital Investors, LLC, incorporated under the laws of State of Delaware, USA is a global private investment firm that manages several pools of capital including private equity, public equity, venture capitals and credit products. GL, a company incorporated under the laws of Bermuda is engaged in the business of providing range of services relating to finance and accounting, sales and marketing analytics, customer services, financial services etc. to Indian and overseas client. However, GL is predominantly engaged in providing information technology and business process outsourcing services to its customers worldwide.
On the basis of the information provided, CCI observed that the parties to the combination are not engaged in the production, supply, distribution, storage, sale or trade of similar or identical or substitutable goods or provisions of service. Where on one hand, GL is primarily engaged in the business of providing technology and management services, GIA and Bain Capital on the other hand, are engaged in the business of investing in companies in engaged in various sectors and have no presence in information technology and business process outsourcing sector. CCI also noted that the activities of GIA and GL are not related to each other at different stages of production, supply, storage, distribution and sale. Hence, CCI held that the proposed combination will not have appreciable adverse effect on the competition in India and approved the proposed combination.
5.        Combination Registration No C-2012/10/81 decided on October 16, 2012
Serco BPO Private Limited (Serco BPO), SKR BPO Services Private Limited (SKR BPO) and Intelenet Global Services Private Limited (IGSPL) jointly filed a notice of combination under to CCI, pursuant to a proposed scheme of arrangement between them under the provisions of the Companies Act.
CCI noted that Serco BPO holds 99.9% and 100% shares in SKR BPO and IGSPL, respectively. Serco BPO is ultimately held by Serco Group Plc. Serco BPO, SKR BPO and IGSPL are all engaged in the business of providing call centre services, transaction and data processing, web enabled customer care, data digitization and IT enabled services. However, they are primarily engaged in Business Process Outsourcing Segment of Information Technology (“IT-BPO”) and providing other Business Process Outsourcing (“BPO”) services in India. 
On the basis of the information provided, CCI noted that the domestic operations of the parties to the combination constitute a small percentage of the overall domestic BPO segment of the IT-BPO sector in India. CCI further observed that the proposed combination is a restructuring between enterprises belonging to the same group. Further, the management and control over activities carried on by the parties to the combination, before and after execution of the scheme, will not change. Hence, CCI held that the proposed combination would not have appreciable adverse effect on the competition and approved the proposed combination.
6.        Combination Registration No C-2012/10/84 decided on October 23, 2012
On October 12, 2012 a notice of combination was jointly filed by Inox Leisure Limited (‘Inox’), Fame India Limited (‘FIL’), Fame Motion Pictures Limited (‘FMPL’), Big Pictures Hospitality Services Private Limited (‘BPHSPL’) and Headstrong Films Private Limited (‘HFPL’) to CCI. The said notice was filed pursuant to a proposed scheme, whereby FIL, FMPL, BPHSPL and HFPL will amalgamate with Inox under the provisions of the Companies Act.  
CCI noted that all the parties to the combination are group entities. The shareholding pattern of the parties to the combination is as following:
§  Inox along with its holding company Gujarat Flurochemicals Limited (“GFL”) holds 74.37% of shares of FIL.
§  FIL holds 99.99% shares in each of FMPL, BPHSPL and HFPL.
CCI observed that the business operations of all the parties to combination primarily pertain to film exhibition in India. As per the information provided in the notice, Inox and FIL together operate 66 multiplexes and have presence in around 38 cities in India. However, CCI further observed that apart from the parties to the combination, there are various other national and regional multiplexes and single screen operators, engaged in film exhibition in India.  
CCI noted that proposed combination is an internal restructuring between enterprises belonging to the Inox group of companies. Further, the management and control of the parties to combination, before and after the proposed combination, will remain same. Therefore, on the basis of the above observations, CCI held that the proposed combination would not have adverse effect on competition in India and approved the proposed combination.
7.        Combination Registration No C-2012/09/80 decided on October 25, 2012
JSW Steel Limited (“JSW Steel”) and JSW ISPAT Steel Limited (“JSW Ispat”) filed a notice of combination, pursuant to a composite scheme of arrangement and amalgamation under Sections 391 to 394 of the Companies Act.
As per the notice, JSW Steel holds controlling stake of 46.75% equity stake in JSW Ispat. Both the companies are listed, and are integrated steel makers manufacturing various kinds of steel products. JSW Building Systems Limited (“JSW Building”) is a wholly owned subsidiary of JSW Steel. Maharashtra Sponge Iron Limited (“Maharashtra Sponge”) is a wholly owned subsidiary of JSW Building.
As per the notice, Kamleshewar undertaking of JSW Ispat and Vasind and Tarapur undertakings of JSW Steel will be transferred to Maharashtra Sponge. JSW Building will be amalgamated into JSW Steel. Lastly, JSW Ispat, after transferring its Kamleshwar undertaking to Maharashtra Sponge will get amalgamated into JSW Steel.  
CCI observed that the control and management of JSW Ispat vests in JSW Steel and even after the combination control will remain with JSW Steel. CCI while noting the presence of large domestic steel producers, absence of major trade barriers on import of steel and plans for capacity expansion by most of the existing steel producers, observed that the proposed combination is not likely to have an adverse effect on competition in India. Therefore, CCI approved the proposed combination.
8.        Combination Registration No C-2012/10/85 decided on October 30, 2012
Vijay Television Private Limited (“Vijay TV”) and Asianet Communications Limited (“Asianet”) jointly filed a notice of combination to CCI. The said notice related to merger of Asianet into Vijaya TV.
As per the notice, Asianet is a subsidiary of Vijaya TV and both are ultimate subsidiaries of News Corporation, a company incorporated under the laws of United States of America. Both Asianet and Vijaya TV are engaged in the business of broadcasting television channels in India.
CCI observed that the proposed combination is a restructuring of the enterprises belonging to the same group. Further, the management and control of the parties to combination after combination will remain same, as it was there before the proposed combination. Therefore, CCI approved the proposed combination by holding that it is not likely to have an adverse effect on competition in India.


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DISCLAIMER

This competition law alert has been prepared by Sarthak Advocates and Solicitors. It is meant to be merely an informative summary and should not be treated as a substitute for considered legal advice. We welcome your comments and suggestions. For any comments, suggestions or further clarifications, please contact us.


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