Armed with a beneficial legal opinion and priority regulations based on competition, Aditya Birla Group is likely to submit an offer for Indian Holcim’s assets -Buja Semen NSE -0.73 % and ACC NSE -1.36 % Ltd, said people who know . It is also ready to release voluntary assets of around 15 million tons per year (MTPA) as a medicine to comply with market share norms.
Since 2011, the Indian Competition Commission has seen 16 acquisitions of cement, in eight of which have provided “notification of long-forming forms”- Legalese for cases where the joint market share of targets and acquisitions exceeds 15% market share in relevant geographical markets.
UltraTech is the country’s largest cement maker with 117 million tonnes per annum (MTPA) capacity while
ACC
NSE -1.34 % and Ambuja together are at 66 MTPA, making them the second largest. The total national capacity is 540 MTPA.
Improvement plan for a quick nod
This involves the purchase of Binani Cement, Assets and Century Century Group Jaypee, among others. Ultratech NSE -1.32 % receive unconditional permits in these five cases within 30 working days, said legal sources close to the group.
Market definition
In cement, CCI defines the “geographical market” through cluster analysis – radius of 400-500 km where cement can be transported profitable. This always goes beyond a state border, said a lawyer involved in the process, who spoke on anonymity conditions. For example, when Ultratech acquired two Jaypee assets in Gujarat with a combined capacity of 4.8 MTPA, CCI examined the relevant geographical market as a combination of Gujarat and Rajasthan ..
Market definition
In cement, CCI defines the “geographical market” through cluster analysis – radius of 400-500 km where cement can be transported profitable. This always goes beyond a state border, said a lawyer involved in the process, who spoke on anonymity conditions. For example, when Ultratech acquired two Jaypee assets in Gujarat with a combined capacity of 4.8 MTPA, CCI examined the relevant geographical market as a combination of Gujarat and Rajasthan ..
Some display
Given the track record of the anti-trust regulator, Ultratech believes to receive a CCI permit, in accordance with the source of law close to the Birla group.
CCI lawyers said that if the company voluntarily with the right improvement plan, approval can be included as early as 30 working days. The five acquisitions of Semen Aditya Birla Group have been approved in the 30 -employment period – also called Phase I approval.
However, without the steps of improvement in advance, CCI can take up to 210 calendar days from when receiving an application to delete proposals. This is called Phase II Approval. There are only eight examples of a total of 925 cross -sector cases, where CCI has gone for Phase II approval. That’s less than 1%, “said an official mentioned above.” Birla will volunteer the improvement plan involving the divesting of assets for a rapid phase I approval, “said an official who knew.
However, without the steps of improvement in advance, CCI can take up to 210 calendar days from when receiving an application to delete proposals. This is called Phase II Approval. There are only eight examples of a total of 925 cross -sector cases, where CCI has gone for Phase II approval. That’s less than 1%, “said an official mentioned above.” Birla will volunteer the improvement plan involving the divesting of assets for a rapid phase I approval, “said an official who knew.
“Considering the presence of a strong market from both parties coupled with the nature of industrial oligopolistic, CCI will usually focus on the joint market share of the party, the level of obstacles to entering the market, and the position of their competitors in the market,” said the Head of Competition Practice from one of the law firms Complete services involved in this problem with the condition of anonymity. “If after the assessment, CCI feels that the transaction will have a negative impact on competition I …
According to Akshayy S Nanda, partners, competition and data privacy, in nerves and partners, regulators will determine whether the acquisition proposed from Ambuja and ACC will cause “considerable adverse effects” on competition. “If the acquisition already has a significant market strength or is likely to gain significant market strength after the acquisition in the regional market, it is likely that CCI will begin an in -depth phase II investigation and may also require certain PLA divestment.
Under the competition laws, the acquisition was given a mandate to obtain previous approval from the CCI before refinement of the transaction, said GR Bhatia, Mitra, L&L Law Office. “CCI can also submit to the divestment of several business assets including factories etc. to maintain competitive markets.” In any case, getting dominance through the acquisition of others is not bad but abuse of a dominant position is prohibited. “