CCI observed that the retail market in India, comprising of the organised as well as the unorganised sector, was highly fragmented. While the unorganised sector constituted approximately 92% of the overall retail market, the organised sector constituted only 8% of the overall retail market at present. In this context, CCI held that THL, which currently operates through its 16 retail stores at various locations, had an insignificant market share in the retail market in India, both the organised retail market as well as the larger overall market for retail.

 
CCI further observed that TOIL was not present in the retail market in India, and that there were no horizontal overlaps between the business activities of THL and TOIL. Accordingly, CCI approved the proposed combination on the basis that it was not likely to have any Adverse Effect in India.

 
However, in a separate order dated May 27, 2014, CCI imposed a penalty of INR 30m on TOIL, for having filed the notification beyond the mandated time limit of 30 days, under the provisions of Section 43A of the Act.

 
CCI held that the parties’ application to the Foreign Investment Promotion Board (‘FIPB’) and the Department of Industrial Policy and Promotion (‘DIPP’), amounted to a communication to a statutory authority the intention to acquire, within the meaning of the deeming provision in the second proviso to Regulation 5(8) of the Combination Regulations. Hence, CCI held that the notification should have been filed within 30 days of such application to FIPB and DIPP.

 
TOIL contended that at the stage of application to the FIPB and DIPP, it had not executed the definitive agreement(s), and that filing the notification at such as stage would have rendered the notification incomplete. However, CCI held that in light of the application made to FIPB and DIPP as well as the board resolution passed by the board of directors of THL, it was apparent that TOIL had formed an intention of acquiring shares in THL prior to making the application before the FIPB and DIPP, and that both the parties were aware of the type, nature and purpose of the proposed combination at the time of making the said application.

 
Accordingly, CCI held that the notification should have been filed within 30 days of such application to the FIPB and DIPP and concluded than the belated notification contravened the provisions of Section 6(2) of the Act. However, taking into account that the notification had been made voluntarily by TOIL, CCI imposed a nominal penalty of INR 30m on TOIL.

For further information, please contact:

Zia Mody, AZB & Partners
[email protected]

Abhijit Joshi, AZB & Partners 
[email protected]

Shuva Mandal, AZB & Partners 
[email protected]

Samir Gandhi, AZB & Partners
[email protected]

Percy Billimoria, AZB & Partners 
[email protected]

Aditya Bhat, AZB & Partners 
[email protected]