CA Plume Investments and Bequest Inc.

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COMPETITION COMMISSION OF INDIA Combination Registration No. C-2023/10/1066 26th June 2025 Notice under Section 6(2) of the Competition Act, 2002 jointly filed by CA Plume Investments and Bequest Inc. CORAM: Ms. Ravneet Kaur Chairperson Mr. Anil Agarwal Member Ms. Sweta Kakkad Member Mr. Deepak Anurag Member Appearance: Mr. Amit Jain, Managing Director and India Head, Carlyle; Mr. Ankit Jajodia, Director, Carlyle; Mr. Samyak Daga, Vice President, Carlyle; Ms. Sravya Paturi, Vice President, Global Legal Investments, Carlyle; Mr. Rakesh Dubey, Director, Government Affairs, Carlyle; Ms. Gauri Chhabra, Partner, Trilegal; Ms. Gargi Yadav, Counsel, Trilegal; and Ms. Eesha Sheth, Senior Associate, Trilegal. Order under Section 43A of the Competition Act, 2002 1. On 23rd October 2023 the Competition Commission of India (Commission) received a notice (Notice) jointly given by CA Plume Investments (CA Plume/ Acquirer I) and Bequest Inc. (Bequest/ Acquirer II), under Section 6(2) of the Competition Act, 2002 (Act) Combination Registration No. C-2023/10/1066 read with Regulation 5A and Schedule III of the Competition Commission of India (Procedure in regard to the transactions of business relating to combinations) Regulations, 2011 (Combination Regulations), for the acquisition of up to 23.6% equity stake in Quest Global Services Pte. Ltd. (Quest Global/ Target) by the Acquirer I, approx. 9.17% equity stake in the Target by Acquirer II and buy-back (Combination) [Hereinafter, Acquirer I and Acquirer II are collectively referred to as the ‘Acquirers’]. Description of the Parties 2. Acquirer I is an investment vehicle established in Mauritius whose ultimate parent entity is the ‘Carlyle Group Inc.’. The Carlyle Group Inc. including the investment funds advised by the affiliates and portfolio entities of the Carlyle Group Inc., are collectively referred to as the ‘Acquirer Group/ Carlyle’. Acquirer I is indirectly controlled by funds managed by affiliates of Carlyle. 3. Carlyle is a global investment firm, incorporated under the laws of Delaware, headquartered in the USA. It is a global asset manager, which manages funds that invest globally across 3 investment disciplines: (i) global private equity (including corporate private equity, real estate, and natural resources funds); (ii) global credit (including liquid credit, illiquid credit, and real assets credit); and (iii) investment solutions (private equity fund of funds program, which include primary fund, secondary and related co-investment activities). With particular reference to private equity, the investment funds advised by Carlyle invest in companies with the main objective of supporting their growth, increasing their profitability and value and have demonstrated extensive experience in a wide range of industries ranging from aerospace and defence to retail, from financial services to technology and business services. 4. It has been submitted that based on the Materiality Thresholds as set out in the Notes to Form I, the Acquirer Group has sixty-five (65) investee entities that are present in India (as of 9th October 2023) (Portfolio Entities) and an Indian subsidiary i.e., Carlyle India Advisors Private Limited. Page 2 of 18 Combination Registration No. C-2023/10/1066 5. Bequest, incorporated in the Cayman Islands, is a holding entity of Target’s co-founder, Chairman and Chief Executive Officer, and existing controlling shareholder, Mr. Ajit Aravind Prabhu. Bequest does not have any business activities in India or worldwide and its sole purpose is to hold shares of the Target. By virtue of its equity stake in Target, Bequest holds an indirect economic interest in six (6) Indian subsidiaries of Target. However, Mr. Ajit Aravind Prabhu, directly or indirectly, does not have investment in any entity above the Materiality Thresholds in India, other than the Target. 6. Target is a company incorporated in Singapore engaged in the provision of engineering and research & development (ER&D) services to design and develop products such as aircraft, aircraft engines, automotive cars, gas turbines, X-ray machines, etc. Its major customers include Airbus, Rolls Royce, Schneider, Hitachi, Alstom, Daimler, BMW, Renault Ford etc. 7. Target’s business falls within the ER&D services segment, and its primary focus is to provide engineering services for products and services across the product lifecycle to its customers. Target’s focus is on helping its customers develop new products, sustenance and maintenance of existing products, re-engineer products, extend the life of legacy products through localization and globalization initiatives, and product deployment and post- deployment support. The services provided by Target, worldwide and in India, encompass technologies ranging from mechanical engineering, silicon engineering, embedded systems engineering, platform and application engineering, data engineering and analytics, and digital and cloud applications using next-generation technologies. Target primarily provides the following ER&D services: (a) Embedded & software engineering: Target’s embedded and software engineering services help clients create innovative connected devices, smart edge systems, and solutions at a quicker pace and lower costs. (b) Mechanical engineering: Target’s mechanical engineering services support new product development. Page 3 of 18 Combination Registration No. C-2023/10/1066 (c) Silicon engineering: Target partners with semiconductor/system companies to deliver hardware and software design services and solutions in an efficient manner through its silicon engineering services. (d) Digital engineering: Target helps original equipment manufacturers (OEMs) integrate and automate design systems for seamless data exchange across product development lifecycles through its digital engineering offerings. The digital engineering services provided by Target relate to the engineering of products and are intended to make machines smarter and more efficient. It involves the usage of digital technology to design, create, and operate physical systems and products. (e) Operations and supply management: Target develops innovative supply chain solutions, fusing global networks and depth of expertise with pioneering digital innovations through its operations and supply chain services. 8. The Acquirers submitted that the Combination will not result in any overlaps between the Acquirers on the one hand and the Target on the other. As such, there are no horizontal, vertical, or complementary overlaps between the activities undertaken by the Acquirers (including their portfolio entities) and the Target (including their portfolio entities). Accordingly, the Combination falls under the category of combinations mentioned in Schedule III of the Combination Regulations and is eligible for deemed approval under the Green Channel Route. In this regard, as per Notice, the Target also confirmed that there are no overlapping products or services offered by the Acquirers (including their Portfolio Entities) in India vis-à-vis the Target. Therefore, the Combination will not cause any foreclosure effects in any market in India. Issue of Letter for Clarifications 9. The Commission in its meeting held on 19th March 2024, considered the submissions of the Acquirers as provided in the Notice and inter alia observed the following regarding the Combination: Page 4 of 18 Combination Registration No. C-2023/10/1066 (i) The activities of certain affiliates of the Acquirer I appear to be exhibiting horizontal overlaps with the activities of the Target; (ii) Information in relation to vertical linkages/ overlaps provided in the Notice is not complete in order to negate the possibility that there is no vertical linkage/ overlap. 10. Accordingly, the Commission vide its letter dated 26th March 2024 had sought the clarifications from the Acquirers. The Acquirers vide submission dated 5th April 2024 furnished their response (Response to Clarifications). Response to Clarifications 11. Based on the submissions of Acquirers, it appeared that there are no horizontal overlaps between products/ services of the Acquirers including their affiliates and those of Target including its affiliates. However, from the description of products/ services as provided through aforementioned response, it appeared that the products/ services of the Acquirers including their affiliates and those of the Target and its affiliates may have vertical or complementary interface/overlaps. Issue of SCN 12. The Commission considered the matter in its meeting held on 30th April 2024 and prima facie observed that the activities of Acquirers including their affiliates and those of the Target and its affiliates exhibited certain vertical or complementary interface/ overlaps. Thereby, the Combination did not appear to fall under Schedule III of the Combination Regulations. 13. Accordingly, the Commission passed an order dated 30th April 2024 (SCN) directing the Acquirers to show cause in writing within 15 days of receipt of the notice as to why: (i) the notice should not be found void ab initio in terms of first proviso to Regulation 5A (2) of the Combination Regulations and the Acquirers should not be held in contravention of the Page 5 of 18 Combination Registration No. C-2023/10/1066 provisions of Section 43A of the Act; (ii) the Acquirers should not be held liable for contravening the provisions of Section 44 of the Act for making statements in the Notice, including Notice Declaration and Green Channel Declaration which are false in material particular; and (iii) make their submissions on the quantum of penalty which may be levied by the Commission in the event that the Acquirers are held to be in contravention of the provisions of Sections 43A and/ or 44 of the Act. 14. The SCN was communicated to the Acquirer vide letter dated 30th May 2024. 15. In the SCN, on the basis of the Response to Clarifications, the Commission observed that customers of the affiliates of the Acquirers and Target for some of their products/ services, appeared to be same. Thus, the affiliates of the Acquirers and Target may offer products/ services as a package or bundle. Accordingly, the Commission was of the prima facie view that the products/services of affiliates of the Acquirers and Target appeared to be complementary. 16. With regards to the vertical linkages/ overlaps, the Commission noted the submission of the Acquirers that: (a) The nature of the service provided by Target i.e., product engineering, is not a business activity which must be availed by an industry player in order to conduct its business. For instance, an aircraft OEM (such as Boeing) does not necessarily require the ER&D services of Target to conduct its business activities of manufacturing and selling aircraft. (b) Accordingly, if the aircraft OEM is looking for product engineering services to assist the OEM’s in-house team in developing a new (and ancillary) component of the aircraft, it may choose to reach out to the Target for such services. If engaged, Target will assist in product engineering and designing. Page 6 of 18 Combination Registration No. C-2023/10/1066 (c) Therefore, the services provided by Target are not ‘essential’ for the customers of Target. 17. The Commission noted the statement made by Acquirers in the Response to Clarifications that “the Target operates and caters to customers in different sectors, none of the inputs provided by the Target can be considered as a vertical input which is required or necessary for the Portfolio Entities of the Acquirer Group to carry out their core business activities, from which the respective Portfolio Entities of the Acquirer Group derive revenue. Thus, ER&D services provided by Target are not essential, important, or must-have for the Portfolio Entities of the Acquirer Group to provide their products or services. In the present case, Quest Global’s services are not indispensable components required by its customers to provide their core services. Consequently, there is no inherent vertical linkage between Quest Global and its customers based on the nature of ER&D services.” 18. It is further submitted that, unlike traditional tangible goods markets, ER&D services are characterized by a high degree of specialization and customization tailored to the specific needs of customers in various sectors. The key characteristics of ER&D services are; (i) these services not being essential for the customers to provide its core services, and (ii) the specialised and customised nature of these services to specific customer requirements and preferences, resultantly implies that these services are not considered for traditional vertical overlaps analysis and are in the ordinary course of business. 19. The Commission noted the reasons and justifications provided in the Response to Clarifications pertaining to vertical linkages/ overlaps and observed that the same does not negate the possibility of vertical linkage(s)/ overlap(s) between products/ services of the affiliates of the Acquirers and Target as the products/ services of the Target are used or potentially may be used by the affiliates of the Acquirer. Response to SCN Page 7 of 18 Combination Registration No. C-2023/10/1066 20. Acquirers sought extensions of time to submit a response to SCN. Acquirers submitted a partial response on 5th September 2024 (Response 1) and a final and complete response on 15th October 2024 (Response 2) [Response 1 and Response 2 are collectively referred to as ‘Responses to SCN’]. Summarily, the responses of the Acquirers to the SCN are brought out below. 21. The Acquirers submitted that based on the (a) extensive due diligence undertaken in the ordinary course of business, with the assistance of various external advisors, and (b) engagement with the officials of the Target, and after conducting due diligence and a detailed overlaps assessment, it is of bona fide belief that Acquirers including their affiliates and those of the Target and its affiliates exhibited certain vertical or complementary interface/ overlaps and the Combination could not be filed under the Green Channel Route. Accordingly, the Acquirers submitted the following: i. There is no failure to give notice under Section 6(2) of the Act. Further, there are no false statements or misrepresentations of any facts to the best of Acquirers’ knowledge, and there is no failure on the part of the Acquirers to disclose information despite knowing it to be material. ii. The transaction did not unduly benefit from the Green Channel filing, since the Combination was only closed after three (3) months of getting the deemed approval. iii. Acquirer I has a flawless track record of complying with the provisions of the Act and has, to date, filed more than thirteen (13) notices [(of which nine (9) were Form I filings, one (1) was a Form II filing, and three (3) filings availed the Green Channel)], and has obtained unconditional approvals for the same. iv. After issuing the SCN, there was a change in the authorised representatives of the Acquirers, and a detailed assessment was undertaken again to determine if there exist any overlaps between the Target and the portfolio entities of the Acquirers and during this assessment, the Acquirers discovered that there were certain inadvertent lapses in Page 8 of 18 Combination Registration No. C-2023/10/1066 penalty. Therefore, even the legislature recognises that an incorrect filing is merely an irregularity and not an illegality that warrants penalties. v. Notwithstanding the above and without prejudice to the submissions, if the Commission is of the view that the notice should have been filed in Form I, the Acquirers most sincerely apologizes for its inadvertent error and is willing to rectify the same by re-filing the notice with the applicable filing fee. This is in line with the legislative intent introduced by way of the Competition (Amendment) Act, 2023, wherein a proviso to Section 43A of the Act is added, which now allows the parties to re-file the notice [in case a wrong filing is made in Green Channel i.e., under Section 6(4) of the Act] within 30 days of the order of the Commission, without imposition of any penalty. 22. In light of the above submissions, the Acquirers have inter alia prayed that the Commission may: (a) acknowledge and take on record the submissions made by the Acquirers in their Responses to SCN; (b) direct the Acquirers to re-file in Form I with the applicable fees, if required; (c) close the inquiry without imposition of any penalties or imposition of any adverse directions; and (d) conclude that the Acquirers did not violate any provision of the Act. Hearing by the Commission 23. On 15th April 2025, the Commission heard the Acquirers at length on their Responses to the SCN. The Acquirers reiterated the submissions made in the aforesaid response, and admitted the inadvertent error in the identification of overlaps and again tendered unconditional apology for the same. Page 11 of 18 Combination Registration No. C-2023/10/1066 Observations of the Commission 24. The Commission noted that Acquirers have submitted that there are certain overlaps in the nature of vertical/ complementarity found between the products/ services of some of the portfolio entities of Acquirers and those of the Target, after a detailed assessment of the same. The Acquirers have admitted the inadvertent error in the identification of the overlaps and tendered unconditional apologies for the same. Accordingly, there is no merit in discussing those vertical/ complementary overlaps. 25. The Commission observed that the Notice has been given under Section 6(2) of the Act read with Regulation 5A of the Combination Regulations, i.e., Green Channel. Under the Green Channel approval facility, a proposed combination is deemed to have been approved by the Commission under Section 31(1) of the Act upon filing of a notice and acknowledgment thereof. 26. Section 6(2) of the Act reads as under: Subject to the provisions contained in sub-section (1), any person or enterprise, who or which proposes to enter into a combination, shall give notice to the Commission, in the form as may be specified, and the fee which may be determined, by regulations, disclosing the details of the proposed combination, within thirty days1 of— (a) …; 1 In exercise of the powers conferred by clause (a) of section 54 of the Act, the Central Government, vide notification no. S.O. 2039(E) dated 29th June 2017 read with notification no. S.O. 1193(E) dated 16th March 2022 exempts every person or enterprise who is a party to a combination as referred to in section 5 of the said Act from giving notice within thirty days mentioned in section 6(2) of the Act, subject to the provisions of section 6(2A) and section 43A of the Act, for ten years from the date of publication of this notification in the Official Gazette. Page 12 of 18 Combination Registration No. C-2023/10/1066 (b) execution of any agreement or other document for acquisition referred to in clause (a) of section 5 or acquiring of control referred to in clause (b) of that section. (emphasis supplied) 27. Regulation 5A of the Combination Regulations reads as under: (1) For the category of combination mentioned in Schedule III, the parties to such combination may, at their option, give notice in Form I pursuant to regulation 5 along with the declaration specified in Schedule IV (Green Channel Declaration). (2) Upon filing of a notice under sub-regulation (1) and acknowledgement thereof, the proposed combination shall be deemed to have been approved by the Commission under sub-section (1) of section 31 of the Act: Provided that where the Commission finds that the combination does not fall under Schedule III and/or the declaration filed pursuant to sub- regulation (1) is incorrect, the notice given and the approval granted under this regulation shall be void ab initio and the Commission shall deal with the combination in accordance with the provisions contained in the Act: Provided further that the Commission shall give to the parties to the combination an opportunity of being heard before arriving at a finding that the combination does not fall under Schedule III and/or the declaration filed pursuant to sub-regulation (1) is incorrect. (emphasis supplied) Page 13 of 18 Combination Registration No. C-2023/10/1066 28. Schedule III of the Combination Regulations reads as under: Considering all plausible alternative market definitions, the parties to the combination, their respective group entities and/or any entity in which they, directly or indirectly, hold shares and/or control: - (a) do not produce/provide similar or identical or substitutable product(s) or service(s) (Horizontal Overlap); (b) are not engaged in any activity relating to production, supply, distribution, storage, sale and service or trade-in product(s) or provision of service(s) which are at different stages or level of the production chain (Vertical Interface); and (c) are not engaged in any activity relating to production, supply, distribution, storage, sale, and service or trade-in product(s) or provision of service(s) which are complementary to each other (Complementarity). 29. The enterprise or person availing the Green Channel approval facility is required to furnish the Green Channel Declaration along with the notice. The contents of the Green Channel Declaration are reproduced as under: 1. The notifying party confirms that it has furnished all the information and documents as required in Form I, as specified in Schedule II. 2. The notifying party confirms that the proposed combination falls under Schedule III and is not likely to cause adverse effect on competition. 3. The notifying party confirms that it has not made any statement which is false in any material particular or knowing it to be false; or omitted to state any material particular knowing it to be material. 30. From the provisions of Regulation 5A(1) read with Schedule III of the Combination Regulations, it is observed that the parties to the combination can avail the benefit of the Page 14 of 18 Combination Registration No. C-2023/10/1066 Green Channel approval facility only if the parties to the combination, their respective group entities and/or any entity in which they, directly or indirectly, hold shares and/ or control which neither exhibit any Horizontal Overlap nor any Vertical Interface nor any Complementarity. Further, the person or enterprise giving notice to the Commission is required to furnish the Green Channel Declaration, inter alia, to the effect that the transaction satisfies the criteria prescribed for the Green Channel approval facility. 31. In light of admission as well as furnishing of such details by the Acquirers that there existed certain vertical/ complementary interface(s)/ overlap(s) between the products/ services of the affiliates of the Acquirers and Target on the day of filing of the Notice, the criteria of Green Channel prescribed under Schedule III of the Combination Regulations was not met and the Combination did not qualify for the Green Channel prescribed under Regulation 5A of the Combination Regulations. Considering the facts and the circumstances of the instant matter, the Commission is of the view that Acquirers ought to have filed Notice in Form I without availing the benefit of Green Channel. Accordingly, the Acquirers have contravened the provisions of Sections 43A and 44 of the Act and the same attracts penalties under these sections. 32. With regard to the submissions of the Acquirers that after amendment of the Act in 2023, the provisions relating to Green Channel are provided in Sections 6(4) and 6(5) of the Act and Competition (Criteria of Combination) Rules, 2024 and as per the amended provisions, if a notice is given within a period of thirty days of the order of the Commission under Section 6(6) of the Act, no action under Section 43A shall be taken by the Commission till the expiry of such period of thirty days. The Commission observed that the present Notice under Green Channel was filed under Section 6(2) of the Act read with Regulation 5A of the Combination Regulations (Old framework) and not under Sections 6(4) and 6(5) of the Act and Competition (Criteria of Combination) Rules, 2024 (New framework). Accordingly, the same is required to be considered and dealt with under the Old framework only. In this regard, the proviso to Regulation 33 of the Competition Commission of India (Combinations) Regulations, 2024, is relevant and the same reads as under: Page 15 of 18 Combination Registration No. C-2023/10/1066 “(1) The Competition Commission of India (Procedure in regard to the transactions of business relating to combinations) Regulations, 2011 stands repealed from the date on which these regulations come into force: Provided that the provisions of the Competition Commission of India (Procedure in regard to the transactions of business relating to combinations) Regulations, 2011, as they stood on the date immediately before these regulations come into force, shall continue to apply to the notice(s) given under sub-section (2) of section 6 of the Act before these regulations come into force. (2) Notwithstanding such repeal, — (a) anything done or any action taken or purported to have been done or taken including fees collected, any proceedings or decision, inquiry or investigation commenced or show-cause notice issued under the repealed regulations, prior to such repeal, shall remain unaffected as if the repealed regulations have never been repealed; (b) the operation of the repealed regulations or anything duly done or suffered thereunder, any right, privilege, obligation or liability acquired, accrued or incurred under the repealed regulations, or any investigation, legal proceeding or remedy shall remain unaffected as if the repealed regulations have never been repealed.” 33. It is to be noted that the first proviso to sub-regulation (2) of Regulation 5A of the Combination Regulations provides as under: “Provided that where the Commission finds that the combination does not fall under Schedule III and/or the declaration filed pursuant to sub-regulation (1) is incorrect, the Page 16 of 18 Combination Registration No. C-2023/10/1066 notice given and the approval granted under this regulation shall be void ab initio and the Commission shall deal with the combination in accordance with the provisions contained in the Act”. 34. Thus, in light of the above, the Commission finds that, the notice and deemed approval, under Section 31(1) of the Act read with Regulation 5A of the Combination Regulations, granted to Combination is void ab initio. As the Combination has already been consummated, the Acquirers are liable for penalty under Section 43A of the Act, which reads as under: “If any person or enterprise fails to give notice under Section 6(2) of the Act, the Commission shall impose on such person or enterprise a penalty which may extend to one per cent of the total turnover or the assets, whichever is higher, of such a combination” 35. It is to be noted that Section 43A of the Act prescribes the extent of penalty that can be levied for failure to file notice. However, the Commission has discretion to consider the conduct of the parties and circumstances of the case to arrive at an appropriate penalty. 36. The Acquirers, in Responses to SCN as well as during the hearing, have inter alia submitted that they have admitted inadvertent error and tendered unconditional apology, proactively identified more overlaps, extended cooperation through the course of proceedings and supplied requisite material/ documents. While all these can be considered as mitigating factors, it is evident that the Combination did not meet the criteria of Green Channel prescribed under Schedule III of the Combination Regulations. 37. Thus, considering the facts and circumstances of the case and the conduct of the Acquirers, the Commission decides to impose a penalty of INR 4,00,000 (Rupees Four Lakhs Only) on the Acquirers under Section 43A of the Act and not to impose penalty under Section 44 of the Act. The Acquirers shall pay the penalty within 60 days from the date of receipt of this order. Further, the Acquirers are directed to file a fresh notice under Regulation 8 of the Page 17 of 18 Combination Registration No. C-2023/10/1066 Combination Regulations providing complete information as required under the applicable form within 30 days from the date of receipt of this order. 38. It is made clear that nothing used in this order shall be deemed to be confidential or deemed to have been granted confidentiality, as the same has been used for the purposes of the Act in terms of the provisions contained in Section 57 thereof. 39. The Secretary is directed to communicate this order to the Acquirers. Page 18 of 18