PepsiCo gets CCI nod for selling bottling plants to franchisee

Fair trade watchdog said the deal does not raise anti-competitive concerns

Beverages and snacks major PepsiCo India's proposed sale of its plants in North India to Varun Beverages had got clearance from fair trade watchdog CCI, saying the deal does not raise anti-competitive concerns.

Under the proposed deal, PepsiCo India's franchisee bottler Varun Beverages would acquire the beverage maker's four bottling plants in Haryana, Himachal Pradesh, Uttarakhand and Uttar Pradesh, as going concern on a slump sale basis.

Varun Beverages, which is an arm of RJ Corp, would also have the rights to distribute and sell "Pepsi" products in the territory of Chandigarh.

Additionally, Varun Beverages would buy an undertaking in Punjab from Aradhana Drinks and Beverages Private Ltd -- a group company of PepsiCo India -- on a going concern on a slump sale basis.

In an order dated December 29 but released today, the Competition Commission of India (CCI) has said that "the proposed combination is not likely to have an appreciable adverse effort on competition in India".

The fair trade regulator noted that PepsiCo India and Varun Beverages "are not competitors but have an existing vertical relationship with each other".

"The proposed combination involves transfer of ownership of the bottling plants/factories, certain distribution rights and an undertaking to an existing bottler/ franchisee (Varun Beverages)," CCI observed in the order.

"Post combination, PepsiCo India will continue to own, maintain and promote the Pepsi brand in India," it said adding that "there will be no significant change in the market structure as a result of the proposed combination".

Varun Beverages is PepsiCo's largest independent bottler in India. It currently operates PepsiCo bottling operations across parts of Haryana, Uttar Pradesh, Madhya Pradesh and Rajasthan, North East, Goa, West Bengal and Delhi with nine plants in India.

It also handles PepsiCo bottling operations in Nepal, Sri Lanka, Zambia, Morocco and Mozambique.

The concerned parities had entered into the deal on November, 15, 2014 following which they had approached CCI for its approval.