CCI clears Zuari’s proposal to acquire 26% stake in Mangalore Chemicals and Fertilisers
17 Sep 2014
The Competition Commission of India (CCI) has approved the proposed acquisition by Zuari Fertilisers and Chemicals Limited (ZFCL) and Zuari Agro Chemicals Limited (ZACL) of up to 26 per cent of the equity share capital of Mangalore Chemicals and Fertilizers Limited (MCFL).
The CCI order, issued on 4 September 2014, has been published on its website on 15 September 2014.
ZFCL and ZACL had made the regulatory filing on the proposed acquisition with the CCI on 11 June 2014, pursuant to ZFCL's public announcement dated 12 May 2014 of the proposed competing bid.
Earlier, on 22 April 2014, Deepak Fertilizers and Chemicals Limited (DFCL) (acting through its subsidiary SCM Soilfert Limited) also made a public announcement for open offer to acquire up to 26 per cent stake in MCFL, which the CCI had approved on 30 July 2014.
This is the first time when the CCI was required to assess the competing bid s of the Zuari group and Deepak Fertilisers, companies active in similar lines of business.
After a detailed review, the CCI held that the proposed acquisition does not raise any competition concerns in any of the possible relevant markets and left the precise market definition open.
The CCI further noted that department of fertilisers regulates the movement of non-urea fertilisers in India. Since Zuari Fertilisers and Zuari Agrochemicals are largely involved only in trading of most overlapping products composite market shares of parties are not substantial nor could there be any incremental change in the market share, which is minimal in most cases.
Besides, most overlapping products are covered under Open General Licence (OGL) and can be imported into India and significant competitors are present in the market, CCI noted.
Accordingly, the CCI held that the proposed acquisition is not likely to have an appreciable adverse effect on competition in India and unconditionally approved the proposed acquisition.
