CCI Approves Comfort Investments’ Acquisition of Nxtra Data

On August 26, 2020, the CCI approved Comfort Investment II’s (‘CI-II’) acquisition of Nxtra Data Limited (‘Nxtra’), pursuant to an investment agreement. [1]

CI-II is an investment company owned and controlled by investment funds advised by affiliates of the Carlyle Group Inc. CI-II is specifically created for the purposes of this combination. Carlyle Group is a global alternative asset manager, which manages funds that invest globally on: (i) corporate private equity; (ii) real assets (real estate, infrastructure and energy and renewable resources); (iii) global credit; and (iv) solutions (private equity fund of funds program and related co-investment and secondary activities).

Nxtra was a wholly owned subsidiary of Bharti Airtel Limited prior to the combination. Nxtra inter alia, provides services such as data center colocation, IT Hardware supply, installation and support.

The CCI observed that there are no horizontal overlaps between CI-II or any of the entities controlled by Carlyle Group and Nxtra. With respect to vertical relationships, the CCI observed that two entities controlled by Carlyle Group namely, Veritas Technologies India Private Limited (‘Veritas’) and Syniverse Technology Services India Private Limited (‘Syniverse’) employ services provided by Nxtra.

Veritas is engaged in developing, manufacturing and selling storage software products. It offers solutions for backup and recovery, disaster recovery, storage management, business continuity, archiving and eDiscovery. Syniverse provides mobile transaction products and services such as wireless number portability, data clearing, messaging, signalling and roaming services to mobile network operators to facilitate carrier interconnection and interoperability globally. Nxtra at the upstream level provides data center colocation services to Veritas and Syniverse.

In its competition assessment, the CCI assessed the “market for provision of data center colocation services in India” as the upstream segment and Veritas’ presence in the “market for provision of back-up & recovery Software in India” (‘Downstream Segment – 1’) and Syniverse’s presence in the “market for provision of mobile network services and solutions in India” (‘Downstream Segment – 2’) as the downstream segments. The CCI observed that Nxtra’s market share in the upstream segment is 20 – 25%. However, other players such as STT GDC, NTT, Sify and CtrlS would continue to pose competitive constraints to Nxtra. Further, the CCI observed that Veritas’ market share in the Downstream Segment – 1 is 10 – 15%, and that Veritas would face competitive constraints from other players such as DELL, IBM, Commvault and Veeam. With respect to Syniverse, the CCI observed that it has a market share of 15-20% in Downstream Segment – 2, and that it would face competitive constraints from other players such as iConnective, SAP, Ericsson, Tata, FT, BICS, GMS, Mobilium, etc.

In light of the above, the CCI was of the opinion that the combination was not likely to have any AAEC and accordingly, approved the combination.

 

[1] Combination Registration No. C-2020/07/755

Published In:Inter Alia Special Edititon - Competition Law - November 2020 [ English
Date: November 13, 2020