CCI clears Holcim-Lafarge deal

Fair trade watchdog CCI has given its green signal for the Holcim-Lafarge merger deal that would create the world's largest cement group, while directing Lafarge to sell its two plants in India to address anti-competition concerns.
The USD 40 billion-deal, which a few weeks ago was on the verge of even falling apart, was also the second instance where the CCI sought public comments to assess the anti-competition nature of the transaction.
After an intense scrutiny, CCI has ordered Lafarge to divest its plants in Jharkhand and Chhattisgarh in order to effectively eliminate "appreciable adverse effect on competition" due to the proposed deal.

Swiss major Holcim and French entity Lafarge have presence in the country through their indirect subsidiaries.
The Competition Commission of India's (CCI) approval has come after the first notice was given by the two companies in July 2014.
The Jojobera plant has a cement grinding capacity of 4.6 MTPA (million tonnes per annum) while the unit at Sonadih in Chhattisgarh has a cement grinding capacity of 0.55 MTPA besides a clinker capacity of 3.10 MTPA.

In the process of deciding on the divestiture proposal, the Commission considered various combinations of plants located in Jharkhand, West Bengal and Chhattisgarh forming part of the relevant market.

To assess the deal, the Commission identified the relevant markets for grey cement and RMC (ready mix concrete).
With regard to grey cement, CCI considered Eastern region -- comprising the states of Chhattisgarh, Odisha, West Bengal, Bihar and Jharkhand -- as the relevant geographic market.
The Commission found that "the proposed combination is likely to have an appreciable adverse effect on competition in India in the relevant market for grey cement in the Eastern region", the order dated March 30 and released today said.
According to the Commission, the divesture of Jojobera and Sonadih plants would create a credible competitor who could pose a significant competitive constraint in the relevant market.

The Commission, did not find any evidence to suggest that the vertical relationships between the two companies with respect to RMC would result in unfair business practices.
Among others, the divestment of the plants would not be complete unless CCI approves the terms of the final and binding sale and purchase agreement, the purchaser and transitional agreements, if any.
Holcim, which is a producer of cement and other construction materials, has presence in India through its two indirect subsidiaries -- ACC and Ambuja Cements. Besides it is present in the RMC and aggregates segments.
Lafarge, which is also into similar business, is present in the product segments of cement, RMC and aggregates in India through its indirect subsidiaries -- Lafarge India Pvt Ltd and Lafarge Aggregates & Concrete India Pvt Ltd.