Jurisdiction - India
India – CCI Fines Temasek For Delay In Filing Pre-Merger Notification.

23 September, 2013



On August 1, 2013, CCI passed an order against Temasek Holdings Private Ltd (‘Temasek’)and its subsidiaries Zulia Investments (‘Zulia’) and Kinder Investments (‘Kinder’), imposing a penalty of INR$ 5 million (approximately US$74,000) for delayed filing of the pre-merger notifications required under Section 6(2) of the Act. On June 6, 2013, Zulia and Kinder, both indirect wholly owned subsidiaries of Temasek, filed a notice under Section 6(2) of the Act (Zulia, Kinder and Temasek are together referred to as the ‘Acquirers’). The proposed transaction pertained to an acquisition of 439 million new ordinary shares in DBS Group Holdings Limited (‘DBSH’).

This proposed acquisition was pursuant to a Share Purchase Agreement (‘SPA’) executed between Fullerton Financial Holdings (Private) Ltd. (‘Fullerton’) (an indirect wholly owned subsidiary of Temasek) and DBSH, on April 2, 2012, whereby Fullerton agreed to sell, and DBSH agreed to purchase, 100% of the issued share capital in Fullerton’s direct wholly owned subsidiary, Asia Financial (Indonesia) Private Limited. The terms of the SPA also required DBSH to issue 439 million shares in DBSH to Fullerton or Temasek or any other wholly owned subsidiaries of Temasek. Accordingly, on May 13, 2013, an Undertaking Agreement was executed between Zulia, Kinder and Fullerton under which Zulia and Kinder were both to receive certain numbers of ordinary shares of DBSH. On the same date, Fullerton also issued a letter to DBSH, directing them to release the aforementioned shares to Zulia and Kinder, respectively, on the date of completion of the SPA.

The Acquirers, while filing the notice under Section 6(2) on June 6, 2013, also filed an application for condonation of delay of 399 days. While CCI admitted the delayed filing under Regulation 7 of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011, as amended up to April 4, 2013 (‘Combination Regulations’), it also decided to initiate separate penalty proceedings under Section 43A of the Act and Regulation 48 of the CCI (General) Regulations, 2009, for the delay in filing.

The Acquirers’ reason for the delay was the receipt of incorrect advice from their initial Indian counsel regarding the notification requirement. The Acquirers claimed to have learnt of the filing requirement only during the course of advice received later on an unrelated and separate matter. Upon learning the same, they immediately and voluntarily filed the notice. 


The Acquirers also submitted that the transaction had been abandoned and the SPA terminated. In such a case of non-consummation of the impugned transaction, they argued that no penalties ought to be imposed. Further, the transaction was entirely offshore in nature. Finally, they reiterated that they had not acted in any mala fide manner and that, if any penalty were to be imposed on them, it should be a symbolic, minimal penalty.

In deciding about the penalty under Section 43A of the Act, CCI made these observations– the Acquirers’ plea of ignorance of filing requirements because of wrong legal advice given by counsel does not hold, as there is ample clarity in the provisions; (ii) the Acquirers’ plea – that when a combination is abandoned (as in this case), the very purpose and basis of the Commission’s inquiry is extinguished and an assessment of the likely competition concerns arising in such a case becomes a moot point – does not hold. According to CCI, regulatory compliance in terms of timely filing of the notice of the proposed combination and the ultimate fate of the transaction are two entirely different issues.

CCI considered the following aggravating factors when deciding the quantum of penalty: (i) no record of any mention of regulatory compliance with Indian competition laws before the execution of the SPA and no record of communication between the Acquirers and their counsel on Indian competition law compliance even after the execution of the SPA, (ii) no sense of urgency shown by the Acquirers, and there was a delay of 5 months even after being informed of the requirement to notify, (iii) both Temasek and DBSH have been operating in India for a long time and cannot plead ignorance, and (iv) there was a failure to notify an earlier transaction by Temasek (the acquisition of certain non-voting preference shares in DBSH by a wholly owned subsidiary of Temasek).Among the mitigating factors, CCI considered: (i) the Acquirers voluntarily gave notice under Section 6(2) of the Act before the consummation of the transaction, and (ii) the proposed combination was an offshore transaction.

Based on the above, CCI considered it appropriate to impose a penalty of INR$ 5 million on the Acquirers, payable within 60 days of the order. CCI did, however, mention in its order that the maximum penalty that may be imposed under Section 43A of the Act would be 1% of the total combined assets of the Acquirers and DBSH, which would amount to INR$ 310,000 million (approximately US$4700 million) .




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]

Comments are closed.