Ignite Luxembourg Holdings S.à r.l

COMPETITION COMMISSION OF INDIA (Combination Registration No. C-2023/07/1041)

5^th September 2023

Notice under Section 6(2) of the Competition Act, 2002 given by Ignite Luxembourg Holdings S.à r.l.

CORAM:

Ms. Ravneet Kaur
Chairperson

Ms. Sangeeta Verma
Member

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

1. On 13^th July 2023, the Competition Commission of India (Commission) received a notice (Notice) under Section 6(2) of the Competition Act, 2002 (Act) given by Ignite Luxembourg Holdings S.à r.l. (Acquirer). The Notice was given pursuant to the announcement dated 30^th May 2023 by the Acquirer regarding its intention to acquire shareholding of RHI Magnesita N.V. (Target), which was updated vide announcement dated 10^th July 2023 and offer document dated 19^th June 2023 published by the Acquirer.

2. The proposed combination envisages an acquisition of up to 29.9% of the equity shareholding of the Target by the Acquirer (Proposed Combination). It has been submitted that the Proposed Combination leads to an indirect acquisition of RHI Magnesita India Limited (RHIM India).

3. The Commission vide its communication dated 8^th August 2023 and 21^st August 2023 under Regulation 14 of the Competition Commission of India (Procedure in regard to the transaction of Business relating to Combinations) Regulations 2011 (Combination Regulations) required the notifying party(ies) to remove defects in the Notice and furnish certain information relevant for the purpose of assessment of the Proposed Combination. Notifying party(ies) furnished their responses vide submissions dated 14^th August 2023 and 23^rd August 2023. They also made certain voluntary submissions dated 4^th September 2023.

4. The Acquirer is a newly formed company incorporated in Luxembourg and is owned by certain investment funds which are indirectly sponsored and controlled by Rhône Capital L.L.C. (Rhône Capital), which is the ultimate parent company. Rhône Capital was founded in 1996 by Robert F. Agostinelli and M. Steven Langman with offices in New York City, London and Madrid. Rhône Capital along with its affiliates are collectively referred to as ‘Rhône’.

5. The Target, incorporated under the laws of Netherlands, is a public company with a primary listing on the London Stock Exchange and Vienna Stock Exchange. The Target is the parent company of all the group entities belonging to the Target. The Target has two subsidiaries in India viz. RHIM India and Magnesita Refractories Private Limited (Magnesita India). It has been submitted that RHIM India holds 99.9% of the equity share capital of Intermetal Engineers (India) Private Limited and 100% of the equity share capital of Dalmia OCL Limited. RHIM India (through Dalmia OCL Limited) also holds 51% and is in the process of acquiring the remaining 49% of the equity shareholding of RHI Magnesita Seven Refractories Limited. It has been submitted that the acquisition of 49% shares of RHI Magnesita Seven Refractories Limited through Dalmia OCL Limited is not an inter-connected transaction with the Proposed Combination.

6. In India, the Target conducts its business through its subsidiary RHIM India. RHIM India offers refractory products and customised refractory services to steel, cement, metals, glass, environment and energy, foundry, and paper & pulp industries. Refractory materials are inorganic non-metallic materials that are able to withstand very high temperatures and corrosive and/or chemically aggressive environments without undergoing physical or chemical changes. They are employed, for instance, as heat buffers or linings in kilns, furnaces and ovens in the steel, cement, non-ferrous metals and glass industries.

7. The market segments in which the Target operates in India are: (a) basic unshaped refractory products from dolomite; (b) basic unshaped refractory products from magnesite; (c) basic shaped fired refractory products from dolomite; (d) basic shaped unfired refractory products from dolomite; (e) basic shaped fired refractory products from magnesite; (f) basic shaped unfired refractory products from magnesite; (g) non-basic unshaped refractories; (h) non-basic shaped refractories; and (i) magnesite as a raw material.

8. However, precise delineation of the relevant market is left open in this matter as it is observed that the Proposed Combination is not likely to cause any appreciable adverse effect on competition in any of the relevant markets in India.

9. Based on the submissions, there are no horizontal overlaps between the activities of Acquirer (including Rhône and its portfolio companies) and the Target (including its affiliates). With regard to vertical interfaces/overlaps, it has been submitted that the Target (including its affiliates) is not engaged in any activities on account of which it has an existing vertical relationship with the Acquirer/Rhône including its portfolio entities. However, there are certain vertical overlaps/interfaces between the activities of portfolio entities of Rhône and those of the Target as stated below:

• (i) Target is engaged in the supply of magnesite as a raw material in India at the upstream level whereas Rhône, through its portfolio entity ASK Chemicals GmbH (ASK Chemicals) is engaged in the manufacture of sand additives and refractories coatings for the foundry industry in India at the downstream level (Vertical Overlap I).
• (ii) Target is engaged in the manufacturing of non-basic unshaped refractory products and non-basic shaped refractory products in India at the upstream level whereas Rhône, through its portfolio entity Lummus Technology Holdings I LLC (Lummus) is engaged in manufacturing of fired process heaters (furnaces) in India at the downstream level (Vertical Overlap II).
• (iii) Rhône, through its portfolio entity ASK Chemicals is engaged in the supply of phenolic resins for use in refractory products in India at the upstream level whereas Target is engaged is the manufacturing of basic shaped unfired refractory products from magnesite, basic shaped unfired refractory products from dolomite and non-basic shaped refractories, at the downstream level (Vertical Overlap III).

10. Based on the submissions it is observed that the market shares of the parties in all the above vertical interfaces is less than 10% except at the downstream level of basic shaped unfired refractory products from magnesite wherein the market share of Target is in the range of 20-25%. The upstream level of such vertical interface i.e., supply of phenolic resins for use in refractory products in India is characterised by competitors such as Forace group, Shree Chem, Kanoria, Promise, Fortis Chemicals etc. Hence, these vertical interfaces are not likely to cause any foreclosure concern.

11. Considering the material on record, including the details provided in the Notice and the assessment of the Proposed Combination based on 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 in any of the relevant market(s) and therefore, the Commission hereby approves the Proposed Combination under Section 31(1) of the Act.

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

13. It is made clear that nothing contained in this order shall be deemed to be confidential as the same has been used for the purposes of the Act in terms of the provisions contained in Section 57 of the Act.

14. The Secretary is directed to communicate to the notifying party(ies) accordingly.