Competition Commission of India (CCI) by its order dated February 16, 2016 has penalized GE Energy Europe B.V., GE and GE Industrial France SAS (collectively, the “Acquirers”) for failure to notify a proposed combination in terms of Section 6(2)(b) of the Competition Act, 2002(Act) read with Regulation 5(8) of the Competition Commission of India(Procedure in regard to the transaction of business relating to combination) Regulation, 2011 (“Combination Regulations”).
The proposed combination related to acquisition of up to 26% of the total paid-up equity share capital of Alstom India Limited and acquisition of up to 25% of the total paid-up equity share capital of Alstom T&D India Limited (collectively “Targets”).
The CCI took suo-moto cognizance of the two public announcements (“PAs”) dated May 05, 2014 made by Acquirers in pursuance to the relevant provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“Takeover Regulations”). The CCI was of the view that the Acquirers were required to give notice within 30 days of the PAs, i.e., April 06, 2014.
The CCI noted that Section 6(2)(b) read with Regulation 5(8) of the Combination Regulation, 2011 provide three conditions to be satisfied:
1- The Acquirers has an intention to acquire shares in the Targets;
2- The Acquirers communicated such intent to a Statutory Authority/Central Govt./State Govt.
3- The Acquirers failed to give notice to the CCI within thirty days of communication of such intent to SEBI.
The CCI noted that the intent to acquire would include unilateral measures such as PAs under the Takeover Regulations. Further, the PAs would constitute a “communication” within the purview of second proviso to Regulation 5(8) of the Combination Regulations.
That the Acquirers failed to give notice to the CCI within 30 days of the publishing of the PAs would constitute violation of Section 6(2) of the Act.
In terms of Section 43A of the Act, the CCI can levy a maximum penalty of 1% of the combined value of worldwide assets of the parties to the proposed combination. While determining the quantum of penalty, the CCI considered (a) the bonafide conduct of the Acquires as regards the intent to file the notice, albeit after the expiry of statutory timelines; and (b) the fact that the combination was not consummated by the Acquirers without the approval of the CCI. The CCI imposed a penalty of INR 5 Crore on the Acquirers. (Source: Order dated February 16, 2016. For full text see CCI website-www.cci gov.in)