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The Competition Commission of India approves the acquisition of equity shares in Niva Bupa Health Insurance Company Limited by V-Sciences Investments Pte Ltd under Section 31(1) of the Competition Act, 2002. The transaction involves the acquisition of 2.63% of the issued and paid-up share capital of the target on a fully diluted basis, along with limited reserved matter rights and information rights. The commission determines that the combination does not cause an appreciable adverse effect on competition in India, noting low market shares and existing competitive alternatives in the relevant insurance and healthcare sectors.
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COMPETITION COMMISSION OF INDIA Combination Registration No. C-2023/10/1071
12th December 2023
Notice under Section 6(2) of the Competition Act, 2002 given by V – Sciences Investments Pte Ltd.
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
[Image omitted. See the official document.]
The Proposed Combination envisages the Acquirer subscribing to equity shares of the Target, amounting to 2.63% of the issued and paid-up share capital of the Target, on a fully diluted basis, with limited reserved matter rights and information rights.
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 6th November 2023, certain information and clarifications were sought from the Acquirer. The response to this letter was submitted by the Acquirer on 13th November 2023.
The Acquirer, an indirect wholly-owned subsidiary of Temasek Holdings (Private) Limited (Temasek/Acquirer Group), acts as an investment holding company and does not have any business operations other than holding investments. The Acquirer Group is an investment company based in Singapore, whose portfolio spans a broad spectrum of industries: transportation and industrials, financial services, telecommunications, media and technology, consumer and real estate, life sciences and agri-food, multi-sector funds as well as others (including credit).
It is submitted that certain affiliates of the Acquirer Group, i.e., PB Fintech Limited (PB Fintech), Sumitomo Mitsui Financial Group India Credit Company Limited (SMCC) and Lendingkart Finance Limited (Lendingkart), are engaged in the distribution of insurance products. Further, the subsidiary of Standard Chartered Plc., an affiliate of Acquirer Group, namely Standard Chartered Bank is also engaged in the distribution of insurance products.
Further, another set of Acquirer Group's affiliates: (i) Manipal Health Enterprises Private Limited (Manipal Health), (ii) Kids Clinic India Limited (Cloudnine), (iii) Global Health Limited (Medanta), and (iv) Dr. Agarwal's Eye Hospital Limited (Dr. Agarwal's Eye Hospital) are engaged in market for provision of healthcare services.
Niva Bupa, a joint venture between Fettle Tone LLP and Bupa Singapore Holdings Pte. Limited, is licensed to sell health, personal accident, and travel insurance to persons resident in India and NRI customers. Niva Bupa has earlier obtained regulatory approval from the Insurance Regulatory Development Authority of India (IRDAI) to undertake health insurance business, under the relevant provisions of the Insurance Act, 1938. [Hereinafter, Acquirer, Acquirer Group and Target are collectively referred to as Parties.]
Competition Assessment
With respect to the presence of the Parties, the Commission observed that while the Target/Niva Bupa engaged in the provision of health insurance products in India, which can be further sub-segmented into travel insurance and other health insurance products in India; the Acquirer Group is present in the market for distribution of insurance products (including the sub-segment of health insurance products) in India, through some of its affiliates [namely, PB Fintech, SMCC, Lendingkart and Standard Chartered Plc. (through its subsidiary Standard Chartered Bank)], leading to existing/potential vertical linkages between the parties. The Target is present in the upstream market for provision of health insurance products in India, and the Acquirer Group is engaged in the downstream market for distribution of insurance products in India.
The Commission assessed the Proposed Combination considering plausible relevant markets and decided to leave the delineation of the relevant market open as the Proposed Combination, for the reasons detailed in ensuing paragraphs, is not likely to cause an appreciable adverse effect on competition in any of the plausible alternative relevant markets that could be delineated.
Based on the submissions of the Parties, the Commission noted that the market shares of Niva Bupa in the market for provision of health insurance products in India and each of such affiliate of the Acquirer Group in the market for distribution of insurance products in India were in the range of 0-5% in FY 2022-23. There are several other well-established players in the health insurance market e.g., New India Assurance, Star Health & Allied Insurance, Oriental Insurance etc. Even the segments of the health insurance market are characterised by several other competitors. Further, the insurance distribution market is also competitive and fragmented, characterised by the presence of several players, including over 576 corporate agents and 562 insurance brokers among other intermediaries, which are engaged in distribution of insurance products. Therefore, neither Niva Bupa nor the enterprises affiliated to the Acquirer Group, have the ability or incentive to cause any foreclosure in their respective markets.
[Image omitted. See the official document.]
In addition to the above, certain affiliates of the Acquirer Group, i.e., Manipal Health, Cloudnine, Medanta, Dr. Agarwal's Eye Hospital operate hospitals in India, which offer a variety of treatments and specialities. Per contra, health insurers (such as the Target) enter into agreements with healthcare service providers, which, in turn, provide cashless services to the policyholders of such insurer. The Acquirer has submitted that the provision of healthcare services and provision of health insurance products should not be considered as complementary given that they are not combined and used together. Therefore, the Acquirer has deemed this interlinkage to be an ancillary interface.
However, as per Section 2(6C) of the Insurance Act, 1938, health insurance business is defined as the "effecting of contracts which provide for sickness benefits or medical, surgical or hospital expense benefits, whether in-patient or out-patient travel cover and personal accident cover". Further, as per Regulation 11 of Insurance Regulatory and Development Authority of India (Health Insurance) Regulations, 2016, health insurance products are offered for treatment in hospitals, subject to certain terms.
While the presence of a health insurance policy is a not an absolute prerequisite for being treated at a hospital, it ensures that individuals who may not necessarily be able to afford such health care services, have equal access to them. At the same time, linkages between health insurance providers and hospitals ensure increased patient footfall as well as revenue generation for hospitals. Thus, the interlinkage between Temasek's affiliates and Niva Bupa has been considered as a complementary overlap for assessment purposes, with regard to present filing, as health insurance schemes of the Target are combined with the healthcare services of Temasek's affiliates by the end consumer, to make the service more cost effective.
[Image omitted. See the official document.]
The Acquirer has submitted that out of the total 69,000 hospitals operating in India, Niva Bupa offered cashless claims settlement at 10,000+ hospitals across India, of which less than 5% are operated by the Temasek Portfolio Companies. Further, less than 5% of the overall claims paid / settled by the Target in FY 2022-23 were in favour of each of the relevant Temasek Portfolio Companies.” Further, the combined market share of the Acquirer Group's affiliates in the market for provision of healthcare services are in the range of 0-5% in FY 2022-23. Therefore, neither Niva Bupa nor Acquirer Group's affiliates operating in the market for provision of healthcare services seems to have the ability or incentive to cause any foreclosure in their respective markets.
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.
The 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.
