Massachusetts Mutual Life Insurance Company

Page 1 of 8 COMPETITION COMMISSION OF INDIA Ref. No. M&A – 2021/01/810 7th August 2023 In re: Proceedings under Section 43A of the Competition Act, 2002 against Massachusetts Mutual Life Insurance Company CORAM: Ms. Ravneet Kaur Chairperson Ms. Sangeeta Verma Member Mr. Bhagwant Singh Bishnoi Member Appearances during the hearing For Massachusetts Mutual Life Insurance Company: Mr. Rohan Batra and Mr. Padmanabh Sethunath, Advocates ORDER UNDER SECTION 43A OF THE COMPETITION ACT, 2002 1. This Order shall dispose of the proceedings against Massachusetts Mutual Life Insurance Company (‘MassMutual’/ ‘Acquirer’) under Section 43A of the Competition Act, 2002 (‘Act’) in relation to its acquisition of approximately 16% shareholding in Invesco Limited (‘Invesco’/ ‘Target’) [‘Transaction’]. Background 2. The Transaction was given effect pursuant to the execution of an Agreement and Plan of Merger, executed, inter alios, amongst MM Asset Management Holding LLC (a wholly Page 2 of 8 owned indirect subsidiary of MassMutual) and Invesco on 17th October 2018 (‘Agreement 1’) and a Shareholder Agreement between MassMutual and Invesco on 24th May 2019 (‘Agreement 2’) [Hereinafter, Agreement 1 and Agreement 2 are collectively referred to as ‘Transaction Documents’]. The Transaction was consummated in May 2019. 3. As per the information available in the public domain, MassMutual belongs to the MassMutual Financial Group and is incorporated in Massachusetts, the United States of America (‘USA’). It operates as an insurance firm and offers individual and group life insurance, disability insurance, individual and group annuities and guaranteed interest contracts to individual and institutional customers in the USA and Puerto Rico. 4. As submitted by MassMutual, the Target is a company incorporated in Bermuda with its corporate headquarters in Atlanta, USA, and listed on the New York Stock Exchange. As per the information available in the public domain, Target is present in more than 26 countries and manages approximately USD 1.5 trillion in assets for investors around the world. 5. MassMutual submitted that at present, Invesco has four subsidiaries incorporated in India viz. Invesco Asset Management (India) Private Limited (‘IAMPL’), Invesco Trustee Private Limited (‘ITPL’), Invesco (India) Private Limited (‘IPL’) [Hereinafter, IAMPL, ITPL and IPL are collectively referred to as ‘Invesco India Subsidiaries’] and Redblack Software Private Limited (‘Redblack Software’). That, Redblack Software was acquired by Invesco in December 2019 i.e., post the consummation of the Transaction. Further, at the time of the Transaction, Invesco’s main presence in India was through an asset management company (‘AMC’) i.e., IAMPL, that managed a mutual fund registered in accordance with the Securities and Exchange Board of India (Mutual Fund) Regulations, 1996 (‘MF Regulations’) namely, Invesco Mutual Fund. 6. It is provided in the Transaction Documents that Invesco shall elect any individual designated by MassMutual as a member of its Board. This right was duly exercised by MassMutual. Further, Invesco expanded its Board from 9 to 12 directors on 5th November Page 3 of 8 2020. Subsequently, the Chairman and CEO of a wholly owned subsidiary of MassMutual joined Invesco’s Board. 7. Further, Invesco’s FY2020 Annual Report, presented vide Form 10-K filings before the United States Securities and Exchange Commission, inter alia, states the following: “…We are not permitted to take certain actions without the prior written approval of MassMutual, including making certain changes in our capital structure or our organizational documents, adopting a shareholder rights plan or effectuating certain business combination transactions. MassMutual’s level of ownership and influence may make some transactions (such as those involving mergers, material share issuances or changes in control) more difficult or impossible without the support of MassMutual…” Initiation of Proceedings under Section 43A of the Act 8. Section 5 of the Act states that acquisition of one or more enterprises by one or more person or merger or amalgamation of enterprises, which exceeds the threshold prescribed therein shall be a combination for the purposes of the Act. The thresholds are specified in the Act in terms of assets or turnover in India and abroad. Further, Section 6(2) of the Act provides that the parties proposing to enter into a combination shall give a notice to the Commission and, as per Section 6(2A) of the Act, no combination shall come into effect until 210 days have passed from the day on which the notice has been given to the Commission under Section 6(2) or the Commission has passed orders under Section 31 of the Act, whichever is earlier. 9. The Central Government, in exercise of the powers conferred by clause (a) of Section 54 of the Act, in public interest, has exempted combinations from giving notice to the Commission under Section 6(2) of the Act, where the value of assets being acquired, taken control of, merged or amalgamated is not more than INR 350 crore in India or turnover is not more than INR 1,000 crore in India. This ‘de minimis’ exemption was issued by the Ministry of Corporate Affairs vide Notification No. S.O. 989(E) dated 27th March 2017. Page 4 of 8 10. Based on the information available in public domain, it is observed that MassMutual consummated the Transaction in May 2019 without giving notice to the Commission in terms of Section 6(2) of the Act. The Commission, in its meeting held on 20th December 2021, considered the issue of consummation of the Transaction without filing a notice before the Commission. The Commission observed that the Transaction was strategic in nature and was accompanied with the right to nominate a director on the board of Invesco. The intention of MassMutual appeared to be that of participating in the affairs of management of Invesco. Further, it appeared that the appointment of another representative of MassMutual on Invesco’s board as well its substituent committees may have also led to the possibility of material influence/control of MassMutual over the affairs and management of Invesco. In view of the foregoing, the Commission was of the prima facie view that the Transaction cannot be categorised as or given the colour of ‘Solely for Investment’ / ‘Ordinary Course of Business’, and therefore, it cannot benefit from Item 1 under Schedule I of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 [‘Combination Regulations’]. 11. Therefore, the Commission was of the prima facie view that the Transaction was given effect to without giving notice to the Commission, leading to contravention of sub-section (2) and (2A) of Section 6 of the Act. Accordingly, the Commission issued a Show Cause Notice (‘SCN’) to MassMutual, under Regulation 48 of the Competition Commission of India (General) Regulations, 2009, read with Section 43A of the Act on 17th January 2022. MassMutual submitted its response to the SCN dated 12th March 2022 along with a request for oral hearing in the matter (‘First Response to SCN’). Thereafter, MassMutual submitted an additional response dated 9th May 2022 (‘Second Response to SCN’) [Hereinafter, First Response to SCN and Second Response to SCN are collectively referred to as ‘Responses to SCN’]. MassMutual also submitted a note on arguments to be advanced during the oral hearing on 6th June 2023. The Commission heard MassMutual at length on 13th June 2023. Page 5 of 8 Submissions of MassMutual 12. The broad contentions of MassMutual, as submitted in Responses to SCN and during the oral hearing, are as under: