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The Competition Commission of India approves the acquisition of an additional equity share capital in Agilus Diagnostics Limited by Fortis Healthcare Limited. Fortis Healthcare Limited acquires thirty-one point five two percent of the equity share capital from private equity investors. The shareholding of Fortis Healthcare Limited in Agilus Diagnostics Limited increases from fifty-seven point six eight percent to eighty-nine point two percent. The private equity investors cease to be shareholders of Agilus Diagnostics Limited after the combination. The Commission concludes that the proposed combination does not cause an appreciable adverse effect on competition in India.
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COMPETITION COMMISSION OF INDIA
Combination Registration No. C-2024/09/1183
29th October 2024
Notice under Section 6(2) of the Competition Act, 2002 given by Fortis Healthcare Limited
CORAM:
Ms. Ravneet Kaur
Chairperson
Mr. Anil Agrawal
Member
Ms. Sweta Kakkad
Member
Order under Section 31(1) of the Competition Act, 2002
On 4th September 2024, the Competition Commission of India (‘Commission’) received a notice (‘Notice’) under sub-section (2) of Section 6 of the Competition Act, 2002 (‘Act’) given by Fortis Healthcare Limited (‘FHL’/ ‘Acquirer’). The Notice was filed pursuant to the execution of, inter alia, Letter Agreement dated 13th June 2024 executed between Agilus Diagnostics Limited (‘Agilus’/ ‘Target’), FHL and private equity investors, namely NYLIM Jacob Ballas India Fund III, LLC (‘NYLIM’), International Finance Corporation (‘IFC’), and Resurgence PE Investments Limited (‘Resurgence’) (hereinafter, NYLIM, IFC, and Resurgence are collectively referred to as ‘PE Investors’ and FHL and Agilus are collectively referred to as the ‘Parties’) and PE Investors’ exercise of the Put Option by way of notices dated 7th August 2024 (‘NYLIM Put Option Notice’), 9th August 2024 (‘IFC Put Option Notice’) and 9th August 2024 (‘Resurgence Put Option Notice’).
The Proposed Combination envisages the acquisition by FHL of an additional 31.52% of the equity share capital of Agilus from NYLIM [15.86%], IFC [7.61%], and Resurgence [8.05%]. Post-Proposed Combination, the shareholding of FHL in Agilus will increase from 57.68% to 89.2% and the PE Investors will cease to be the shareholders of Agilus.
In terms of Regulation 14 of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011, vide letter dated 18th September 2024, certain information and clarifications were sought from the Acquirer. The Acquirer submitted the response dated 25th September 2024. Since the response was not complete, another letter was issued on 7th October 2024 and the response dated 11th October 2024 was furnished by the Acquirer.
FHL, a public listed company, provides healthcare services in India. It offers a full spectrum of services ranging from clinics to quaternary care facilities and a wide range of ancillary services. The diagnostics services business of FHL is being undertaken primarily through Agilus and also directly in four hospitals by FHL. FHL is a subsidiary of the IHH Healthcare Berhad group, which is a healthcare network with more than 80 hospitals in 10 countries.
Agilus is a chain of diagnostic laboratories with pan-India presence. Agilus is, inter alia, engaged in establishing, managing, maintaining clinical reference laboratories and other laboratories for providing testing and diagnostic services. It offers a range of routine and specialized diagnostics tests, wellness packages that cover an extensive range of specialties, corporate wellness services and preventive care health packages comprising several pathology and radiology tests as well as home collection services.
It is submitted that there is no horizontal overlap between the business activities of the Parties. With regard to vertical/complementary overlaps, there is an existing relationship between FHL and Agilus as FHL is engaged in the business of providing integrated healthcare delivery services in India and Agilus is engaged in the business of retail diagnostics services in India. The Parties have entered into agreement(s) for pathology and diagnostics services to be rendered by Agilus within different hospitals controlled/managed by FHL.
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 appreciable adverse effect on competition in any of the plausible relevant market(s) in India.
Based on the submissions of the Acquirer, the Commission noted that the market share of FHL in the healthcare services market and Agilus in the retail diagnostic services market is in the range of [0-5]%. Further, each market is characterised by the presence of various players. Based on the foregoing, it appears that the Proposed Combination is not likely to foreclose competition.
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 appreciable adverse effect on competition in India. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act.
This order may be 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.
