CCI approves the acquisition of Tata CMB by Airtel*

On November 16, 2017, CCI approved the acquisition of 100% of the consumer mobile business of Tata Teleservices Limited (‘TTSL’) and Tata Teleservices (Maharashtra) Limited (‘TTML’) (‘Tata CMB’) by Bharti Airtel Limited (‘Airtel’) (Tata CMB together with Airtel referred to as the ‘Parties’) (‘Proposed Combination’).

Airtel, a part of Bharti Enterprises group (‘Bharti Group’), is a publicly traded global telecommunications corporation while TTSL, a part of the Tata Group, is a telecom service provider in a number of telecom circles in India. TTML is an associate company of TTSL and provides telecom service in Maharashtra.

CCI opined that the concerned relevant product market of retail mobile telephony services can be classified on the basis of various criteria such as type of service and customer, but in view of the Proposed Combination not likely to result in appreciable adverse effect on competition, it left the exact determination of the relevant product market open. CCI held the geographical market to be the 19 telecom circles where the activities of the Parties overlapped.

In its competition assessment, CCI was concerned that the telecom market is highly concentrated with high Herfindahl-Hirschman Index (‘HHI’) figures and that the change in HHI post the Proposed Combination would also be significant in many of the overlapping circles. How- ever, in view of the limited product offering of Tata CMB, negligible diversion ratio from Airtel to Tata CMB, and the steady decline in the market share of Tata CMB, CCI observed that Tata CMB neither seems to be a close nor an effective competitor to Airtel going forward. It further noted that spectrum holding is fairly distributed among the Telecom Service Provider (‘TSPs’) in the overlapping circles and there is a significant quantity of unsold spectrum in each telecom circle which would likely obviate any access issues. CCI also took into account the significant constraint exerted from the buyer side by virtue of multi-SIMing, ease of substitution due to the option of mobile number portability, and significant churn rates, and that there would be five TSPs in all the telecom circles post the Proposed Combination. Having regard to the fact that the competitors were in a position to exercise adequate competitive constraints on the Parties, CCI held the Proposed Combination not likely to raise any substantial competition concerns, and therefore, approved it under Section 31(1) of the Act.

* Combination Registration No. C-2017/10/531.

Published In:Inter Alia - Special Edition Competition Law January 2018 [ English
Date: January 10, 2018