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India – CCI Approves Merger Of Holcim Limited And Lafarge S.A.

27 May, 2015

 


On April 30, 2015, CCI conditionally approved the merger of Lafarge S.A. (‘Lafarge’) into Holcim Limited (‘Holcim’). The notice was filed pursuant to the execution of a combination agreement between Lafarge and Holcim.

CCI noted that Holcim is a global producer of cement and other construction material such as ready mix concrete (‘RMC’), aggregates, asphalt, and pre-cast concrete products. It also noted that in India, Holcim is active through two indirect subsidiaries – ACC Limited and Ambuja Cements Limited, in the RMC and aggregates product segments.

CCI further noted that Lafarge is a global producer of cement and other construction material such as RMC, aggregates, asphalt, and pre-cast concrete products. Lafarge was engaged in the RMC and aggregates segments in India through its indirect subsidiaries Lafarge India Private Limited and Lafarge Aggregates & Concrete India Private Limited.

CCI formed a prima facie opinion that the transaction was likely to result in an AAEC in the market for grey cement and RMC and issued a show cause notice to Lafarge and Holcim to explain why an investigation in the proposed transaction should not be conducted. Pursuant to the response to the show cause notice, the CCI concluded that the transaction was likely to result in an AAEC, and directed the parties to publish the details of the proposed transaction in Form IV.

CCI defined the relevant market in the proposed transaction as (i) the market for grey cement in north western India and eastern India (limited to Chattisgarh, Jharkhand, Bihar, Assam, West Bengal, Odisha, Madhya Pradesh, and eastern Uttar Pradesh); and (ii) the market for RMC in Hyderabad, Chennai, Mohali, Panchkula, Ludhiana, Raipur, Jaipur, National Capital Region, Sonepat, Ahmedabad, Vadodra, Surat, Bengaluru and Mumbai.

In the course of its assessment, CCI found that because of high post combination market shares, low countervailing buyer power, lack of competitive constraints, significant barriers to entry into the market, control over substantial installed capacity along with ability of the parties to charge high prices, and the fact that the cement market is oligopolistic in nature, that the proposed transaction was likely to result in an AAEC in the market for grey cement in eastern India. However, CCI found there was no risk of AAEC in the market of RMC.

To attenuate the possible AAEC as a result of the combination, CCI approved the combination on the condition that two Lafarge plants in Jharkhand and Chattisgarh will be divested to a suitable third party. The divestment process is still ongoing.

AZB    

    

For further information, please contact:

 

Zia Mody, AZB & Partners
zia.mody@azbpartners.com

 

Abhijit Joshi, AZB & Partners 
abhijit.joshi@azbpartners.com

Shuva Mandal, AZB & Partners 
shuva.mandal@azbpartners.com

 

Samir Gandhi, AZB & Partners
samir.gandhi@azbpartners.com

Percy Billimoria, AZB & Partners 
percy.billimoria@azbpartners.com

 

Aditya Bhat, AZB & Partners 
aditya.bhat@azbpartners.com

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