CCI slaps Rs 5 crore penalty on Zuari, Deepak Fertilizers

Fair trade watchdog CCI has imposed a total penalty of Rs 5 crore on Zuari and Deepak Fertilizers for violating competition norms with regard to their stake purchases in Mangalore Chemicals and Fertilizers.
The regulator has slapped a "nominal" penalty of Rs 3 crore on Zuari Fertilisers and Chemicals Ltd (ZFCL) and Zuari Agro Chemicals Ltd (ZACL).
Besides, a "nominal" fine of Rs 2 crore has been imposed on Deepak Fertilizers and its subsidiary SCM Soilfert Ltd.
In separate but similarly worded orders, the Competition Commission of India (CCI) said these companies have been penalised since they consummated respective acquisition of shares in MCFL without giving notice to it.

Both orders are dated February 10.
Zuari group and Deepak Fertilizers are in the race to take control of MCFL. Recently, Zuari announced voluntary open offer to acquire additional 36.56 per cent stake in MCFL.

At the end of December 2014, Zuari Fertilisers & Chemicals Ltd -- which is part of promoter group -- held 16.47 per cent stake in MCFL while that of Deepak Fertilizers stood at 29.05 per cent. Vijay Mallya-led UB group has over 21 per cent stake in MCFL.
Deepak Fertilizers and its subsidiary SCM Soilfert Ltd have been penalised for not giving notice to CCI regarding their acquisition of 24.46 per cent in MCFL which happened in July 2013.

The fine is also for not seeking the regulator's approval while acquiring additional 0.8 per cent stake in MCFL which took the Deepak group's overall shareholding to 25.3 per cent in April 2014.
Similarly, in the case of Zuari Fertilisers and Chemicals Ltd (ZFCL) and Zuari Agro Chemicals Ltd (ZACL), the Commission said they did not inform it about 16.43 per cent stake acquisition in MCFL. This stake was purchased over a period from April 2013 to July 2013.
The Commission came to know about both instances when the two parties separately sought approval for acquiring additional 26 per cent stake in MCFL last year.

Both the proposals were approved by CCI last year.