The Indian Merger Control Regime is Suspensory in Nature - Law Assignment Help

Assignment Task

Part A [800 words]

Question 1. At what point in a transaction are parties’ obligations to notify the CCI of the merger or acquisition triggered? What is meant by the statement that ‘the Indian merger control regime is suspensory in nature’? Why is it important to have a suspensory merger control framework?

Part B

Read the facts stated below and based on the facts provided answer ALL the questions that follow.

Best Dairy is India’s second largest online retailer of dairy products such as milk, paneer, cheese, yoghurt etc. with a market share of 35% and assets of INR 400 crores. In addition to selling products of local farmers, it also sells its own brand of milk and cheese on its website – bestdairy.com. Farm House is the biggest retailer of dairy products in India with a market share of 45%. While Best Dairy and Farm House are niche dairy retailers, online sellers of grocery products like Big Bucket also sell dairy products. Big Bucket has a market share of 7% in the market for dairy products. Other large online grocery sellers such as Amazing and Crofers also sell dairy products and have a market share of 3-4?ch in the sale of dairy products.

Big Bucket has announced that it is acquiring Best Dairy. Big Bucket is one of the largest grocery retailers in India with assets of more than INR 2000 crores and a pan India presence. It sells all grocery products from dairy to staples to vegetables and poultry. Big Bucket has a presence in different segments of the grocery market, similar to Amazing and Crofers. Big Bucket has a market share of approximately 25% in the overall grocery segment. Amazing leads this segment with a market share of 30% and Crofers has a market share of 20%.

Big Bucket has announced that the aim of the acquisition is to strengthen its grocery delivery business by giving it access to Best Dairy’s excellent distribution network for door step delivery of dairy products. Further, it will help to reduce costs of sourcing and distributing dairy products through economies of scale. However, the Competition Commission of India (CCI) is concerned that the acquisition will create two large entities with a similar size and position in the market – Farm House and Big Bucket and that it will incentivise these two entities to coordinate and collude rather than compete with each other in the market, for instance, by pressurising local farmers to sell it milk and dairy at lower prices. In addition, the CCI is concerned that the acquisition will give Big Bucket the incentive to unfairly give preference to Best Dairy’s own brand of milk and cheese products in the search results page and thereby foreclose the market to other producers of milk and cheese.

In order to alleviate the concerns that the acquisition will have an Appreciable Adverse Effect on Competition (AAEC), Big Bucket offers to sell Best Dairy’s own brand of milk and cheese products to a buyer approved by the CCI or to enter into contracts with local farmers for the supply of milk and dairy products on terms agreeable to the CCI to prevent concerns of collusion.

Given this fact situation, please answer the following questions:

I. Would you classify Big Bucket’s acquisition of Best Dairy as horizontal, vertical or conglomerate? What is the nature of overlap between the business of these entities? Give reasons for your answer. [100 words]

II. Should the acquisition be notified to the CCI? If so, why, and will it require a Form I or a Form II filing? Explain by detailing why the transaction may or may not qualify for an exemption from notification requirements. [800 words]

III. Are the remedies offered by Big Bucket behavioural or structural in nature? Describe what are behavioural remedies and structural remedies. Evaluate whether either or both of the remedies offered by Big Bucket are suitable to alleviate the CCI’s concerns of an AAEC arising from the acquisition. [600 words]

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