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The Competition Commission of India approves the proposed combination involving the acquisition of 100 percent shareholding and voting rights of Constantia Flexibles Holding GmbH by Capripack BidCo GmbH. The Commission determines that the combination is not likely to cause an appreciable adverse effect on competition in India. The approval is subject to potential revocation if the provided information is found to be incorrect at any time.
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COMPETITION COMMISSION OF INDIA Combination Registration No.C-2023/10/1065
12th December 2023
Notice under Section 6(2) of the Competition Act, 2002 given by Capripack Bidco GmbH
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
On 18th October 2023, the Competition Commission of India (Commission) received a notice under sub-section (2) of Section 6 of the Competition Act, 2002 (Act) given by Capripack BidCo GmbH (formerly Ea Zweihundertzehnte WT Holding GmbH) (Capripack/Acquirer). The notice was filed pursuant to the Sale and Purchase Agreement dated 28th July 2023 entered into and between the Acquirer and the Constantia Lux S.à.r.l. (Seller).
The Proposed Combination envisages the acquisition of 100% shareholding and voting rights of Constantia Flexibles Holding GmbH (Constantia/Target) by the Acquirer from the Seller [Hereinafter, the Acquirer and the Target are collectively referred to as ‘Parties’].
In terms of Regulation 14 of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (Combination Regulations), vide letter dated 3rd November 2023 certain information and clarifications were sought from the Acquirer. The Acquirer submitted the response to the same vide its letter dated 7th November 2023. Since the response was not complete, another letter dated 14th November 2023 was issued and the Acquirer submitted the response vide letter dated 17th November 2023.
The Acquirer is indirectly owned by investment funds managed and advised by One Rock Capital Partners, LLC (ORC). ORC, a private equity firm headquartered in United States of America, manages funds that invest in companies operating within various industries, including chemicals and process industries, specialty manufacturing and healthcare products, food manufacturing and distribution, and business and environmental services. ORC is present in India through its various affiliates. One of the affiliates of ORC is GPD Companies, Inc. (GPD), which distributes certain chemicals in India.
The Target, wholly owned by the Seller, is a global producer of flexible packaging products and is headquartered in Austria. Its products are mainly based on aluminium (foil), film and paper. The product portfolio of the Target includes flexible packaging materials for everyday use products such as food, dairy, pet food, household and personal care, pharmaceutical and medical, as well as beverages.
In India, the Target operates through its direct and indirect subsidiaries and affiliates including S.B. Packagings Private Limited (and its subsidiaries and affiliates), which is a joint venture (JV) of the Target operating in India. The Target is engaged in the production and sale of flexible packaging materials in India. It is submitted that the Target’s entities are operating as ‘converters’ i.e., players which transform films into flexible packaging by way of printing/coating, laminating, slitting, and pouching.
It is submitted that there is no horizontal overlap between the Acquirer and ORC with the business activities of the Target (including its subsidiaries and affiliates) in India. With regards to vertical overlaps, there is a potential vertical relationship in the upstream market of distribution/sale of certain chemicals in India by GPD and the downstream market of production and sale of flexible packaging material in India by the Target.
According to the Notice, GPD is active in the chemicals sector in India. Of all the chemicals distributed by GPD in India, Polyethylene (PE) and Polypropylene (PP) may be used as inputs to manufacture flexible packaging material. The Commission in its earlier orders has noted that based on characteristics, usage or price potential sub-segments of PE includes High Density PE (HDPE), Low Density PE (LDPE), Linear Low Density PE (LLDPE) and potential sub-segments of PP includes homopolymers and impact copolymers. At these levels, GPD is engaged in the distribution/sale of HDPE and homopolymers PP in India.
Based on the business activities of the Target including its subsidiaries and affiliates in India, the downstream market of production and sale of flexible packaging materials may be segmented into packaging material for food and non-food products. The non-food segment may further be segmented into flexible packaging materials used for packaging home and personal care products, healthcare products, hygiene products and other products.
The Commission decided to leave the delineation of the relevant market open, as it was observed that the Proposed Combination is not likely to cause an appreciable adverse effect on competition in any of the relevant markets in India.
Based on the submissions of the Acquirer, the Commission noted that the presence of the Acquirer in the upstream segments of PE and PP and sub-segments of HDPE and homopolymers in India is minuscule. Further, it is noted that the market share of the Target in the downstream segments/sub-segments thereof is in the range of [0-5]% in terms of volume and value. Moreover, there are several other players present in all these downstream segments/sub-segments such as Uflex Limited, Huhtamaki PPL, Amcor Flexibles, Shrinath Rotopack and Uma Polymers. It is also submitted that the Target has not purchased any of the chemicals distributed by GPD in India over the last five years and the Target uses different grades of these chemicals which cannot be substituted by the PE or PP grades that GPD in India distributes. Based on the foregoing, it appears that the Proposed Combination will not foreclose competition in any market in India.
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. This order is, however, issued without prejudice to the proceedings under Section 43A of the Act.
This order may stand revoked if, at any time, the information provided by the Acquirer is found to be incorrect.
The information provided by the Acquirer shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act.
The Secretary is directed to communicate to the Acquirer accordingly.
