Adani Power Acquisition of Lanco Amarkantak Power

COMPETITION COMMISSION OF INDIA Combination Registration No. C-2024/02/1113

26th March 2024

Notice under Section 6(2) of the Competition Act, 2002 given by Adani Power Limited

CORAM:

Ms. Ravneet Kaur Chairperson

Mr. Anil Agrawal Member

Ms. Sweta Kakkad Member

Mr. Deepak Anurag Member

Order under Section 31(1) of the Competition Act, 2002

1. On 19th February 2024, the Competition Commission of India (‘Commission’) received a Notice under Section 6(2) of the Competition Act, 2002 (‘Act’) given by Adani Power Limited (‘Acquirer’/ ‘Adani Power’). The Notice was filed pursuant to the Resolution Plan dated 11th August 2022 (as amended on 1st November, 2022) for Lanco Amarkantak Power Limited (‘Lanco’/ ‘Target’) read with amended and restated Addendum dated 15th February 2024 (‘Resolution Plan’) and the Board resolution of the Acquirer in relation to the Proposed Combination.

2. The Proposed Combination envisages an acquisition of 100% share capital and control of the Target by the Acquirer pursuant to the Resolution Plan submitted by the Acquirer in the corporate insolvency resolution process (‘CIRP’) initiated under the Insolvency and Bankruptcy Code, 2016 (‘IBC’) in respect of the Target, being the Corporate Debtor under the CIRP.

3. The Acquirer is a part of the Adani group since the ultimate beneficial ownership of the Acquirer is held by certain members of the Adani family. The Adani group (‘Acquirer group’) is a global integrated infrastructure player with businesses in key industry verticals such as resources, logistics and energy. The Acquirer is engaged in the business of power generation with nearly 20+ years of experience. It currently has 15,250 MW of operating power generation capacity and a 40 MW solar power plant.

4. There are other relevant portfolio entities of the Adani Group such as Adani Green Energy Limited and its subsidiaries which are engaged in business of renewable power generation; Adani Energy Solutions Limited (‘AESL’) that builds, commissions, operates and maintains electric power transmission systems, and distributes electricity in the suburbs of Mumbai; Adani Enterprises Limited (‘AEL’) which is engaged in the business of coal mining and also provides coal management services. There are two subsidiaries of AESL, namely Adani Electricity Mumbai Limited (‘AEML’); which operates a captive thermal power plant Adani Dahanu Thermal Power Station (‘ADTPS’) catering to power demand in Mumbai, and MPEZ Utilities Limited (‘MUL’), which is a distribution licensee for the Mundra SEZ area, engaged in the power distribution business.

5. The Target is a part of the Lanco Group, engaged in the generation of power through thermal power plants. It has operating power assets with a capacity of 600 MW and an additional 1320 MW which is at advanced stages of construction, besides proposed power assets which may consist of a combined capacity of 1320 MW. The Target is currently undergoing CIRP under the IBC [Hereinafter, Acquirer, Acquirer Group and Target are collectively referred to as Parties].

Competition Assessment

6. Considering the activities of the Parties, it is noted that the Acquirer group and the Target exhibit a horizontal overlap in the broad market for power generation in India and in the narrow market for power generation through thermal sources in India.

Further, the Commission notes that the Acquirer Group and Target exhibit certain potential vertical linkages. The first vertical linkage arises from the Target’s presence in the upstream market for generation of power and the Acquirer Group’s presence in the downstream market for transmission of power. The second vertical linkage arises from the Target’s presence in the upstream market for generation of power and the Acquirer Group’s presence in the downstream market for distribution of power. The third vertical linkage arise from the Acquirer Group’s presence in the upstream market for coal management services and the Target’s presence in the downstream market for generation of power.

7. The Commission assessed the Proposed Combination considering all plausible relevant markets and decided to leave the delineation of the relevant market open as the Proposed Combination, for the reasons detailed in ensuing paragraphs, is not likely to cause an appreciable adverse effect on competition in any of the plausible alternative relevant markets that could be delineated.

8. The Commission observed that the total power generating capacity of the Target (including the capacity which is at an advanced stages of construction) is 1920 MW. The same amounts to less than 1 percent of the all India installed capacity of power stations as on 31st March 2023 (in terms of both the total installed capacity in the market for power generation in India and market for power generation from thermal sources in India). Considering the same, the Commission observed that the Proposed Combination is not likely to result in any significant change in competition dynamics of the power sector regardless of the existing presence of the Acquirer Group in any of the horizontally or vertically affected markets.

9. Based on the submissions of the Parties, the Commission noted that the combined market shares of the parties, in terms of volume generated or installed capacity, in the broad market for power generation in India and narrow market for power generation from thermal sources in India is in the range of [5-10] % and the incremental market share is insignificant to raise any competition concerns in India. Further, this sector is characterised by presence of several large players, both public and private, such as National Thermal Power Corporation Ltd., Tata Power Ltd., Torrent Power Ltd., Maharashtra State Power Generation Company Ltd. etc.

10. With reference to first and second vertical linkages, the market share of the Target in the upstream markets for generation of power in India is miniscule, whereas the market share of the Acquirer group, in terms of volume, in the downstream markets for transmission of power in India and distribution of power in India is in the range of [0-5] %. Further, there are other large players, both public and private, present in the downstream markets such as Power Grid Corporation of India, Gujarat Energy Transmission Corporation Ltd., Maharashtra State Electricity Transmission Co. Ltd. etc. in the power transmission segment and Maharashtra State Electricity Distribution Co. Ltd., Tamil Nadu Generation and Distribution Corporation Ltd., Southern Power Distribution Company of Telangana Ltd. etc. in the power distribution segment. With reference to the third vertical linkage, the market share of the Acquirer group, in terms of volume, in the upstream market for coal management services in India is in the range of [0-5] % whereas the market share of the Target in the downstream market for generation of power in India is minuscule. Further, there are other large players present in the upstream market such as Mahanadi Coal Fields, South Eastern Coal Fields, Northern Coal Fields etc. Therefore, neither the Target nor the Acquirer group seems to have the ability or incentive to cause any foreclosure in the respective markets.

11. Considering the material on record, including the details provided in the Notice and the assessment of the Proposed Combination based on the factors stated in Section 20(4) of the Act, the Commission is of the opinion that the Proposed Combination is not likely to have any appreciable adverse effect on competition in India. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act.

12. The order may be revoked if, at any time, the information provided by the Acquirer is found to be incorrect.

13. The information provided by the Acquirer shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act.

14. The Secretary is directed to communicate to the Acquirer accordingly.