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The Competition Commission of India approves the acquisition of the remaining thirty percent equity share capital of Signet Excipients Private Limited by IMCD India Private Limited under Section 31(1) of the Competition Act, 2002. The combination changes the control of the target from joint control to sole control by the acquirer. Both parties operate in the wholesale supply of excipients in India and exhibit horizontal and complementary overlaps. The commission finds that the combination does not cause an appreciable adverse effect on competition due to low combined market shares and the presence of numerous other competitors in the relevant markets. The approval is subject to the condition that the information provided by the acquirer remains correct.
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COMPETITION COMMISSION OF INDIA Combination Registration No. C-2023/12/1083
9th January 2024
Notice under Section 6(2) of the Competition Act, 2002 given by IMCD India Private 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 $1^{\text{st}}$ December 2023, the Competition Commission of India (‘Commission’) received a notice (‘Notice’) under Section 6(2) of the Competition Act, 2002 (‘Act’), given by IMCD India Private Limited (‘Acquirer’/‘IMCD’). The Notice was given pursuant to the Share Purchase Agreement (‘SPA’) entered into between Sellers (promoter shareholders), Acquirer, IMCD N.V., and Signet Excipients Private Limited (‘Target’/‘Signet’) dated $15^{\text{th}}$ September 2020 and Shareholders’ Agreement (‘SHA’) inter alia entered into between Acquirer, IMCD N.V., Target, and certain seller shareholders dated $15^{\text{th}}$ September 2020. [Hereinafter, Acquirer and Target are collectively referred to as ‘Parties’]
The Commission, vide its communication dated $15^{\text{th}}$ December 2023, issued under Regulation 14(3) of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 required the Acquirer to remove defects in the Notice and furnish certain information relevant for the purpose of assessment of the proposed combination. The Acquirer furnished the response to the same vide its submission dated $22^{\text{nd}}$ December 2023.
The Acquirer has submitted that it currently holds seventy (70) percent shareholding of the Target and jointly controls the Target with the promoters.
The Proposed Combination relates to an acquisition of the remaining thirty (30) percent of the equity share capital of the Target by the Acquirer, such that the Acquirer will hold the entire (i.e., 100%) shareholding of the Target (‘Proposed Combination’).
The Acquirer is an indirect wholly owned subsidiary of IMCD N.V. which is a Dutch-listed entity and has a presence across various jurisdictions. The IMCD group is engaged in the distribution of specialty chemicals, food ingredients, and pharma ingredients on a worldwide basis. The Acquirer is present in India through its wholly owned subsidiaries i.e., Parkash Dvechem Private Limited and Tradeimpex India Private Limited.
The Acquirer is engaged in sales, marketing, and distribution of specialty chemicals in India including food and pharma ingredients through the product segments such as (a) Pharmaceutical Excipients; (b) Food and Nutrition Ingredients and Excipients; (c) Coatings and Construction Chemicals; (d) Advanced Materials (Plastic Additives and Composites); (e) Lubricants and Fuels chemicals and additives; (f) Textile chemicals & additives; and (g) Beauty and Personal Care ingredients.
The Target is jointly controlled by IMCD and its promoters. The Target is present in India only and does not have any presence outside India, except for minimal sales by way of exports in the Indian subcontinent and Africa. It is engaged in the business of sales, marketing, distributing, importing, or exporting of (i) excipients used for pharmaceutical products; and (ii) excipients used for non-pharmaceutical purposes such as nutraceuticals, food, personal care, etc. It has been submitted that Target is only a distributor, engaged in the wholesale supply of excipients in India.
Based on the submission of the Parties, the Commission observed that the Proposed Combination will result only in a change in the quality of the Acquirer’s control over the Target (i.e., from joint control to sole control). Be that as it may, the Commission observed that both the Target as well as the Acquirer are engaged in the wholesale supply of excipients in India. Accordingly, the horizontal overlap exists between the activities of the Acquirer and Target in the segment of wholesale supply of excipients in India (i.e. at a Broad level) and narrowly in the wholesale supply of pharmaceutical (Narrow Level-1) and non-pharmaceutical excipients in India (Narrow Level-2). The Commission noted that the above segments of excipients can be further segmented into the food, nutrition, and personal care segments.
With regard to vertical linkages, the Commission observed that there are no existing vertical and/or potential vertical overlaps between the activities of the Parties as both the Acquirer and Target are only suppliers/distributors of products and none of the products are manufactured by either of the Parties. However, some of the products supplied and/or distributed by the Acquirer are complementary to the products supplied by Target. Thus, there are certain complementary overlaps between the Parties. The details of such complementary overlaps are stated below :
However, the Commission decided to leave the exact delineation of the relevant market(s) 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 for the reasons given in the subsequent paragraph.
The Commission noted that the combined market share of the Acquirer and the Target is in the range of [0-10] percent and the incremental market share is insignificant in any of the segments / sub-segments of excipients. Further, with regard to complementary overlaps, mentioned supra, the market shares of the Acquirer or the Target, as the case may be, in their respective areas of activities are also not such which can cause adverse effects on competition in India. Further, all of these segments/sub-segments/areas of activities are characterised by the presence of many other players such as Adani Wilmar, EID India Parry, Shree Renuka Sugars, Bajaj Hindusthan Sugars, Evonik India, Colorcon India, 3F Industries, Dow Chemicals, BASF, Cargill, Clariant, IFF, Galaxy Surfactants, Sun Pharma, Cipla, and Lupin.
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.
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 this order to the Acquirer.
