CCI approves the amalgamation of GlaxoSmithKline Consumer Healthcare Limited and Hindustan Unilever Limited

On January 23, 2019, CCI approved the amalgamation of GlaxoSmithKline Healthcare Limited (‘GSKCH’) and Hindustan Unilever Limited (‘HUL’, collectively with GSK referred to as ‘Parties’) (‘Proposed Combination’). The Proposed Combination was notified to CCI, (i) pursuant to a resolution passed by the board of directors of GSKCH and HUL, each on December 03, 2018, and (ii) execution of merger co-operation agreement among inter alia, HUL, Unilever Plc, GSKCH, GlaxoSmithKline (‘GSK’) Pte. Limited, Horlicks Limited and GlaxoSmithKline plc on December 03, 2018 (‘Merger Agreement’). Pursuant the Proposed Combination, HUL would also enter into a non-exclusive consignment selling agency arrangement with various GSK group entities in relation to marketing and selling of certain over-the-counter medicinal (‘OTC’) products and oral healthcare (‘OH’) products in India, Bhutan and Nepal for a period of five years. (‘CSA Products’). [1] HUL belongs to the Unilever group which is globally present in home-care, beauty and personal care and foods and refreshments product segments. In India, HUL is primarily involved in the business of manufacture and sale of: (i) home care products; (ii) personal care products; (iii) food products; and (iv) refreshments.

GSKCH belongs to the GSK group which is globally present in prescription medicines, vaccines, consumer healthcare products etc. In India, GSKCH is engaged in inter alia, manufacture and sale of: (i) malt based and protein based health food drinks; (ii) food products; (ii) nutrition drinks (ready to drink). Additionally, GSKCH is also the consignment selling agent for other GSK group entities (including for OTC and OH products).

Based on the business activities of the Parties, CCI identified overlaps between the Parties in two categories, namely, (i) instant noodles; and (ii) breakfast cereals (potential overlap). However, given that the Proposed Combination would not have led to any AAEC in any of the alternative relevant markets, CCI did not conclusively define the relevant market(s). As per CCI, the Parties did not have a significant presence in the instant noodles segment, which is marked by the presence of numerous significant enterprises. With respect to the breakfast cereals segment, CCI noted that HUL did not have a significant presence in such a segment. Accordingly, CCI concluded that the Proposed Combination would not lead to any AAEC in any market in India.

Additionally, CCI also analysed CSA Products and products sold by HUL for overlaps and identified OH as an overlapping product market. However, as per CCI, the combined market share of the Parties of 20% (with a minimal increment of zero to five percent), coupled with numerous significant competitors (e.g., Colgate, Dabur etc.) would prevent the Proposed Combination from causing any AAEC in this segment. Accordingly, CCI approved the Proposed Combination under Section 31(1) of the Act.

[1] Combination Registration No. C-2018/12/625