CCI worried about ‘molecular’ effect of Sun-Ranbaxy merger

The Competition Commission of India, which has put the $4-billion Sun-Ranbaxy merger deal under public scrutiny, said on Friday the major issue is whether the combination would result in high market concentration of certain molecules.

This is the first case of a combination where the CCI, the country's fair trade watchdog, has gone for a public scrutiny, its chairman Ashok Chawla said  (See: Sun-Ranbaxy merger: competition panel demands more details)   

On 6 April Sun Pharmaceuticals had announced it would buy Ranbaxy Laboratories from Japan's Daiichi Sankyo in an all-share deal pegged at $4 billion, including the debt of $800 million on Ranbaxy's books (See: Sun Pharma, Ranbaxy to merge in Rs24,000 all-stock deal). Sun said it expected the deal to be closed by the end of 2014.

The deal, which would create one of the top five speciality generics companies in the world, has been approved by the major stock exchanges and by the two companies' shareholders.

Chawla said the major issues related to the deal are with regard to the molecules market.

"The major issues obviously are that in many of the molecules, the basic building block in the pharmaceutical industry, whether in some of those molecules there is high market concentration which will emerge as a result (of the consolidation). That is the matter," Chawla said during an industry event in New Delhi.

The CCI has asked Sun Pharma and Ranbaxy to make public the details of their proposed transaction in a "prescribed format" within 10 working days.

Both companies informed the stock exchanges on Thursday about the CCI direction, which comes under Section 29(2) of the Competition Act, 2002.