On August 22, 2023, the CCI imposed a penalty of INR 40,00,000 (approx. US$ 48,000) on NTPC Limited (‘NTPC’) in relation to its acquisition of 35.47% of the equity share capital in Ratnagiri Gas & Power Private Limited (‘RGPPL’). 
Background and Transaction
NTPC is a central public sector enterprise which was incorporated in 1975 with an aim to accelerate power development in India. Currently, the Government of India owns 51.1% equity stake in NTPC. In compliance with the directives of the Government of India, RGPPL was incorporated with capital contributions from NTPC, GAIL (India) Limited (‘GAIL’) and institutional investors. NTPC was a shareholder (of 25.51%) in RGPPL.
NTPC consummated its acquisition of 35.47% of the equity share capital of RGPPL without notification to the CCI. The CCI issued a letter seeking information to determine whether further proceeding is required under Section 20(1) and/or Section 43A of the Competition Act. As a part of its submissions, NTPC also disclosed details of three other transactions involving RGPPL, Konkan LNG Limited, and GAIL.
Proceedings Under Section 43A
Considering that the transaction increased NTPC’s shareholding in RGPPL to 60.98%, the transaction was not eligible to benefit from Item 1A of Schedule I of Combination Regulations. Thus, the CCI was of the prima facie opinion that the transaction in question was a notifiable transaction. Accordingly, the CCI issued a show cause notice to the parties on October 27, 2022, for failure to notify the transaction.
Submissions by NTPC: NTPC submitted that the acquisition of an additional 35.47% stake in RGPPL was as a part of the resolution plan for settlement of outstanding debt of RGPPL (on account of stoppage of operations and deteriorating financial conditions). It was contended that the final goal of the said transaction was not to acquire equity shares or control, but to settle RGPPL’s debt. This argument was furthered buttressed with the submission that NTPC did not acquire any additional rights and enjoys joint control in RGPPL along with GAIL and Maharashtra State Electricity Distribution Company Limited even on consummation of the transaction. Therefore, ‘in substance’, there has been no change in control in RGPPL and no harm has been caused to the competition.
Lastly, NTPC sought to take benefit of the exemption in the Government of India Notification dated November 22, 2017 (‘O&G Exemption’) as NTPC, GAIL, and RGPPL operated in the gas sector.
In arguendo, NTPC also submitted certain mitigating factors for the CCI to consider if they found NTPC to have contravened the Competition Act :(i) voluntary disclosure of consummation of three different transactions; (ii) full and complete disclosure of the acquisition of RGPPL in the form to notify NTPC’s acquisition of Jhabua Power Limited; (iii) the purpose of the transaction being to revive a national asset; (iv) no effective “control” and no transfer of control from joint control to sole control; (v) the transaction does not result in appreciable adverse effect on competition ; (vi) there are no previous violations of the Competition Act by NTPC; and (vii) NTPC has cooperated to its fullest extent with the CCI.
NTPC further argued that no notification was required as approximately two years have elapsed since the consummation of the transaction, the CCI would need to analyse the constantly evolving and dynamic power sector from an outdated perspective, the CCI has already approved transactions in the power sector including the one filed by NTPC and such cumbersome form filing will be against the ease of doing business initiative of the central government.
CCI’s Findings: The CCI noted that combinations are mandatorily notifiable unless they are exempted by a notification of the Government of India or fall under Schedule 1 of Combination Regulations. In the instant case, the government of India did not issue any exemption notification in relation to this transaction. Further, post the combination, NTPC’s shareholding in RGPPL increased from 25.51% to 60.98%. Therefore, the transaction in question would not be eligible for any benefit under Item 1A of Schedule I of Combination Regulations. The CCI further clarified that irrespective of the fact that no additional control conferring rights were acquired or despite the transaction not changing control from joint to sole control or even if the transaction did not result in AAEC in India, the transaction ought to have been notified to the CCI.
Accordingly, the CCI held that by failure to notify the transaction before its consummation has resulted in violation of provisions of Section 6(2) read with Section 6(2A) of the Competition Act and therefore, is liable to a penalty under Section 43A of the Competition Act.
Finally, the CCI after considering mitigating factors submitted by NTPC, imposed a penalty of INR 40,00,000 (approx. US$ 48,000) on NTPC.
 Section 20(1) provides the CCI with the power to inquire into a combination either on its own motion or on the basis of a notice under Section 6(2) of the Competition Act, provided that the CCI shall not initiate any inquiry under this subsection after the expiry of one year from the date on which such combination has taken effect.
 In a case where the acquirer already has more than 25% shares in the target prior to acquisition, Item 1 exempts the transaction from notification if the shareholding does not exceed 50% after the transaction.
 As per the notification, all combinations involving the Central Public Sector Enterprises operating in the Oil and Gas Sectors as well as their subsidiaries in the oil and gas sectors were exempt from notification for a period of five years from the date of publication of the notification.