Dalmia makes way for Lafarge-Holcim merger

The CCI had earlier approved merger of cement manufacturers Lafarge and Holcim in country

The Competition Appellate Tribunal (Compat) on Monday accepted Dalmia Cements’ application for withdrawal of a challenge to the proposed merger of Lafarge and Holcim in India. Dalmia had challenged an approval given by the Competition Commission of India (CCI) to the proposed merger.

In February 2016, CCI had allowed the Lafarge-Holcim merger for a second time, provided Lafarge sell all its Indian assets. CCI had first approved the merger between the two companies in March 2015, on the stipulation that Lafarge sell two of its plants in the open market.

Lafarge could not complete the sale due to passage of the Mines and Minerals (Development and Regulation) Amendment Act, 2015, which barred transfer of limestone mines attached with its cement plants.

Thereafter, Lafarge and Holcim approached CCI again to request sanctioning of the merger on revised terms. The re-approval was challenged in Compat by Dalmia Cements on the ground that CCI did not have the power — under Section 31 of the Competition Act, 2002 — to approve a merger for a second time when the terms of the first approval had not been complied with.

After hearing the initial arguments made by Dalmia Cements, represented by the law firm Luthra & Luthra, the COMPAT on April 13 stayed the CCI approval of the merger.

In an interesting twist, Dalmia Cements instead of pressing the matter further today, made an application for withdrawal of the appeal citing recent developments in the Mines and Minerals Act and existent uncertainties in the legislation in relation to mining and prospecting licenses, making the appeal unwarranted.

The Senior Advocate representing the CCI did not object to the withdrawal but instead implored the tribunal to impose costs. "From the very beginning, this has been a frivolous appeal. The CCI has spent sufficient time in dealing with it" the CCI counsel said.

After considering the pleas, the tribunal allowed the withdrawal but abstained from imposing costs upon the appellant considering the far-reaching implications of such a step to future challenges of CCI orders. "We refrain from awarding costs as judicial propriety will seriously be hampered (for the future)" the bench comprising of Chairperson G S Singhvi and Member Rajeev Kher said. The dismissal of the appeal finally clears the path for the Larfarge-Holcim merger as per the February 2016 CCI order.