On September 5, 2023, CCI approved the acquisition of 29.9% shareholding (‘Proposed Combination’) by Ignite Luxembourg Holdings S.à r.l (‘Ignite/Acquirer’) in RHI Magnesita N.V (‘RHI/Target’). The Proposed Combination leads to an indirect acquisition of RHI Magnesita India Limited (‘RHIM India’).
Parties to Combination
Ignite/Acquirer: Ignite is a newly formed company incorporated in Luxembourg and is owned by certain investment funds which are indirectly sponsored and controlled by Rhône Capital L.L.C. (‘Rhône Capital/ Rhone’), which is the ultimate parent company.
Target: The Target is a public company incorporated in Netherlands with a primary listing on the London Stock Exchange and Vienna Stock Exchange. The Target is the parent company of all the group entities belonging to the Target. Target has two subsidiaries in India viz. RHIM India and Magnesita Refractories Private Limited (‘Magnesita India’). RHI conducts its business through its subsidiary RHIM India. RHIM India offers refractory products and customised refractory services to steel, cement, metals, glass, environment and energy, foundry, and paper & pulp industries.
Relevant Markets and Overlaps
CCI left the exact definition of relevant market open as the Proposed Combination was not considered to cause any appreciable adverse effect on competition in India. The CCI in this regard noted that there are no horizontal overlaps between the activities of Acquirer (including Rhône Capital and its portfolio companies) and Target (including its affiliates). It was also submitted that RHI (including its affiliates) is not engaged in any activities on account of which it has an existing vertical relationship with the Acquirer/Rhône including its portfolio entities. However, certain vertical overlaps/interfaces between the activities of portfolio entities of Rhône and those of the RHI were submitted. Those overlaps were:
i. The Target is engaged in the supply of magnesite as a raw material in India at the upstream level whereas Rhône, through its portfolio entity ASK Chemicals GmbH (‘ASK Chemicals’) is engaged in the manufacture of sand additives and refractories coatings for the foundry industry in India at the downstream level;
ii. The Target is engaged in the manufacturing of non-basic unshaped refractory products and non-basic shaped refractory products in India at the upstream level whereas Rhône, through its portfolio entity Lummus Technology Holdings I LLC is engaged in manufacturing of fired process heaters (furnaces) in India at the downstream level; and
iii. Rhône, through its portfolio entity ASK Chemicals is engaged in the supply of phenolic resins for use in refractory products in India at the upstream level whereas the Target is engaged is the manufacturing of basic shaped unfired refractory products from magnesite, basic shaped unfired refractory products from dolomite and non-basic shaped refractories, at the downstream level.
The CCI based on the submissions observed that the market shares of the parties in all the above vertical interfaces is less than 10% except at the downstream level of basic shaped unfired refractory products from magnesite, wherein the market share of RHI is in the range of 20-25%. The upstream level of such vertical interface i.e., supply of phenolic resins for use in refractory products in India is characterised by competitors such as Forace group, Shree Chem, Kanoria, Promise, Fortis Chemicals etc. The CCI concluded that these vertical interfaces are not likely to cause any foreclosure concern and thus approved the Combination.
 Refractory materials are inorganic non-metallic materials that are able to withstand very high temperatures and corrosive and/or chemically aggressive environments without undergoing physical or chemical changes. They are employed, for instance, as heat buffers or linings in kilns, furnaces and ovens in the steel, cement, non-ferrous metals and glass industries.