1. Home
  2. Business
  3. CCI tightens scrutiny; puts Holcim-Lafarge under

CCI tightens scrutiny; puts Holcim-Lafarge under public lens

New Delhi: Exercising its rarely-used powers for the second time in less than three months, fair trade watchdog CCI has put another mega merger deal -- between Holcim and Lafarge -- under public scrutiny after
PTI November 23, 2014 11:39 IST
PTI

New Delhi: Exercising its rarely-used powers for the second time in less than three months, fair trade watchdog CCI has put another mega merger deal -- between Holcim and Lafarge -- under public scrutiny after prima facie finding it could hurt competition in Indian cement market.

This is the second deal, after the proposed $4 billion Sun Pharma-Ranbaxy transaction, wherein the regulator is seeking comments from the public to assess fair competition concerns before taking the final call.

The Competition Commission of India (CCI) decision to put deals under public scrutiny also comes at a time when it is boosting efforts to curb unfair business practices and ensure a level playing field for entities across sectors.

CCI has given 15 working days time starting from November 22 for public comments on Holcim-Lafarge deal. The regulator has formed a prima facie opinion that the combination is likely to have an appreciable adverse effect on competition.
 
In India, Swiss major Holcim operates through its two subsidiaries ACC Ltd and Ambuja Cements Ltd, while French entity Lafarge is active through its two entities, Lafarge India Pvt Ltd and Lafarge Aggregates & Concrete India Pvt Ltd.

As per the public notice given by the two companies, the country's cement market is "characterised by excess capacity, which hinders and will continue to hinder the ability of the combined entity to sustain ably increase prices".

According to the notice, the combined entity would continue to face aggressive competition from existing players such as UltraTech, Shree Cement and Jaypee on a pan-India level.

"Additionally, the combined entity will face competition from number of other players who are more active on a regional basis, such as Reliance (ADAG), Dalmia, Century Cement etc.

"With most of these players (UltraTech, Shree Cement, Dalmia etc) expanding through greenfield and brownfield expansions which will ensure that the relevant markets continue to witness effective competition," it added.

This robust competition is also reflected in the high advertising spending by companies which ensures a well informed set of consumers capable of freely exercising their choice, the notice said.

"The Holcim-Lafarge proposal is in works and is in progress. I think we will still take sometime on that. It is not likely to get concluded before another one-and-a-half to two months," CCI Chairman Ashok Chawla had said this Friday.

Holcim and Lafarge had approached the Commission for approval on July 14.

Meanwhile, the Commission is expected to finalise its decision on the USD 4 billion Sun Pharma-Ranbaxy deal by end of this month.

This big ticket deal is the first M&A transaction to have gone through public scrutiny amid concerns of adverse impact on fair competition in the market.