Infrastructure & Project Finance
Regulatory Framework on FDI in E-Commerce
Regulatory Framework on FDI in E-Commerce
With the stated aim of clarifying the foreign direct investment (‘FDI’) regime for e-commerce activities, the Department of Industrial Policy and Promotion (‘DIPP’) has issued Press Note No. 3 (2016 Series) on March 29, 2016 (‘Press Note’). Prior to the Press Note, the Consolidated Foreign Direct Investment Policy issued by DIPP (‘FDI Policy’) allowed 100% FDI under the automatic route (i.e. without requiring prior approval of the Government of India) in business to business (B2B) e-commerce activities, but did not permit FDI in multi-brand retail trade activity through online e-commerce. In such a regulatory landscape, the ‘marketplace’ model became popular; under the marketplace model, the marketplace entity provided a technology platform to connect buyers and sellers and did not itself undertake any trading activity. Such entities received FDI without any prior approvals from the Government of India. The regulatory framework for e-commerce has now been altered by the Press Note in the manner discussed below.
- Salient Features
i. FDI up to 100% under the automatic route is now permitted in the ‘marketplace’ model (definition discussed below in paragraph (iv) of the section on New Definitions), subject to certain conditions, including those described below.
ii. FDI is not permitted in the ‘inventory-based’ model (definition discussed below in paragraph (iii) of the section on New Definitions).
iii. Subject to the conditions in the FDI Policy applicable to the services sector and applicable laws / regulations, security and other conditionalities, FDI up to 100% is also permitted, under the automatic route, in entities engaged in the sale of services through e-commerce.
iv. Other noteworthy aspects of the new framework for e-commerce include:
a. the inclusion of goods coupled with services within the purview of e-commerce;
b. the clarification that marketplace entities are permitted to provide ancillary services such as delivery, logistics etc.;
c. marketplace entities not being permitted to have sales of more than 25% from one seller / vendor; and
d. marketplace entities being restricted from directly or indirectly influencing the sale price of goods/ services and being required to maintain a level playing field.
- New Definitions
The Press Note has introduced the following new definitions:
i. E-commerce: E-commerce means “buying and selling of goods and services including digital products over digital & electronic network”.1 The definition of e-commerce includes buying and selling of goods and services (including digital products) within its purview. At the same time, paragraph 3.0 of the Press Note suggests that the services sector is outside the purview of the Press Note and continues to remain eligible for 100% FDI under the automatic route. The interplay of the definition of e-commerce read with paragraph 3.0 of the Press Note suggests that the Press Note may not apply to entities merely providing services including digital products, except where they are buying and selling both, goods and services.
ii. E-commerce Entity: An e-commerce entity has been defined to mean “a company incorporated under the Companies Act, 1956 or the Companies Act, 2013 or a foreign company covered under section 2(42) of the Companies Act, 2013 or an office, branch or agency in India as provided in section 2(v)(iii) of the Foreign Exchange Management Act, 1999, owned or controlled by a person resident outside India and conducting the e-commerce business.”
It is not clear why the Government felt the need to include, within the definition of e-commerce entity, a foreign company or a branch or agency in India, when the conditions in the Press Note are applicable only to FDI investment, which is a very specific route of investment in an Indian incorporated entity under the Foreign Exchange Management Act, 1999 and the rules and regulations notified thereunder ( ‘FEMA Regulations’).
An office or branch of a foreign company is merely a form of presence of the foreign company itself, the establishment and operation of which is separately regulated under FEMA Regulations. This kind of presence i.e. a foreign company or an office, branch or agency of a foreign company in India does not actually receive FDI, and therefore inclusion of these kinds of entities in the Press Note (which is intended to govern conditions for FDI in the e-commerce sector) is unclear. Also, given that the definition is restricted to companies and does not specifically include limited liability partnerships (‘LLP’), it is not clear if it is intended to exclude LLPs from the purview of the Press Note, implying that an LLP cannot conduct permissible e-commerce activities.
iii. Inventory Based Model of E-commerce: This model has been defined under the Press Note to mean “an e-commerce activity where inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly”. The Press Note does not permit FDI in entities that operate under an inventory based model of e-commerce.
iv. Marketplace Based Model of E-commerce: The Press Note defines this model as “providing of an information technology platform by an e-commerce entity on a digital & electronic network to act as a facilitator between buyer and seller.” This is the model that is popular in the market and which has been adopted by various aggregation platforms, more prominently for online hotel / room reservations, taxi booking services and online shopping.
- Relaxations Provided for the Marketplace Model
i. Marketplace entity allowed to provide support services to sellers in respect of warehousing, logistics, order fulfillment, call centre, payment collection and other services: This clarification is very welcome. Even before the Press Note was issued, a marketplace entity could have engaged in all these activities. However, the specific clarification included in the Press Note brings in more transparency in implementing the policy. The ability for e-commerce entities to provide these kinds of services could result in greater efficiencies as services ancillary to marketplace operations are commonly housed in different legal entities. We expect marketplace entities to be more optimistic about consolidating these functions within a single entity in light of this clarification.
ii. Express Recognition of Marketplace Model: There has been an increasing trend amongst investors to be a little more cautious about investing or increasing their investments in the Indian e-commerce space. While profitability has been a commercial issue and may continue to be an issue in the foreseeable future, there has also been some circumspection that has resulted from the absence of an express policy statement regarding FDI in the e-commerce sector, negative publicity around FDI in e-commerce and queries that have previously been raised by the regulators.
As the Government’s policy is now expressly stated, it will address concerns raised by various trade associations in their petitions before multiple judicial forums, where it is being argued that the marketplace model is not recognized under the FDI Policy and therefore not eligible for FDI. In our view, this argument was flawed since the FDI Policy cannot be expected to positively list every business model or opportunity that emerges in this fast moving technology rich environment. On the contrary, paragraph 6.2 of the FDI Policy specifically clarifies that FDI is allowed up to 100% under the automatic route in sectors and activities not listed in the FDI Policy. Hence, merely because the marketplace model was not expressly mentioned in the FDI Policy, did not imply that such activity was not eligible to receive FDI prior to the Press Note. If each of its ingredients were eligible for FDI investment, such sector/activity was always eligible to receive FDI.
- Restrictions on the Marketplace Model
i. Marketplace entity cannot exercise ownership over the inventory (goods purported to be sold), as ownership of the goods would result in an inventory based model: While it is clear that ownership of goods by a marketplace entity is not permitted under the Press Note, the scope of the term ‘exercise ownership’ used in paragraph 2.3(iv) of the Press Note is unclear.
ii. Not more than 25% of the sales from one vendor/ its group companies: This condition may affect the business model of certain e-commerce entities, where a significant percentage of sales are often made by one large reseller. Marketplace operators may now have to limit sales made by these resellers to ensure compliance with the Press Note. Such large resellers are therefore impacted despite the Press Note not being applicable to them. While the Press Note does not expressly clarify as to how and when the 25% limit on sales is to be computed, we expect that such compliance will be reviewed on an annual basis. Similar annual checks at the end of the financial year are prescribed in the FDI Policy on wholesale trading where the wholesale entity cannot sell more than 25% of its wholesale turnover to a group company.
iii. Post sales, delivery of goods and customer satisfaction to be seller’s responsibility: There seems to be an inconsistency between this obligation of the seller and the ability of the marketplace entity to provide ancillary support services. On the one hand, the Press Note permits a marketplace entity to provide logistics and ancillary services, while on the other it requires that following the sale, delivery of goods will be the seller’s responsibility. It is likely that the Press Note intended to clarify that the responsibility for all post-sale obligations is that of the seller, and not the marketplace entity. However, contractually, the seller should be free to provide such services in the manner it deems fit (including through an agreement with the marketplace entity, in which case the marketplace entity would be contractually liable to the seller for such services).
iv. Warranty/ guarantee of goods and services sold to be seller’s responsibility: This condition appears to stem from the requirement that goods/ services not be owned by the marketplace entity. This condition seems more in the nature of a clarification rather than a change in the legal position given that a marketplace entity would not usually provide any warranty / guarantee in respect of goods/ services; which warranties / guarantees are usually extended by the manufacturer / service provider.
v. Marketplace entity will not directly or indirectly influence the sale price of goods/ services and will maintain a level playing field: This condition is one of the key changes introduced by the Press Note and is likely to have a significant impact on marketplace entities and their business models. Popular marketplaces invest meaningfully to promote their platform to make it attractive for customers and sellers. Unlike brick and mortar stores which are able to promote their marketplace / shops in numerous ways that can be seen and felt by a customer, there are only a limited number of ways in which an online marketplace entity can promote its virtual presence. The broad language of the Press Note makes it even more difficult for a marketplace entity to promote its platform.
With regard to the obligation to maintain a ‘level playing field’, more than one interpretation may be possible. One school of thought is that this requirement is intended to apply to the sellers on the e-commerce platforms inter-se, such that the marketplace is not built around a single large / dominant seller, which seller is then accorded preferential treatment over other sellers by the marketplace entity. Another reading of this provision could be that the requirement is intended to apply to sellers on the e-commerce platforms vis-à-vis brick and mortar stores, such that brick and mortar stores are not unduly disadvantaged by e-commerce platforms through the actions of such e-commerce platforms, such as through offering discounts / incentives / promotional pricing on goods sold through such platforms. It is however difficult for a marketplace entity to ensure a level playing field with respect to brick and mortar stores, particularly given the inherent differences between the two mediums.
The Press Note is a step in the right direction by the Government and has introduced much needed and anticipated clarity on FDI in the e-commerce sector.
The conditionalities and restrictions imposed by the Press Note (which states that it shall take immediate effect) are prospective in nature and are not stated to apply to FDI already received by entities engaged in e-commerce activities. Any marketplace e-commerce entities which now intend to receive FDI would need to ensure that such FDI is received in compliance with all conditions of the Press Note. Likewise, any entities with existing FDI (received prior to the issuance of the Press Note) but which intend to receive additional FDI, would need to ensure that the conditions prescribed by the Press Note are complied with going forward. To this end, it may serve well for all existing e-commerce companies to revisit their business models and ensure that their business models are aligned to the Press Note as soon as possible.
The Dirty Dozen – first off the block
The Dirty Dozen – first off the block
Electrosteel Steels Limited was one of the twelve large stressed accounts directed by the Reserve Bank of India (‘RBI’) to be placed into the corporate insolvency resolution process of the Insolvency and Bankruptcy Code and has now become the first to be resolved under that process. The National Company Law Tribunal yesterday (i.e. April 17, 2018) approved the resolution plan submitted by Vedanta Limited. News reports suggest that the haircut taken by lenders is in the region of 55%. Vedanta awaits clearance from the Competition Commission of India before it can complete the acquisition. Many of the other ‘dirty-dozen’ are in the closing stages of their corporate insolvency resolution process and the next few weeks will see more resolutions and in some cases objections and litigation. The litigation in this space may settle some of the issues that lenders and acquirers fret about.
Amendments to FEMA 20
RBI has, by way of a series of notifications, amended the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 (‘FEMA 20’). The key amendments pursuant to these notifications have been summarized below.
i. Issuance of Convertible Notes by Startups: RBI notification dated January 10, 2017 (‘January Notification’) provides for the issuance of convertible notes by Indian startup companies (‘startups’). A ‘convertible note’ has been defined to mean “an instrument issued by a startup company evidencing receipt of money initially as debt, which is repayable at the option of the holder, or which is convertible into such number of equity shares of such startup company, within a period not exceeding five years from the date of issue of the convertible note, upon occurrence of specified events as per the other terms and conditions agreed to and indicated in the instrument”.
The newly introduced Regulation 6D of FEMA 20 sets out the relevant provisions, which provide that:
a. A person resident outside India (other than an individual who is a citizen of, or an entity registered / incorporated in, Pakistan or Bangladesh), may purchase convertible notes issued by startups for an amount of Rs. 2,500,000 (approximately US$ 39,000) or more in a single tranche;
b. Startups engaged in a sector where foreign investment requires Government approval may issue convertible notes to a non-resident only with Government approval;
c. Issue of shares against convertible notes will be as per Schedule 1 of FEMA 20;
d. Startups issuing convertible notes to a non-resident must receive the consideration by inward remittance through banking channels or by debit to the NRE / FCNR (B) / escrow account maintained as per the Foreign Exchange Management (Deposit) Regulations, 2016 and closed upon the earlier of the requirements having been completed or within a period of six months;
e. Non-resident Indians may acquire convertible notes on non-repatriation basis as per Schedule 4 of FEMA 20;
f. A person resident outside India may acquire or transfer, by way of sale, convertible notes, from or to, a person resident in or outside India, provided the transfer takes place in accordance with the pricing guidelines as prescribed by RBI; and
g. Startup issuing convertible notes are required to furnish reports as prescribed by RBI.
ii. Foreign Investment in Infrastructure Companies: The January Notification also amends conditions relating to foreign direct investment (‘FDI’) under Schedule 1 of FEMA 20 in commodity exchanges, which have been combined with those relating to infrastructure companies in the securities market (namely stock exchanges, commodity derivative exchanges, depositories and clearing corporations). The key revisions introduced by the January Notification are:
a. FDI, including by foreign portfolio investors (‘FPI’), in commodity exchanges will now be subject to guidelines prescribed by RBI in addition to those issued by the Central Government (‘GoI’) and SEBI;
b. FDI in other infrastructure companies in securities market will now be subject to guidelines by GoI and RBI, in addition to those issued by SEBI;
c. the earlier condition permitting FIIs / FPIs to invest in commodity exchanges or infrastructure companies only through the secondary market has been removed; and
d. the restriction on investment by a non-resident in commodity exchanges to a maximum of 5% of its equity shares has been removed.
The Consolidated Foreign Direct Investment Policy dated June 7, 2016 (‘FDI Policy’) has also been amended, by way Press Note 1 of 2017 dated February 20, 2017, to align it with the January Notification.
iii. FDI in LLPs: Pursuant to notification dated March 3, 2017, RBI has amended Regulation 5(9) and Schedule 9 of FEMA 20 to further liberalize FDI in Limited Liability Partnerships (‘LLPs’). Companies having FDI can now be converted into LLPs under the automatic route provided that the concerned company is engaged in a sector where: (a) 100% FDI is permitted under the automatic route; and (b) no FDI linked performance conditions exist. Previously, conversion of companies with foreign investment was only permitted under the approval route. The erstwhile ‘Other Conditions’ stipulated under Schedule 9 of FEMA 20 have been completely omitted resulting in the following key changes:
a. Previously, the designated partner of a LLP having FDI had to satisfy the condition of being “a person resident in India”. Also, a body corporate other than a company registered in India under CA 2013 was not permitted to be a designated partner of a LLP with FDI. These conditions have been removed. Consequently, a LLP having FDI will have to comply only with the provisions of the LLP Act, 2008 for appointment of designated partners;
b. Earlier, designated partners were responsible for compliance with FDI conditions for LLPs and liable for all penalties imposed on a LLP for any contraventions. This condition has now been deleted from Schedule 9 but no corresponding provision has been included in the revised Schedule 9; and
c. Express prohibition on LLPs availing External Commercial Borrowings (‘ECB’) has been removed. However, the extant ECB guidelines have not yet been amended to permit LLPs to avail ECBs. Therefore, LLPs will not be able to avail ECBs until the extant ECB guidelines are amended.
iv. FDI in E-commerce: The Department of Industrial Policy and Promotion had, by way of Press Note 3 of 2016 dated March 29, 2016 (‘Press Note 3’), prescribed that no FDI is permitted in an inventory based model of e-commerce and 100% FDI under the automatic route is permitted in the marketplace model of e-commerce subject to compliance with the guidelines prescribed thereunder. A summary of the key changes introduced through Press Note 3 have been captured in the April 2016 edition of Inter Alia. RBI has, by way of a notification dated March 9, 2017, amended FEMA 20 in line with the changes introduced through Press Note 3. However, RBI has introduced a minor change to Press Note 3 by clarifying that the threshold of 25% of sales emanating from one vendor or their group companies will be computed based on the sale value during the relevant financial year.
 Being a private company incorporated under CA 2013 and recognized as such as per Notification G.S.R. 180(E) dated February 17, 2016 issued by the Department of Industrial Policy and Promotion.
Amendment to SEBI (Real Estate Investment Trusts) Regulations, 2014 and SEBI (Infrastructure Investment Trusts) Regulations, 2014
Pursuant to the meeting of the SEBI board held on September 23, 2016, SEBI has amended the SEBI (Real Estate Investment Trusts) Regulations, 2014 and the SEBI (Infrastructure Investment Trusts) Regulations, 2014. Some of the key amendments include:
i. The minimum holding of the mandatory sponsor in the infrastructure investment trust (‘InvIT’) has been reduced from 25% to 15%;
ii. The existing limit of three sponsors has been removed from both regulations;
iii. The permissible investment limit for investment by real estate investment trusts (‘REIT’) in ‘under construction’ assets has been increased from 10% to 20%; and
iv. InvITs and REITs are allowed to invest in a two-level SPV holding structure, through a holding company.
Meeting of the SEBI Board
The SEBI Board met on September 23, 2016 and took the following decisions:
i. Currently, FPIs are required to transact in securities through stock brokers registered with SEBI, while domestic institutions such as banks, insurance companies, pension funds etc. are permitted to access the bond market directly (i.e. without brokers). SEBI has decided to extend this privilege to Category I and Category II FPIs.
ii. In order to facilitate the growth of Investment Trusts (“InvIT”) and Real Estate Investment Trusts (“REIT”), SEBI has decided to amend the SEBI (Infrastructure Investment Trusts) Regulations, 2014 and the SEBI (Real Estate Investment Trusts) Regulations, 2014 (“REIT Regulations”). The key amendments will include:
a. InvITs and REITs will be allowed to invest in the two level SPV structure through the holding company subject to sufficient shareholding in the holding company and other prescribed safeguards. The holding company would have to distribute 100% cash flows realised from the underlying SPVs and at least 90% of the remaining cash flows.
b. The minimum holding of the mandatory sponsor in the InvIT has been reduced to 15%.
c. REITs have been permitted to invest upto 20% in under construction assets.
d. The limit on the number of sponsors has been removed under the REIT Regulations.
iii. The SEBI Board has approved amendments to the SEBI (Portfolio Managers) Regulations, 1993, to provide a framework for the registration of fund managers for overseas funds, pursuant to the introduction of section 9A in the Income Tax, 1961.
iv. The SEBI Board has decided to grant permanent registration to the following categories of intermediaries: merchant bankers, bankers to an issue, registrar to an issue & share transfer, underwriters, credit rating agency, debenture trustee, depository participant, KYC registration agency, portfolio managers, investment advisers and research analysts.
v. The Securities Contracts (Regulation) (Stock Exchanges and Cleaning Corporations) Regulations, 2012 have been amended to increase the upper limit of shareholding of foreign institutional investors mentioned in the Indian stock exchanges from 5% to 15% and to allow an FPI to acquire shares of an unlisted stock exchange through transactions outside of recognised stock exchange including allotment.
Foreign Investment in Units Issued by REITs, InvITs and AIFs
Salient features of foreign investment permitted by RBI, pursuant to its circular dated April 21, 2016, in the units of investment vehicles for real estate and infrastructure registered with the SEBI or any other competent authority are as under:
i. A person resident outside India (including a Registered Foreign Portfolio Investor (‘RFPI’) and NRIs may invest in units of real estate investment trusts (‘REITs’);
ii. A person resident outside India who has acquired or purchased units in accordance with the regulations may sell or transfer in any manner or redeem the units as per regulations framed by SEBI or directions issued by RBI;
iii. An Alternative Investment Fund Category III with foreign investment can make portfolio investment in only those securities or instruments in which a RFPI is allowed to invest; and
iv. Foreign investment in units of REITs registered with SEBI will not be included in ‘real estate business’.
Guidelines for Public Issue of Units of Infrastructure Investment Trusts
SEBI has, on May 11, 2016, issued Guidelines for Public Issue of Units of Infrastructure Investment Trusts (‘Guidelines’), which amend the provisions of the SEBI (Infrastructure Investment Trusts) Regulation, 2014 (‘SEBI InvIT Regulations’).
The Guidelines set out the procedure to be followed by an infrastructure investment trust (‘InvIT’) in relation to a public issue of its units, which includes the appointment of a lead merchant banker and other intermediaries, procedure for filing of offer documents with SEBI and the stock exchanges, the process of bidding and allotment. Further, the allocation in a public issue is required to be in the following proportion: (i) not more than 75% to institutional investors; and (ii) not less than 25% to other investors; provided that the investment manager has the option to allocate 60% of the portion available for allocation to institutional investors and anchor investors (which includes strategic investors), subject to certain conditions. Further, the investment manager, on behalf of the InvIT is required to deposit and keep deposited with the stock exchange(s), an amount equal to 0.5% of the amount of the units offered for subscription to the public or Rs 5 crores (approximately US$ 7,45,000), whichever is lower. The price of units can be determined either: (i) by the investment manager in consultation with the lead merchant banker; or (ii) through the book building process. However, differential prices are not permitted.
Government Notifies the MMDR (Amendment) Act, 2016
The Central Government has notified the Mines and Minerals (Development and Regulation) Amendment Act, 2016 (‘2016 Amendment’) on May 9, 2016. By virtue of amendments to the Mines and Minerals (Development and Regulation) Act, 1957 (‘MMDR Act’) in 2015, transfer of only those mineral concessions granted by auction was allowed. By virtue of the 2016 Amendment, where a mining lease: (i) has been granted otherwise than through auction; and (ii) the mineral from such mining lease is being used for captive purpose, such mining lease can be transferred subject to compliance with such terms and conditions and payment of transfer charges as may be prescribed. The term ‘used for captive purpose’ has been defined under the 2016 Amendment to mean use of the entire quantity of mineral extracted from the mining lease in a manufacturing unit owned by the lessee.
Government Notifies the Minerals (Transfer of Mining Lease Granted Otherwise than Through Auction for Captive Purpose) Rules, 2016
Pursuant to the 2016 Amendment, the Central Government has notified the Minerals (Transfer of Mining Lease Granted Otherwise than through Auction for Captive Purpose) Rules, 2016 (‘ML Transfer Rules’) on May 30, 2016, which set out the procedure for transfer of mining leases granted otherwise than through auction and for captive purpose (‘ML’). The salient features of ML Transfer Rules are as below:
i. Deemed approval for transfer of ML, if the State Government does not reject the application within 90 days from the application;
ii. Transferee to make an upfront lumpsum payment of 0.5% of the value of estimated resources of the ML upon receipt of approval and execute the mine development and production agreement with the State Government;
iii. Transferee to provide performance security to the State Government for an amount equivalent to 0.5% of the value of estimated resources, to be adjusted every five years to correspond to 0.5% of the reassessed value of estimated resources;
iv. Transferor and transferee to jointly submit a duly registered transfer deed for ML to the State Government within the specified period; and
v. State Government to execute a mining lease deed with the transferee upon registration of the deed of transfer of ML.
The ML Transfer Rules also stipulate that whenever royalty is payable in terms of the second schedule to the MMDR Act, the transferee is to pay to the State Government an amount equal to 80% of the royalty, in addition to the royalty payable, simultaneously with payments of royalty, which will be adjusted against the upfront payment mentioned under (ii) above.
Participation by Strategic Investor(s) in InvITs and REITs
Pursuant to SEBI’s circular dated January 18, 2018 (‘SEBI Circular’), a Real Estate Investment Trust (‘REIT’) / Infrastructure Investment Trust (‘InvIT’) may invite subscriptions from strategic investors subject to inter alia the following:
i. The strategic investors can, either jointly or severally, invest not less than 5% and not more than 25% of the total offer size.
ii. The investment manager or manager is required to enter into a binding unit subscription agreement with the strategic investors proposing to invest in the public issue, which agreement cannot be terminated except if the issue fails to collect minimum subscription.
iii. The entire subscription price has to be deposited in a special escrow account prior to opening of the public issue.
iv. The price at which the strategic investors have agreed to buy units of the InvIT/ REIT should not be less than the public issue price. In case of a lower price, the strategic investors should bring in the additional amounts within two working days of the determination of the public issue price, and in case of a higher price, the excess amount will not be refunded and the strategic investors will be bound by the price agreed in the unit subscription agreement.
v. The draft offer document or offer document, as applicable, will disclose details of the unit subscription agreement, including the name of each strategic investor, the number of units proposed to be subscribed etc.
vi. Units subscribed by strategic investors, pursuant to the unit subscription agreement, will be locked-in for a period of 180 days from the date of listing in the public issue.
Standardisation of Environment Clearance Conditions by MOEF
The Ministry of Environment, Forest and Climate Change (‘MOEF’) had notified the Environmental Impact Assessment Notification, 2006 (‘EIA Notification’) imposing certain restrictions on proposed projects or on the expansion / modernization of existing projects based on their potential environmental impacts. Projects seeking environmental clearance are appraised by the relevant authorities pursuant to a screening, scoping, public consultation and appraisal process by relevant authorities, which then make categorical recommendations to the applicable regulatory authority for grant or rejection of the application for environmental clearance.
By way of an office memorandum dated August 9, 2018 (‘Office Memo’), the MoEF has now prescribed certain standard conditions for consideration by the Expert Appraisal Committee (’EAC’) in relation to 25 specified industrial sectors including, inter alia, integrated iron and steel plants, sponge iron plants, integrated cement plants, coal mines (both open cast and underground), pharmaceutical and chemical industries, off-shore and on-shore oil and gas exploration, development and production and industrial estates, at the time of appraisal of proposals seeking environment clearance. The EAC, after due diligence, can modify, delete and add conditions based on the project specific requirements. The Office Memo has been issued by the MOEF to bring uniformity across various projects and sectors and as a general guidance to the EAC as well as project proponents.
Amendments to Specific Relief Act, 1963
The Central Government has, by way of a notification dated August 1, 2018, introduced the Specific Relief (Amendment) Act, 2018 (‘Amendment Act’), which amends the Specific Relief Act, 1963 (‘1963 Act’). However, the date on which the provisions of the Amendment Act will come into effect has not yet been notified.
The 1963 Act provides for, inter alia, parties to a contract to seek specific performance when aggrieved by the non-performance of such contract. Some of the key amendments introduced by the Amendment Act have been set out below:
i. Specific performance: The 1963 Act provided that specific performance is a limited remedy, which may be granted by a Court, at its discretion, subject to certain conditions. The Amendment Act empowers the Court to grant specific performance as a general rule, subject to the certain exceptions. A brief comparison of the conditions, pre and post amendment of the 1963 Act, under which Courts would not grant specific performance are:
|A contract for the non-performance of which compensation is an adequate relief||This condition does not apply|
|A contract which runs into such minute or numerous details or which is so dependent on the volition of the parties or otherwise from its nature is such that the court cannot enforce specific performance of its material terms||These conditions do not apply|
|A contract which is so dependent on the personal qualification of the parties that the court cannot enforce specific performance of its material terms||This condition is still applicable|
|A contract which is in its nature determinable||This condition is still applicable|
|A contract, the performance of which involves the performance of a continuous duty which the court cannot supervise||This condition is still applicable|
ii. Substituted performance: The Amendment Act gives an affected party the option to arrange for performance of the contract by a third party or by his own agency (substituted performance), and costs for such substituted performance may be recovered from the defaulting party. After obtaining substituted performance, specific performance cannot be claimed. However, the affected party’s right to claim compensation will not get affected.
iii. Infrastructure projects: A schedule has been added pursuant to the Amendment Act which broadly describes the infrastructure projects which would be under the purview of the 1963 Act. These projects can be categorized as follows: (i) transport; (ii) energy; (iii) water and sanitation; (iv) communication (such as telecommunication); and (v) social and commercial infrastructure (such as affordable housing).
iii. Injunctions: The Amendment Act prevents Courts from granting injunction in respect of contracts relating to infrastructure projects, if such an injunction would hinder or delay the progress or completion of the infrastructure project.
iv. Special Courts: The Amendment Act requires that State Government will, in consultation with the Chief Justice of the relevant High Court, designate one or more Civil Courts as Special Courts to deal with cases under the 1963 Act, in relation to infrastructure projects. Such cases must be disposed off within 12 months, which period can be extended by six months, of the date of service of summons to the defendant.
v. Experts: The Amendment Act inserts a new provision which empowers the Courts to engage experts in suits where expert opinion may be needed. Such expert may be examined in the Court in relation to the expert’s findings, opinions, etc.
NCLAT Dismisses the Appeal Filed by the Cement Companies and Upholds INR 63 billion Fine Levied by CCI
On July 25, 2018, National Company Law Appellate Tribunal (‘NCLAT’) pronounced its judgment in upholding the order of the Competition Commission of India (‘CCI’) dated August 31, 2016 finding 10 cement companies and their trade association, Cement Manufacturers Association (‘CMA’), guilty of fixing prices and limiting supply in contravention of Section 3(3) of the Competition Act (‘Act’).
As evidence of an ‘agreement’ between the cement companies, NCLAT found that the companies used the CMA as a platform for exchanging ‘pricing and sensitive information relating to production, capacity, dispatch etc.’ Reviewing the minutes of CMA’s Managing Committee between 2007 and 2009 and three High Powered Committee meetings in 2011, NCLAT found CMA to have provided a platform to collect prices in minimum and maximum ranges for different regions in India. NCLAT also considered (i) ACC and Ambuja’s withdrawal from CMA activities; and (ii) CMA’s amendments to its regulations post initiation of the CCI investigation, as further proof that CMA provided a platform to coordinate amongst its members. Per NCLAT, CMA’s collection of business sensitive information further to directions of the Department of Industrial Policy and Promotion (‘DIPP’) was not adequate justification for such conduct. While DIPP requested information relating to retail and wholesale prices from different centers, NCLAT held CMA’s process of providing DIPP this information by collecting this information through its members, such that cement companies were able to access each others sensitive price and non-price information, may not be said to have been sanctioned by the government. Finding that “information exchange can constitute concerted practice if it reduces strategic uncertainty in the market thereby facilitating collusion,” NCLAT concluded that there was a meeting of minds between cement companies to fix the sale price of cement and regulating production and supply.
To determine whether the ‘agreement’ resulted in fixing prices or reduction in production or supply, NCLAT reviewed the data on record. On the basis of price charts, NCLAT found there existed price parallelism on the basis of absolute changes in cement prices in each state. This, NCLAT held, indicated that cement companies hiked prices without justification in departure from “normal trends over the previous years”.
NCLAT also found dispatch and production coordination amongst cement companies on the basis of reduced production and dispatch of cement despite increased demand over corresponding months (November – December 2010) and a subsequent increase in prices (January – February 2011). Relying on statements made by third party cement distributors, NCLAT concluded that this coordination amongst cement companies resulted in reduction in supplies. NCLAT also noted that while installed capacity increased in 2009-10 and 2010-11, production growth and capacity utilization decreased in 2010-11, along with corresponding price increases across all regions- south, central, north and eastern, while this was not the case in 2009-10.
Notably, NCLAT clarified the standard of evidence for cartel cases as being one of ‘balance of probabilities’ as distinguished from ‘beyond reasonable doubt’, unlike criminal law.
The NCLAT also referred to the Supreme Court (‘SC’) decision in Competition Commission of India v. Coordination Committee of Artistes and Technicians of West Bengal Film Television & Ors. (‘WBFT Case’) which held that it was necessary to delineate the relevant market in which competition may be said to be affected, and “in particular for determining if undertakings are competitors or potential competitors and when assessing the anti-competitive effect of conduct in a market”. Relying on the SC decision in the WBFT Case, NCLAT held that as market power analysis was key, it was necessary to delineate a relevant market in this case as well. Reviewing the price and non-price data collected and relied on by CCI, NCLAT clarified that CCI identified the relevant market as ‘all regional markets for cement.’
Finally, observing that CCI had imposed “mere minimum penalty,” NCLAT held there was no need to interfere with CCI’s penalty computation. On this basis, NCLAT dismissed the appeals filed by the cement manufacturers.
 ACC Ltd. (ACC), Ambuja Cement Ltd. (Ambuja), Binani Cement Ltd. (Binani) , Century Textiles & Industries Ltd. (Century Cement), India Cement Ltd. (India Cement), JK Cement Ltd. (JK Cement) , Nuvoco Vistas Corporation Limited (Lafarge), Ramco Cements Ltd, (Ramco), Ultra Tech Cement Ltd. (Ultra Tech) and Jaiprakash Associates Limited.
 (2017) 5 SCC 17
 We request our readers to note that by way of an order dated 7 May 2018 pursuant to a review application filed by CCI in the WBFT Case, the Supreme Court clarified that the “determination of ‘relevant market’ is not a mandatory pre-condition for making assessment of the alleged violation under Section 3 of the Act.”
CCI Dismisses Allegations of Price Fixing and Abuse of Dominance against Arthur Flury AG Switzerland and PPS International, Delhi.
On August 27, 2018, CCI dismissed information filed by the Central Organisation for Railway Electrification (‘CORE’) under Section 19(1)(a) of the Act, alleging violations of Section 3 and 4 of the Act by PPS International, Delhi (‘PPS’). CORE operates under the Ministry of Railways, Government of India and is concerned with railway electrification of the entire network of the Indian railways. To carry out its functions, CORE procures Short Neutral Section Assembly (‘SNS Assembly’/ ‘phase break’) from the authorised Indian distributors of Research Design and Standards Organisation (‘RDSO’), an original equipment manufacturer namely, Arthur Flury AG Switzerland (‘Arthur’).
As per the information, PPS was alleged to have imposed unfair conditions and artificially increased the prices for sale of SNS Assembly in contravention of Section 4(2)(a)(i) and Section 4(2)(a)(ii) of the Act. It was also alleged that the price increase was pursuant to a concerted decision between Arthur and PPS, in violation of Section 3(3)(a) of the Act. CCI in its assessment at the outset dismissed allegations of violation of Section 3(3)(a) since Arthur (manufacturer) and PPS (distributor) were operating at different levels of the production chain in different markets and Section 3(3) is only applicable to concerted actions between competitors (enterprises active in the same market). As regards allegations of abuse of dominance, CCI identified the relevant market as the ‘market for supply of SNS Assembly in India’ given the specific physical characteristics of SNS Assembly and the geographic scope of homogenous competitive conditions. In the concerned market, CCI observed that PPS was a dominant enterprise since it was the only distributor for Arthur (and Arthur was the only RDSO approved original equipment manufacturer for SNS Assembly). However, as regards allegations of abuse, CCI observed that a case for violation of Section 4(2)(a)(i) was not made out. As regards excessive pricing, CCI analysed the prices charged by PPS over the period of 2006-2018 and observed that the price increase was not continuous and in fact decreased in 2016. For the above reasons, CCI dismissed the allegations of abuse of dominance as well.
 Central Organisation for Railway Electrification v. M/s PPS International, Case No. 05 of 2018 (Order dated August 27, 2018)
CCI Orders Investigation against Ministry of Railways and Online Ticketing Operations of Indian Railways – IRCTC regarding Abuse of Dominance in the Market for Sale of Tickets by Railways in India
On November 9, 2018, CCI ordered investigation into the information alleging violation of Section 4 of the Act, filed by Mr. Meet Shah and Mr. Anand Ranpara against Ministry of Railway (‘MoR’) and Indian Railway Catering and Tourism Corporation Limited (‘IRCTC’). The informants in this case alleged that the MoR and IRCTC, according to their pricing policy, round off the base fare of the railway ticket to the next higher multiple of ₹ 5 (as per Circular no. 6 of 2013, the Ministry of Railways, with effect from January 22, 2013). This act of rounding off is an unfair and discriminatory condition imposed on the informants and merits examination of abuse of dominance by the MoR and IRCTC.
In order to determine the alleged abuse of dominant position, CCI held the relevant market to be ‘market for sale of tickets by railways in India’. CCI relied on its earlier decisions in Shri Sharad Kumar Jhunjhunwala v Union of India, Shri Ismail Zabiulla v Union of India and Shri Yaseen Bala v Union of India, where MoR and IRCTC were collectively considered as a ‘group’ for the purpose of the Act and dominant in the market of transportation of passengers through railways across India including ancillary segments like ticketing, catering on board, platform facilities, etc. provided by the Indian Railways. On the basis of this decision, CCI held that MoR and IRCTC are dominant in the defined relevant market in the present case.
MoR and IRCTC submitted that the rounding off was done to reduce transaction time and serve passengers expeditiously. CCI was of the opinion that this rationale does not stand with respect to online sale of tickets where the transaction can take place to one paisa precision electronically. CCI also held that MoR and IRCTC had been unable to explain why rounding off is done separately for each passenger even when more than one ticket are booked through one account at the same time for a journey.
CCI found the practice of rounding off actual base fares to the next higher multiple of ₹ 5 by MoR and IRCTC prima facie amount to imposition of unfair conditions in the relevant market. CCI directed the Director General to conduct an investigation into the contravention of Section 4, more particularly Section 4(2)(a)(i) of the Act for unfair or discriminatory pricing or conditions.
 Case No. 30 of 2018.
 Case No. 100 of 2013
 Case No. 49 of 2014
 Case No. 89 of 2014
CCI Approves Acquisition of 26% by Shell Gas B.V. in Hazira LNG and Hazira Port from Total Gaz Electricité
On December 6, 2018, pursuant to a share purchase agreement signed on November 6, 2018, CCI approved acquisition of 26% shares by Shell Gas B.V. (‘Shell’) in Hazira LNG Private Limited (‘HLPL’) and Hazira Port Private Limited (‘HPPL’) from Total Gaz Electricité Holdings France (‘Total’). The combination increased Shell’s shareholding in HLPL and HPPL from 74% to 100% and changed Shell’s control in HLPL and HPPL (from joint control to sole control). 
Shell is a Dutch company with businesses including oil and natural gas exploration, production and marketing, manufacturing, and marketing and shipping of oil products and chemicals. Shell group companies are engaged in India in the activities of: (i) exploration and production of oil and natural gas; (ii) supply of liquid natural gas (‘LNG’) into India; (iii) provision of LNG regasification (and related storage) services; (iv) wholesale and downstream supply of natural gas; (v) provision of port facilities to LNG terminals; and (vi) supply of fuel products.
HLPL and HPPL are joint venture companies set up by Shell and Total. HLPL provides LNG regasification services (and related storage) to large LNG importers and also has activities in the wholesale and downstream sale of natural gas in India. It operates and manages the re-gasification terminal at the Hazira Port, Gujarat. HPPL owns and manages the Hazira port used for unloading and receipt of LNG and receives a fee from HLPL for access to the facilities at Hazira port and other allied activities.
In its competitive assessment, CCI observed that HLPL is primarily engaged in LNG regasification (and related storage) services and Shell does not have any presence in the product segment other than through HLPL. As regards the activities of HLPL relating to wholesale and downstream supply of natural gas, CCI observed that Shell has independent presence but the extent of presence of HLPL is not significant enough to cause any change in competition dynamics. CCI further observed that HPPL is engaged in provision of port facilities at LNG terminals and Shell does not have any presence in previously mentioned product segment other than through HPPL.
In light of the above, CCI approved the combination as it is not likely to have any appreciable adverse effect on competition (‘AAEC’) in India in any of the markets catered to by HLPL and HPPL.
 Combination Registration Number C-2018/11/615.
CCI approves acquisition of EPC Constructions India Limited by ArcelorMittal India Private Limited
On January 10, 2019, CCI approved the acquisition of 100% equity shares of EPC Constructions India Limited (‘EPCC’) by ArcelorMittal India Private Limited (‘AMIPL’). The said transaction is subject to the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016.
AMIPL is a part of ArcelorMittal group (‘AM Group’). AM Group does not have a steel manufacturing unit in India but is engaged in sale of steel products through other channels.
EPCC is a part of the Essar Group. EPCC is engaged in the supply of Engineering Procurement Construction (‘EPC’) services, which includes undertaking and executing projects involving industrial plants, civil and infrastructure projects, laying onshore pipeline for oil, gas and water, and working in marine constructions.
In its competitive assessment, CCI noted that there were no horizontal and vertical overlaps between EPCC and AMIPL. CCI, however, observed that AMIPL had also filed a resolution plan with respect to acquisition of Essar Steel India Limited (‘ESIL’). If the acquisition of ESIL by AMIPL were to be successful, the services of EPCC could also be utilized by ESIL. In this regard, CCI noted that this potential vertical relationship may not cause any potential competition concerns due to lack of ability and incentive to foreclose the market by EPCC.
In light of the above, CCI approved the combination since it was not likely to have any AAEC in India in any of the markets.
 Combination Registration No. C- 2018/12/624
CCI approves acquisition of EPC Constructions India Limited by Royale Partners
On January 31, 2019, CCI approved the acquisition of 100% of the equity shares of EPC Constructions India Limited (‘EPCC’) by Royale Partners. The said transaction is subject to the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016.
Royale Partners is engaged in the business of investing in companies. EPCC is engaged in the supply of EPC services as covered above.
In its competitive assessment, CCI noted that there were no horizontal or vertical overlaps between EPCC and Royale Partners. In light of the above, CCI approved the combination since it was not likely to have any AAEC in India in any of the markets.
 Combination Registration No. C- 2019/01/632
CCI approves acquisition of Usha Martin Limited by Tata Steel Limited
On December 7, 2018, pursuant to a business transfer agreement signed on September 22, 2018 and novation agreement signed on October 24, 2018, CCI approved the acquisition of the steel division of Usha Martin Limited (‘UML’) by Tata Steel Limited (‘TSL’) through Tata Sponge Iron Limited (‘TSIL’) (collectively referred to as ‘Parties’).
CCI, relying on its previous decisional practice, noted the technical characteristics, intended use, price levels, etc. for each of the product segments/sub-segments of steel, concluding that each steel product would form its separate relevant product market. However, the exact definition of the relevant market was left open.
The Parties overlapped in the market for manufacturing and sale of certain steel products in India, i.e., (i) sponge iron; (ii) long carbon steel products, in particular carbon wire rods; (iii) pig iron; (iv) alloy billets; and (v) special steel products.
In its competition assessment, CCI observed that this combination was unlikely to cause AAEC since in the market for manufacturing/sale of sponge iron, carbon steel wire rods, pig iron and alloy billets, the combined marked share was less than 20% and the increment was within the range of 0-5 %. Specifically, in the market for special steel, the overlaps were found to be insignificant. Additionally, in the vertically linked markets, the Parties were unlikely to have any ability/ incentive to foreclose. Based on the above, CCI decided to approve this combination.
 Combination Registration No. C-2018/10/608
CCI approves acquisition of Prayagraj Power Generation Company Limited by Renascent Power Ventures Private Limited
On December 27, 2018, CCI approved the acquisition of 75.01% of the total paid up equity share capital and 270 million optionally convertible redeemable preference shares of Prayagraj Power Generation Company Limited (‘PPGCL’) by Renascent Power Ventures Private Limited (‘Renascent’) (collectively referred to as ‘Parties’) pursuant to the execution of share purchase agreement dated November 13, 2018. 
PPGCL is engaged in the business of thermal power generation. Renascent, a wholly owned subsidiary of Resurgent Power Ventures Pte. Ltd. (‘Resurgent’), did not have any investments in the power sector in India. Further, Resurgent or any of its subsidiaries, prior to this transaction, did not have any investments in the power sector in India. However, in its competitive assessment, CCI considered the overlaps between the shareholders of Resurgent (including Tata Power International Ltd.) and PPGCL.
CCI noted that the Parties were engaged in the similar business and involved vertically linkages in the market for power generation. In the competitive assessment, CCI noted that the combined market share of the Parties was within the range of 0-5% and the increment was less than a percent. Additionally, PPGCL had a long term obligation to supply a large part of its power generation to Uttar Pradesh power distribution utilities and had entered into interconnection agreement with Uttar Pradesh power transmission utilities.
Given the particulars of this transaction, CCI concluded that this transaction was unlikely to cause AAEC in India.
 Combination Registration No. C-2018/11/616
CCI approves the transaction between Nippon Steel & Sumitomo Metal Corporation and Sanyo Special Steel Company Limited
On November 30, 2018, CCI approved (i) the acquisition of 51.5% shares in Sanyo Special Steel Company Limited (‘Sanyo’) by Nippon Steel & Sumitomo Metal Corporation (‘NSSMC’); and (ii) transfer of Ovako AB (‘Ovako’) from NSSMC to Sanyo. NSSMC, Ovaka and Sanyo are collectively referred to as ‘Parties’. 
In its competition assessment, CCI found that the Parties overlapped in respect of sale of certain special steel products in India i.e., (i) specialty steel bars; (ii) seamless pipes; and (iii) rings. The combined market share of the Parties in the specialty steel bars segment was within the range of 15%-20% with less than 5% increment. In the segment of seamless pipes, the combined market share was under 5%. In the segment of rings, it was noted that Ovaka supplied rings for wind power bearings whereas Sanyo sells bearings for only automobiles. One of Sanyo’s subsidiaries was found to be in the process of entering the market for the manufacture and sale of fabricated materials for wind power bearings and had started manufacturing. However, the combined market share was found to be insignificant. Therefore, CCI concluded that this transaction was unlikely to cause AAEC in India.
 Wholly owned subsdiairy of NSSMC
 Combination Registration No. C-2018/09/597
National Company Law Appellate Tribunal
NCLAT affirms CCI’s order dismissing allegations of collusive bid-rigging against Bharat Heavy Electricals Limited, IL&FS Technologies Limited, and Hitachi Systems Micro Clinic Private Limited
On February 26, 2019, the National Company Law Appellate Tribunal (‘NCLAT’) dismissed an appeal filed by Reprographic India (‘Appellant’) filed against the order of CCI dismissing allegations of collusive bid-rigging against Bharat Heavy Electricals Limited (‘BHEL’), IL&FS Technologies Limited (‘ILFS’), and Hitachi Systems Micro Clinic Private Limited (‘Hitachi’) (collectively ‘Respondents’), in violation of Section 3(3) of the Act.
The Appellant was an ancillary to BHEL’s Haridwar unit, engaged in the manufacture of folding and finishing systems as well as the manufacture and distribution of information technology (‘IT’) products and provision of services. The Appellant had been supplying IT products to BHEL directly, or through System Integrators (‘SI’) of Original Equipment Manufacturers (‘OEMs’). ILFS and Hitachi were SIs, which sourced Hewlett Packard (‘HP’) products and provided IT solutions. As per the Appellant, BHEL floated a tender on April 1, 2017, for supply, installation and maintenance of personal computers (‘PCs’) and peripherals for more than 20 locations, for a period of five years on lease basis on ‘Corporate Rate Contract’ (‘Tender’). The total items which were being sought pursuant to the Tender were grouped into two categories, namely, group-A comprising 24 items pertaining to PCs and peripherals, and group-B comprising 47 items pertaining to ‘Enterprise Equipment’. The bidders were at liberty to bid for either group A or both groups A and B. As per the conditions of the Tender, with regard to group A, only OEMs and SIs were eligible to bid. Further, all items in each group were supposed to be of the same OEM. Pursuant to the Tender, only two bids, i.e., of ILFS and Hitachi were received with regard to group A products and ultimately the Tender was awarded to Hitachi. As per the Appellant, both Hitachi and ILFS acted in collusion through out this process in violation of Section 3(3) of the Act.
CCI in its observation noted that the Tender was an open tender with no embargo on any SI or OEM to participate. Moreover, various SIs and OEMs had participated in the pre-bid discussions. It further observed that only ILFS and Hitachi submitted bids with regard to group A since the Tender with regard to group A mandated a provision for maintenance and other services for a five year lease period. CCI noted that the stringent requirements of group A may have resulted in low bidding. Additionally, it stated that the facts on record did not support the allegation of supportive bidding on part of ILFS, or that ILFS and Hitachi were engaged in bid rotation. Moreover, the fact that both ILFS and Hitachi had common business links with HP was not in itself sufficient to confirm an allegation of collusion. Further, CCI also did not consider the fact that some employees of one Respondent were working with the other Respondent at some point of time, as relevant for the purposes of the allegations, clarifying that this was a routine affair in the IT industry. In sum, CCI was of view that a meeting of minds for purposes of bid rigging/collusive bidding could not be inferred from mere proximity and the Appellant had failed to furnish any evidence that would suggest otherwise. Accordingly, CCI through an order under Section 26(2) of the Act had dismissed the allegations.
NCLAT at the outset clarified that directing an investigation to be conducted by the DG is entirely dependent on existence of a prima facie case warranting such investigation, and unless CCI is so satisfied, the informant has no vested right to seek investigation into the alleged contravention of the provisions of the Act. It further clarified that it was the obligation of the informant to make out a prima facie case based on proven facts warranting an investigation by the DG. Further, NCLAT stated that as the successful bidder, Hitachi had the discretion to quote products of any OEM, especially given that it would have to provide maintenance and other services during the entire lease period. Additionally, it reiterated that there may have been business links between ILFS and Hitachi; however, in the absence of any material to suggest any collusion between ILFS and Hitachi, no adverse inference suggesting collusive bidding could be drawn against them. Accordingly, NCLAT affirmed CCI’s observations and dismissed the appeal filed by the Appellant.
 Case No. 41/2018.
CCI Approves Acquisition by BCP Acquisitions LLC, and CDPQ Fund 780 L.P. and CDP Investissements Inc. (collectively) of the Global Power Solutions Business of Johnson Controls International Plc
On February 14, 2019, CCI approved the acquisition by BCP Acquisitions LLC (‘BCP’), CDPQ Fund 780 L.P. (‘CDPQ Fund’) and CDP Investissements Inc. (‘CDP’) (collectively) of the global power solutions business (‘Target Business’) of Johnson Controls International plc (‘JCI’) (‘Proposed Combination’). BCP is a part of Brookfield Assets Management Inc. (‘Brookfield’) whereas both CDPQ Fund and CDP are wholly owned by Caisse de dépôt et placement du Québec (‘CDPQ’). Pursuant to the Proposed Combination, Brookfield (through BCP) and CDPQ (through CDPQ Fund and CDP) will own 70% and 30% of the Target Business, respectively. The Proposed Combination was notified to CCI pursuant to the share and asset purchase agreement dated November 13, 2018, executed between JCI and BCP (‘SAPA’), and a binding term sheet, entered into between Brookfield and CDPQ pursuant to which both Brookfield and CDPQ had proposed to enter into a shareholders agreement (‘SHA’). (BCP, CDPQ Fund, CDP and JCI are collectively referred to as ‘Parties’). 
BCP is a special purpose vehicle (‘SPV’) formed for the purposes of the Proposed Combination, and is not engaged in any business activity in India. Brookfield has various investments across multiple sectors such as real estate, infrastructure etc. in India and elsewhere. CDPQ Fund and CDQ do not have any direct presence in India and CDPQ is a Canadian institutional investor that manages funds primarily for public and para-public pension and insurance plans. The Target Business is engaged in the business of inter alia manufacturing and distribution of low voltage energy storage products using lead-acid and lithium-ion technologies, primarily for use in passenger vehicles, trucks and other motive applications. The Target Business’ products are sold to, or distributed through, original equipment manufacturers and aftermarket retailers and distributors, and the Target Business is present in India only through its 26% equity shareholding in Amara Raja Batteries Limited (‘ARBL’).
Based on the information provided by the Parties, CCI noted that Brookfield does not have any portfolio investments in India in the same business as that of the Target Business. Further, CDPQ holds certain investments in entities engaged in manufacturing and sale of lead acid-based batteries in India or may have potential vertical linkages with the Target Business. However, given that these investments of CDPQ were of less than five percent of the total equity share capital and in the absence of any special veto/governance rights, CCI approved the Proposed Combination in light of there being no substantial horizontal or vertical overlap between the Parties.
 Combination Registration No.C-2019/01/630
CCI Approves the Acquisition by Power Finance Corporation Limited of 52.63% equity stake along with management control in REC Limited
On January 31, 2019, CCI approved the acquisition by Power Finance Corporation Limited (‘PFC’) of 52.63% equity stake along with management control in REC Limited (‘REC’, collectively with PFC as ‘Parties’) (‘Proposed Combination’). The Proposed Combination was notified to CCI pursuant to the decision of the Cabinet Committee on Economic Affairs dated December 06, 2018 granting in-principle approval for strategic sale of Government of India’s (‘GoI’) 52.63% shareholding in REC to PFC along with a resolution dated December 20, 2018 passed by the board of directors of PFC granting an in-principle approval to the Proposed Combination.
PFC is a public sector enterprise, which is registered with the Reserve Bank of India (‘RBI’) as a Non-banking Finance Company – Infrastructure Finance Company, since 1990 and was declared as a Public Financial Institution (‘PFI’) in 2010. It provides (directly and indirectly) various financial products and services from the project conceptualization stage to the post commissioning stage, for clients in the power sector. PFC is also a nodal agency for various schemes of GoI in the power sector, including; (i) Ultra Mega Projects (‘UMPPs’); (ii) Restructured Accelerated Power Development and Reforms Program (‘R-APDRP’)/ Integrated Power Development Scheme (‘IPDS’); and (iii) Independent Transmission Projects (‘ITPs’).
REC is also a public sector enterprise, registered as a Non-banking Finance Company – Infrastructure Finance Company with RBI since 2010. REC is engaged in financing projects/schemes for inter alia power generation, transmission, distribution, etc. REC is also designated as a nodal agency for various schemes of GoI in the power sector such as; (i) Pradhan Mantri Sahaj Har Ghar Yojna; and (ii) Deendayal Upadhyaya Gram Jyoti Yojna; etc.
Based on the business activities of the Parties, CCI identified overlaps between the Parties in two product segments, as detailed below. However, CCI did not provide the exact market definition, since the Proposed Combination would not have led to any AAEC in India.
i. Provision of credit for power sector in India: CCI observed that this market may be further classified based on varied criteria such as instrument of financing, type of loan products, nature of power project such as generation, transmission or distribution etc. For assessing the presence of the Parties, CCI stated that market share estimates in terms of gross loan assets would not provide a fair indication of current competition dynamics, and assessed the Parties presence based on bidding data. Accordingly, based on the bidding data of the Parties (including the winning bids), CCI observed that the presence of the Parties was not significant and was constrained by the presence of various enterprises, especially banks.
ii. Provision of consultancy services in the power sector in India: CCI noted that the Parties did not have a significant presence in this market, with a less than 10% combined market share pursuant to the Proposed Combination. Further, the market was also characterized by significant competitors such as WAPCOS Limited, Tata Consulting Engineers Limited, etc.
In its assessment, CCI also noted that the Parties had common shareholding in certain entities namely, Energy Efficiency Services Limited (‘EESL’), Shree Maheshwar Hydel Power Corporation Limited (‘SMHPCL’) and NHPC Limited (‘NHPC’). However, given that (i) EESL was not engaged in any business activity as that of the Parties; (ii) SMHPCL had been classified as a non-performing asset (‘NPA’); (iii) SMHPCL had limited capacity under implementation; and (iv) NHPC’s total installed capacity constituted an insignificant part of the total installed capacity in India, CCI observed that the common shareholding would not be likely to cause any AAEC in any market in India.
CCI also observed that the Parties work closely with GoI, and even pursuant to the Proposed Combination would continue to follow the mandate as decided by GoI. Given that the Proposed Combination does not lead to any AAEC in any of the markets identified above, CCI approved the Proposed Combination under Section 31(1) of the Act.
Guidelines for the Public Issue of Units of InvITs and REITs
SEBI has introduced amendments to the guidelines for public issue of units of Infrastructure Investment Trusts and Real Estate Investment Trusts (together, ‘Investment Vehicles’) in order to further rationalise and ease the process of public issue of units of Investment Vehicles. Key highlights amongst them are:
i. the definition of ‘institutional investors’ has been updated to refer to the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018;
ii. Mutual funds, alternative investment funds (‘AIFs’), FPIs other than category III FPIs sponsored by associate entities of the merchant bankers, insurance companies promoted by, and pension funds of, associate entities of the merchant bankers have been permitted to invest under the category of anchor investors;
iii. Bidding period may be extended on account of force majeure, banking strike or similar circumstances, subject to total bidding period not exceeding 30 days;
iv. Time period for announcement of the floor price or the price band by the investment manager has been reduced from five days to two days prior to the opening of the bid (in case of initial public offer); and
Investment Vehicles are required to accept bids using only the application supported by blocked amount (‘ASBA’) and consequent changes in bidding process have been made.
Revised Framework for Trade Credits
RBI has, pursuant to the circular dated March 13, 2019, introduced changes and rationalised the extant framework for trade credits (‘TC’), with effect from the date of the circular. Some of the key additions and amendments introduced by the circular are set out below.
i. TC can now be raised in any freely convertible foreign security as well as in Indian Rupees.
ii. The circular has increased the limits under which TC could be raised under the automatic route and provides for a higher limit for sectors such as for oil / gas refining & marketing, airline and shipping where the transaction value is generally larger, and has specified the persons who can grant TC depending on the type of TC proposed to be availed.
iii. The circular has aligned the tenure of TC for import of capital goods, non-capital goods and shipyards / shipbuilders with the changes in the minimum average maturity for external commercial borrowings.
iv. The circular has also reduced the all-in cost ceiling for raising TC and borrowers availing TC are now permitted to hedge their exposure created by the TC.
v. The circular now permits change of currency of TC from one freely convertible foreign currency to any other freely convertible foreign currency as well as to Rs, but not from Rs to any freely convertible foreign currency.
In addition to guarantees, the circular now permits creation of security over certain movable and immovable assets for the TC.
CCI Approves the Acquisition of National Projects Construction Corporation Limited by WAPCOS Limited.
On March 28, 2019, CCI approved the acquisition of 98.89% of the equity share capital of National Projects Construction Corporation Limited (‘NPCC’) by WAPCOS Limited (‘WAPCOS’). WAPCOS and NPCC are both Central Public Sector Enterprises under the control of Ministry of Water Resources, River Development and Ganga Rejuvenation, Government of India (‘MoWR’). 
WAPCOS provides engineering consultancy services (‘ECS’) for developmental projects in India and abroad. NPCC’s services include project management consultancy services (‘PMCS’) for civil construction projects, real estate development, construction of roads etc.
CCI approved the transaction unconditionally since it found that the parties did not have significant horizontal or vertical overlaps. While WAPCOS and NPCC are active in the PMCS segment, they are insignificant players (by market share) as compared to other players like NBCC (India) Limited, Uttar Pradesh Rajkiya Nirman Nigam Limited, Bridge & Roof Co. (India) Limited etc. Further, while examining the vertical linkages between ECS and PMCS, CCI found no cause for concern since: (i) ECS offered by WAPCOS related primarily to water, power and irrigation infrastructure, while NPCC’s PMCS business was focused on general infrastructure like school, border fencing and road transportation; and (ii) WAPCOS faces strong competition in the ECS segment from players like Tata Consulting Engineers, Ramboll, etc.
 Combination Registration No. C-2019/03/655.
CCI Approves the Acquisition of Asian Colour Coated Ispat Limited by JSW Steel Coated Products Limited
On April 9, 2019, CCI approved the acquisition of entire business operations of Asian Colour Coated Ispat Limited by JSW Steel Coated Products Limited (‘JSWSCL’). The notice was filed pursuant to a resolution plan submitted by JSWSCL to the resolution professional as per the provisions of the Insolvency and Bankruptcy Code, 2016.
In its assessment, CCI observed that the activities of the parties competed in certain steel products in India i.e., (i) hot rolled coiled sheets and plates; (ii) cold rolled coils and sheets; (iii) galvanised products; and (iv) colour coated products (‘CCPs’). CCI assessed the combined market shares of the parties on the basis of installed capacity and domestic sales, and concluded that the combined market shares of the parties did not exceed 30% and 20% respectively, except in the case of CCPs. Further, the incremental market shares were estimated to be around 0-5% on the basis of both installed capacity as well as domestic sales. For CCPs, the increment was within the range of 5-10%. Finally, CCI approved the transaction after considering the presence of significant competitors such as Tata Steel Limited, Essar Steel Limited and SAIL in each product segment.
 Combination Registration No. C-2019/03/650
SEBI Discussion Paper on Review of Buy-Back of Securities
SEBI has issued a discussion paper on May 22, 2019 to seek public comments on the suggestions relating to review of conditions for buy-back of securities (last date for which has elapsed). Under the SEBI (Buy-back of Securities) Regulations, 2018, one of the main conditions for buy-back of securities is that the aggregate of secured and unsecured debts owed by the company after buy-back should not be more than twice the paid-up capital and free reserves of such a company (however, if a higher ratio is specified under the Companies Act, 2013, the higher threshold would prevail). SEBI is of the view that the financial statements considered for evaluating compliance with the aforesaid test would be considered on a conservative basis (i.e., both standalone and consolidated basis).
Given that non-banking financial companies (‘NBFCs’), housing finance companies (‘HFCs’) and infrastructure companies have higher debts because of the nature of their businesses, the primary markets advisory committee of SEBI has proposed adoption of a different approach in case of listed companies with NBFCs, HFCs and infrastructure companies as subsidiaries, the key proponents of which are: (i) the post buy-back debt to capital and free reserves ratio of 2:1 for the listed company (other than for companies for which such ratios have been notified under the Companies Act, 2013) should be considered on a consolidated basis, after excluding such subsidiaries which are regulated and have issuances with AAA ratings; and (ii) such subsidiaries should have debt to equity ratio of not more than 5:1 on standalone basis.
Orissa High Court Allows Input Tax Credit on Construction Services of a Shopping Mall
Under Section 17(5)(d) of the Central Goods and Services Tax Act, 2017 (‘CGST Act’) input tax credit (‘ITC’) is not allowed on goods or services received by a taxable person for construction of an immovable property (other than plant or machinery) including when such goods or services are used in the course or furtherance of a business.
However, recently, the Orissa High Court has allowed ITC on inputs and input services used for construction of a shopping mall wherein such mall is intended to be let-out upon construction, on the following grounds: (i) The very purpose of the Goods and Services Tax (‘GST’) regime is to prevent cascading of taxes, which objective should not be frustrated by adopting a narrow interpretation of the aforesaid Section 17(5)(d) of the CGST Act; and (ii) the shopping mall would not be used for personal business, and would instead be let-out, which is an activity covered under GST.
 Safari Retreats Private Limited, W.P. (C) No. 20463 of 2018.
Expropriation in the Infrastructure Sector in India
Expropriation refers to either the direct acquisition by an act of a state, or the indirect appropriation of foreign investment through interference with the host state incentives that, an entity, as an investor may be entitled to. Such conduct could give rise to an actionable claim against the host state by a foreign investor, if there is a valid and subsisting Bilateral Investment Treaty (“BIT“) or Bilateral Investment Protection Agreement (“BIPA“) between the host State and the foreign investor’s state of nationality.
LEGISLATIVE AUTHORITY OF THE STATE TO EXPROPRIATE
There have been several laws enacted by the government to acquire land from private individuals. Significant among those is the Land Acquisition Act of 1894 (“LAQ Act 1894”). The lack of adequate safeguards in favour of the landowner led to the enactment of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (“LARR Act”) which replaced the LAQ Act 1894.
Unfortunately, the LARR Act was widely criticized by the then government upon assumption of office in 2014 on the ground that it interfered with government’s right of acquiring property for public purpose and was thus bound to make a negative impact on the growth of the nation. In view of this background, the government introduced the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Second Amendment) Bill, 2015 (“Bill”).
INSTANCES OF DIRECT EXPROPRIATION INITIATED BY GOVERNMENT OF INDIA
Instances of Direct Expropriation (pre-1990, economic liberalization era):
• Coal Industry
In 1973, the government of India passed the Coal Mines Nationalization, Act 1973 which ensured that coal mining operations in India could be carried on only by a government managed, owned or controlled company.
• Banking sector
In 1969, under the provisions of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, the government of India nationalised 14 (fourteen) of the largest Indian banks, having over 75% (seventy five percent) of the deposits of the country. Subsequently, in 1980, a few more commercial banks were nationalised and this ensured that government of India controlled 90% (ninety percent) of the banks in India.
TREATMENT OF EXPROPRIATION EVENTS UNDER CONCESSION AGREEMENTS/GOVERNMENT CONTRACTS
Government expropriation or attempt towards nationalisation of private assets can be examined under the following categories:
Political Force Majeure
Political or direct force majeure is treated as political force majeure events under concession agreements in Indian infrastructure contracts. Typically, such events may not provide any remedies to the private entity that holds the assets and will eventually result in termination of the concerned concession agreement. Usually where the contracts are with the state or central government entities, there is a possibility of termination payments being issued to the private entity whose assets have been expropriated, and this is commonly undertaken in ports, roads and airports sectors.
End of the term of concession
Upon determination of the concession agreement, the parties to a contract can agree in the manner and price at which various assets would be handed back to the Government. Though it can be argued that this is done on a mutual basis and not forcibly, however it must be noted that, many concession agreements do not provide flexibility to the developers to cherry pick assets that are to be handed over, making this a form of indirect expropriation.
Temporary step in
Many concession agreements deal with temporary periods of step in, during which all the assets comprising the project as well as the contractual rights are expropriated. This could be during situations of emergency or during a default event attributable to the concessionaire.
OTHER CONTRACTUAL REMEDIES AVAILABLE TO AN INVESTOR
An aggrieved investor may also proceed against the government by invoking contractual remedy of specific performance, if the same has been provided for in the underlying contract. The specific performance of a contract is governed by the Specific Relief Act, 1963. It has been largely observed that the courts were reluctant to award specific performance and tend to award damages instead. However, the Specific Relief Amendment Act, 2018 (“Amendment Act”) has introduced provisions which tend to increase the enforceability of the contracts.
ROLE OF BITS IN RESOLVING EXPROPRIATION DISPUTES
The unprecedented growth in technology has led to a significant increase in foreign investment. Such increase in foreign investment has been accompanied with increased expropriation of foreign projects and concerned countries have been entering into BITs with dispute resolution mechanisms. Here are a few examples of BITs being invoked in previous instances:
• Dabhol Power Project, 1990s
The Government of India (“GOI”) has acquired various assets, companies and utility projects, including the famous Dabhol Power Company (“Dabhol“). The acquisition of Dabhol was a result of the backlash following the bankruptcy of Enron International and its scandals in India.
• White Industries, 2002-2011
In a contractual dispute with Coal India, White Industries obtained an arbitral award in its favour, and sought enforcement of the award before the Delhi High Court. On the other hand the Calcutta High Court set aside the award on the request of Coal India. Thereafter, White Industries took the matter to arbitration on grounds of fair and equitable treatment and expropriation.
• Vodafone Case
Vodafone invoked the dispute resolution mechanism of the India-UK BIT for demand of INR 11,000 crore by the GoI. The demand arose after the GoI introduced a retrospective clarification to the Income Tax Act, 1961.
• NTT DoCoMo
In the TATA-DoCoMo deal, TATA, the Indian Company agreed to buy back shares in its joint venture with DoCoMo. The GoI blocked the purchases by invoking a wrong regulation to prevent equity investments flowing in a disguised manner as a debt. DoCoMo sought an international arbitration at London and won $1.17 billion in compensation and government has blocked them from receiving this payment as well and initiated termination of old BITs and institution of new BITs.
• Nokia Dispute
Tax authorities issued a tax demand notice on Nokia’s Indian subsidiary on ground that the Nokia India had paid royalty on the software used in the manufacture of mobile to its parent company, thus it attracted a 10% (ten percent) tax to be deducted at source. Thereafter, Nokia India asked the Indian government to invoke dispute settlement clause in the India-Finland Bilateral Investment Promotion and Protection Pact.
MODEL BIT INTRODUCED IN 2016 BY THE GOVERNMENT OF INDIA
The India Model BIT, 2016 (“2016 India Model BIT”) is an outcome of India’s substantially changed attitude towards disputes arising out of BITs. The 2003 Indian model BIT was structured in a way that it protected the investors by providing easy and quick access to the dispute resolution mechanism in case of breach of the underlying BIT. However, the 2016 Model BIT adopted by the government of India as a result of substantial number of claims initiated by foreign investors is substantially different and drafted in a way as to support the host state (the government of India in this case). Under the 2016 India Model BIT, investors will now have to exhaust all local remedies before going to international arbitration.
This would mean that, going forward, expropriation disputes are likely to be resolved more through local remedies available with local courts, and domestic arbitrations, rather than relying on BITS. This would mean that a lot of importance will be placed by investors on speedy enforceability of contracts in India, particularly in case of expropriation claims.
Prashanth Sabeshan, Partner
Swathy Pisharody, Associate
Swati Rawat, Associate
CCI Dismissed a Complaint Alleging Abuse of Dominance by the Indian Railways
On June 28, 2019, CCI dismissed an information filed by Consumer Educational and Research Society (‘IP-1’) and its member, Ms. Parul Choudhary (‘IP-2’) (collectively, referred to as ‘IPs’), against Union of India, Ministry of Railways (‘MoR’) and the Indian Railway Catering and Tourism Corporation Limited (‘IRCTC’) (collectively, referred to as ‘Indian Railways’) alleging contravention of the provisions of Section 4 of the Act.
The allegation in the information pertained to Indian Railways abusing its alleged dominant position in the railways sector in India and challenged the ticket refund rules as being arbitrary, unjust and against public interest. The IPs alleged that the rule regarding refund under the Railway Passengers (Cancellation of Tickets and Refund of Fare) Rules, 2015 (‘Refund Rules’), empowered the Indian Railways to forfeit the full ticket fare even in cases where the passengers fail to cancel the ticket for reasons attributable solely to the Indian Railways and/or circumstances beyond the control of the passenger.
CCI first noted and agreed that as a result of the statutory and regulatory framework, Indian Railways is dominant in the market of ‘transportation of passengers through railways across India’, but dismissed the information on the ground that no anti-competitive conduct could be said to have arisen for the allegations made. The Refund Rules have been notified in the Gazette by the Central Government in exercise of its powers under the provisions of the Railways Act, 1989 and if there is deficiency in service on part of Indian Railways, IPs can initiate action before an appropriate forum. CCI however mentioned that the Indian Railways may consider reviewing the existing rules of refund of fare and make them more consumer friendly.
 Case no. 20 of 2019
CCI Dismisses Information against Bentley Systems for Violation of Sections 3 and 4 of the Competition Act
On July 2, 2019, CCI passed an order dismissing an information filed by SOWiL Limited (‘Sowil’), a consultancy, against Bentley Systems India Pvt. Ltd. (‘Bentley’) alleging, inter alia, contravention of the provisions of Sections 3 and 4 of the Act. Sowil provides consultancy in preliminary planning, feasibility studies, traffic studies, railway works, bridges, structures and tunneling. Bentley is a subsidiary of Bentley Systems, Incorporated, registered in the United States of America, and is engaged in the business of providing software solutions to engineers, architects, etc. for design construction, and allied operation of infrastructure.
Sowil had purchased certain software from Bentley and had also entered into a ‘SELECT Agreement’ with Bentley, which enabled Sowil to acquire licensing privileges and services. Sowil primarily alleged that the SELECT agreement imposed a condition to compulsorily renew all licenses, even in a case where Sowil wished to renew three out of the eight licenses it owned because of financial difficulties. Further, to prove dominant position of Bentley, Sowil submitted that: (i) Bentley has a market share of more than 80% in the field of providing ‘software services to more than 170 countries’, without defining a specific relevant market in the information; and (ii) purchase of Bentley’s softwares is a mandatory pre-condition to participate in the tenders floated by State Government and Central Government agencies including Railways, National Highways Authority of India and Rail Vikas Nigam Limited etc.
CCI dismissed the information on the following grounds:
i. No Anti-Competitive Agreement: CCI held that under Section 3(3) of the Act, only agreements entered into between entities involved in similar trade of goods and services can be tested. Considering Sowil had purchased licenses over Bentley’s software, this arrangement could not qualify as a horizontal relationship. Further, since the licensing services availed by Sowil were in the capacity as a captive consumer, the arrangement could also not be an agreement entered into between entities at different stages/levels of the production chain.
ii. Test under Section 4: To test violation of Section 4 of the Act, CCI defined the relevant market as the ‘supply of computer-aided design (CAD) software services in civil engineering works in India’, bearing in mind that CAD software used in different fields are not substitutable and the software used by Sowil is related to designing for use in civil construction. CCI held that in this relevant market, Bentley was not in a dominant position considering that there were many competitors in the market providing CAD disabling (e.g., AutoDesk, Carlson, Site3D, SierraSoft, Trimble etc.).
iii. Other Allegations to Prove Dominance: After considering the tenders and documents relied on by Sowil, CCI concluded that they did not support Sowil’s allegation that only Bentley’s software have to be used to qualify for participation in the tender process as a pre-condition, since the tenders allowed other products viz., AutoDesk’s Civil 3D or other similar software for designing of railway projects without any exclusivity.
 Case no. 8 of 2019
CCI Approves Joint Acquisition of Uttam Galva Metallics Limited and Uttam Value Steel Limited by CarVal Funds and Nithia
On June 3, 2019, CCI approved the proposed joint acquisition of up to 100% of the total issued and paid up share capital of each of Uttam Galva Metallics Limited (‘UGML’) and Uttam Value Steel Limited (‘UVSL’) by CVI CVF IV Master Fund II LP, CVI AA Master Fund II LP, CVI AV Master Fund II LP, CVIC Master Fund LP, Carval GCF Master Fund II LP, CarVal GCF Lux Securities S. à r. l., CVI AA Lux Securities S. à r. l., CVI AV Lux Securities S. à r. l., CVI CVF IV Lux Securities S. à r. l., CVIC Lux Securities Trading S. à r. l (collectively, referred to as ‘Carval Funds’) and Nithia Capital Resources Advisors LLP (including Mr. Jai Saraf) (‘Nithia’) (‘Proposed Combination’). The notice for the proposed acquisition was filed pursuant to resolution plans submitted by Carval Funds and Nithia in relation the insolvency proceedings initiated under the Insolvency and Bankruptcy Code, 2016 for corporate insolvency resolution process of UGML and UVSL.
Carval Funds are global investment funds managed by CarVal Investors, LLC (‘Carval’), a global investment fund manager that invests in distressed securities belonging to various sectors, globally. Carval has a minor, non-control conferring 0.7% investment in Tata Steel BSL Limited, as a result of conversion of debt investment. Nithia is engaged in providing advisory services in relation to, inter alia, distressed companies globally, and is not currently present in India either directly or indirectly. UGML is a public company incorporated in India, engaged in the business of manufacture of hot metal/pig iron and UVSL is a public company, engaged in the business of manufacture and sale of finished flat carbon steel products.
CCI approved the Proposed Combination given that it did not change the competition dynamics in any market in India and is thus not likely to result in AAEC in any of the markets in India.
 Combination Registration No. C-2019/04/659
CCI Approves Acquisition of Approximately 7.98% of the Total Outstanding Equity Share Capital of Ajax by Kedaara
On June 20, 2019, CCI approved the acquisition of approximately 7.98% of the total outstanding equity share capital of Ajax Engineering Private Limited (‘Ajax’) by Kedaara Capital Fund II LLP (‘Kedaara’) along with right of representation on the Board of Directors of Ajax (‘Proposed Combination’).
While Kedara is a private equity fund having no current presence in India, Ajax is a private limited company, engaged in the manufacture and sale of concreting equipment within India, under the brand name of Ajax.
CCI approved the Proposed Combination, considering that there were no direct or indirect horizontal or vertical overlaps between the business activities of Ajax and Kedaara. Therefore, the Proposed Combination was unlikely to cause any AAEC in India.
 Combination Registration No. C-2019/06/666