NEW DELHI: For Competition Commission of India, the Sun Pharma-Ranbaxy deal may be amongst the largest that it has dealt with since the rules for M&A scrutiny were put in place nearly three years ago. But, experts do not see any threat to the deal from the anti-monopoly watchdog.
“It will cross the threshold in terms of the assets and the turnover fixed by CCI. Usually, CCI does not come in the way of a merger being consummated,” said Manas Chaudhuri, partner at law firm Khaitan & Co.
CCI scrutinizes transactions of either the combined asset of the enterprise is over Rs 1,500 crore or the combined turnover exceeds Rs 4,500 crore. There are separate provisions for companies, which have global presence, which will kick in for the Sun Pharma-Ranbaxy deal as well. In addition, the triggers for the merger of a group (turnover of Rs 6,000 crore and assets of Rs 18,000 crore) may kick in, a consultant at a global consultancy firm said.
All transactions, which result in the combined entity having a market share of 15%, face scrutiny. V Krishnakumar, partner at consulting firm EY, said the market share will be in excess of 9% in the domestic formulations market, while the second largest Indian company has 6% share.
“Even 15-18% market share should not be a problem because at that level it will not be impinging on competition. While CCI will examine the deal in detail, it should be able to get CCI approval. CCI has been quite fair,” said Amrish Shah, another partner at EY.
When contacted, CCI chairman Ashok Chawla refused to get into the details, saying he has not received the proposal yet. “As and when it is filed, we will look at it,” he said.
“It is only when some futuristic combination will disturb the market for existing players, will CCI ask for modification of the terms of the transaction,” said Khaitan & Co’s Chaudhuri.