Axis Bank Limited

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Page 1 of 7 COMPETITION COMMISSION OF INDIA Combination Registration No. C-2023/12/1096 2nd April 2024 Notice under Section 6(2) of the Competition Act, 2002 given by Axis Bank Limited, Axis Capital Limited and Axis Securities 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 26th December 2023, the Competition Commission of India (Commission) received a notice (Notice) under Section 6(2) of the Competition Act, 2002 (Act) given by Axis Bank Limited (Axis Bank). Initially, only Axis Bank was the notifying party. However, vide submissions dated 25th January 2024, Axis Securities Limited (ASL) and Axis Capital Limited (ACL) also became notifying parties to the Notice. The Notice has been given pursuant to the execution of: (i) Share subscription agreement between Axis Bank and Max Life Insurance Company Limited (Max Life Insurance/Target) on 9th August 2023 (SSA); and (ii) Restated shareholders agreement between Axis Bank and Max Life Insurance, Max Financial Services Limited (MFSL), ASL, ACL, Mitsui Sumitomo Insurance Company Limited, Mr. Combination Registration Number: C-2023/12/1096 Page 2 of 7 Analjit Singh, and Max Ventures Investment Holdings Private Limited on 9th August 2023. 2. The notifying parties vide communications dated 4th January 2024 and 6th February 2024 issued under Regulation 14 of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (Combination Regulations) were required to remove the defect from the Notice and furnish certain information relevant for the purpose of assessment of the proposed combination. The notifying parties furnished their responses vide submissions dated 25th January 2024 and 14th February 2024. The Commission vide its order dated 12th March 2024 also sought certain clarifications from the notifying parties. The notifying parties furnished their response vide submissions dated 25th March 2024 which was revised vide submissions dated 26th March 2024. 3. The proposed combination envisages subscription to 14,25,79,161 equity shares of the Target by the Acquirer to increase its shareholding in the Target from its existing 9.99% to 16.22% along with the right to appoint/nominate two directors, in addition to its existing right to nominate three directors, on the board of the Target (Proposed Combination). It has also been stated that the Acquirer would have an option to acquire certain equity shares of the Target, through itself and/or through its wholly-owned subsidiaries, ACL and ASL, through one or more tranches, constituting 0.98% equity share capital of the Target from MFSL, within 42 months from the completion of the earlier acquisition1 (Secondary Acquisition). 4. Axis Bank is an Indian private sector bank engaged in the banking business. It provides services in retail banking, wholesale banking, payment solutions, wealth management, forex and remittance products, and distribution of mutual funds and insurance policies. The Acquirer, through its subsidiaries, is also engaged in the provision of other services such as asset management, investment banking, retail broking, corporate and retail lending, invoice discounting, trusteeship activities, merchant acquisition and payment 1 The earlier acquisition was completed on 6th April 2021. Combination Registration Number: C-2023/12/1096 Page 3 of 7 aggregation services, pension fund management, etc. The select affiliates and/or subsidiaries of Axis Bank are as under: - Axis Pension Fund Management Limited (Axis Pension): Pension fund management business under the National Pension Scheme (NPS); - ASL: broking, and distribution of financial products and advisory services, including distribution of life insurance products; - Go Digit Life Insurance Limited (Go Digit): provision of life insurance products; and - CSC e-Governance Services India Limited (CSC e-Governance): Overseeing implementation of Common Services Centers Scheme (CSC Scheme), including enrolment of subscribers in the NPS. 5. Max Life Insurance is engaged in the business of providing life insurance and annuity products and investment plans in India. The various plans offered by Max Life Insurance account for different ranges of premiums, different age groups, as well as different needs, for example, term plans, retirement plans, children plans, savings and income plans, etc. 6. Max Life Insurance has a wholly-owned subsidiary namely, Max Life Pension Fund Management Limited (Max Pension). Max Life Insurance is also the sponsor of the pension funds managed by Max Pension in accordance with the provisions of the Pension Fund Regulatory and Development Authority Act, 2013 read with the Pension Fund Regulatory and Development Authority (Pension Fund) Regulations, 2015. 7. The following businesses of Axis Bank (including its affiliates) and Max Life Insurance (including its affiliates) exhibit horizontal overlaps: - Provision of life insurance products by Max Life Insurance and Go Digit, Combination Registration Number: C-2023/12/1096 Page 4 of 7 - Management of non-government pension fund assets under the NPS by Axis Pension and Max Pension, and - Enrolment/distribution of NPS by Axis Bank, CSC e-Governance and Max Pension. 8. With respect to the provision of life insurance products in India, it has been submitted that Go Digit, an affiliate of Axis Bank, received registration from IRDAI on 9th June 2023. Therefore, Go Digit is a new entrant, and it did not have offerings competing with the offerings of Max Life Insurance during the financial year (FY) 2022-23. The combined market shares, based on volume (number of policies) and value (premium), of Max Life Insurance and Go Digit for the group insurance policies segment for FY 2023-24 (up to the second quarter) are [0-5]%. Further, it has been submitted that this segment is characterised by the presence of other public and private players such as LIC, ICICI Prudential, Bajaj Allianz, HDFC Life Insurance, and SBI Life Insurance. 9. With regard to the individual insurance policies segment, it has been submitted that Go Digit did not sell any life insurance products up to the second quarter of FY 2023-24. Further, the market share of Max Life Insurance, based on volume (number of policies) and value (premium), for the individual insurance policies segment for FY 2022-23 are [0-5]% and [5-10]%. Similar is the case for FY 2023-24 (up to the second quarter). Further, it has been submitted that this segment is characterised by the presence of other public and private players such as LIC, ICICI Prudential, Tata AIA, HDFC Life Insurance and SBI Life Insurance. 10. With respect to the management of NPS, it has been submitted that pension fund managers, on registration with the Pension Fund Regulatory and Development Authority (PFRDA), can offer pension fund schemes under the NPS. Schemes under the NPS include various public schemes [i.e., central government schemes, corporate- central government schemes, state government schemes, Atal Pension Yojana, etc.]. The public pension fund managers (i.e., LIC Pension Fund Limited, SBI Pension Funds Pvt. Limited and UTI Retirement Solutions Limited) are permitted to the public schemes. The private players (like Max Pension) can offer various non-government schemes under the NPS. Combination Registration Number: C-2023/12/1096 Page 5 of 7 11. With regard to non-government pension fund assets under the NPS, it has been submitted that both Axis Pension and Max Pension have entered the segment and commenced operations in FY 2022-23. The combined market share of Axis Pension and Max Pension, based on value (assets under management) and volume (number of subscribers), as on 31st October 2023, is less than 1%. It has been further submitted that other players such as HDFC Pension, ICICI Prudential Pension Funds and LIC Pension Fund, UTI Retirement Solution, and SBI Pension Funds are also present in this segment. 12. With respect to enrolment/distribution of NPS in India, it has been submitted that Axis Bank and CSC e-Governance operate as a Point of Presence (POP). Further, Max Pension also operates as a POP. In order to provide enrolment/distribution services for NPS, registration with the PFRDA as a POP is required. A POP is the point of interaction between the subscriber and the NPS architecture. The functions of a POP include registration of the subscriber, receiving information and contributions from subscribers, and transmitting it to the pension fund managers and central record- keeping agency. The combined market share, in terms of volume (number of subscribers), of Axis Bank along with CSC e-Governance and Max Pension, as on 31st October 2023 is [10-15]% with incremental market share being less than 1%. It has been further submitted that there are over 100 players registered as POP with the PFRDA. 13. The following businesses of Axis Bank (including its affiliates) and Max Life Insurance (including its affiliates) exhibit vertical interfaces: (i) Provision of life insurance products by Max Life Insurance and distribution of life insurance products by Axis Bank and its affiliates (Vertical Interface I); (ii) NPS pension fund management by Axis Pension and enrolment/distribution of NPS by Max Pension (Vertical Interface II); Combination Registration Number: C-2023/12/1096 Page 6 of 7 (iii) NPS pension fund management by Max Pension and enrolment/distribution of NPS by Axis Bank and its affiliate (Vertical Interface III); and (iv) NPS pension fund management by Axis Pension and annuity services by Max Life Insurance (Vertical Interface IV). 14. With reference to the Vertical Interface I, it has been submitted that the market share of Max Life Insurance for the provision of life insurance products in the individual segment for FY 2022 – 23 is [0-5]% in terms of volume (number of policies) and [5- 10]% in terms of value (premium). Further, for the same period, its market share for the provision of life insurance products in the group segment both in terms of value and volume is less than 1%. On the other hand, the market share of Axis Bank and its affiliates for the distribution of insurance products for FY 2022 – 23 is [0-5]%. 15. With reference to the Vertical Interface II and Vertical Interface III, it has been submitted that the market share, both in terms of value (AUM) and volume (number of subscribers), of each of Axis Pension and Max Pension for NPS non-government fund management as on 31st October 2023 is less than 1%. On the other hand, the market share, in terms of number of subscribers, of Axis Bank (including its affiliate) and Max Pension for enrolment/distribution services for NPS as on 31st October 2023 is [10- 15]% and less than 1%, respectively. Further, there are over 100 players registered as POP with the PFRDA including HDFC Securities, HDFC Pension Management, HDFC Bank, ICICI Bank, ICICI Securities, ICICI Prudential Pension Fund, Stock Holdings Corporation, Union Bank Kotak Mahindra Bank. 16. With reference to the Vertical Interface IV, the market share, both in terms of value (AUM) and volume (number of subscribers), of Axis Pension for NPS non-government fund management as on 31st October 2023 is less than 1%. Similarly, Max Life Insurance’s market share, both in terms of value (one-time premium) and volume (number of policies), for annuity services for NPS for FY 2022 – 23 is [0-5]%. Further, it has been submitted that there are 15 empanelled annuity service providers including Combination Registration Number: C-2023/12/1096 Page 7 of 7 HDFC Life Insurance, ICICI Prudential Life Insurance, SBI Life, Kotak Mahindra Bank and Tata AIA. 17. 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. 18. The order may be revoked if, at any time, the information provided by the notifying parties is found to be incorrect. 19. The information provided by the notifying parties shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act. 20. The Secretary is directed to communicate the order to the notifying parties.