Mrtpc Panel To Decide On Hll-Tomco Merger Review

The Monopolies & Restrictive Trade Practices Commission (MRTPC) will set up a full bench to decide if the Commission can examine the post-merger situation arising from the Hindustan Lever and Tata Oil Mills Company (Tomco) merger in 1992. The three-member bench will meet on March 16.

A decision in the affirmative by the bench, headed by the MRTPC chairman, will throw open for examination several recent amalgamations, including HLLs merger with Ponds and its acquisition of Lakme.

The HLL-Tomco merger had been okayed by the high court in 1992. Hence, in deciding on the Commissions powers to re-examine the amalgamation, the panel will have to take into account various issues. Legal sources said the bench would look into all legal aspects, especially to determine if the high courts clearance of the merger would be a binding order on the Commission.

 

A case against the HLL-Tomco merger had earlier been filed with the MRTPC by the Maharashtra Small Scale Soap Manufacturers Association. Later, the Maharash-tra General Kamgar Union also filed a case, alleging that the merger had led to a monopoly situation wherein the small scale manufacturers of soap have been pushed out of the market.

Although the MRTPC is not empowered to decide on mergers or amalgamations, it can review post-merger situations under Section 31(ii) of the MRTP Act.

An MRTPC review could impact on the HLL-Tomco merger. The Commission, which has already undertaken an enquiry into possible monopolistic implications of the merger, has to decide if it can prepare a report and present it to the government.

The Supreme Court had earlier, while ruling in the HLL-Tomco case, said: As a result of amalgamation, if it is found that the working of the company is being conducted in a way that brings it within the mischief of the MRTP Act, it would be open to the authority under the MRTP Act to go into it and decide the controversy as it thinks fit.

Corporate lawyers say it is unlikely that the MRTPC will undo the merger even if it makes out a case. Instead, if it finds instances of monopolistic or restrictive trade practices in the deal, it could issue interim orders to rectify the situation.

If the Commissions full bench decides to examine the merger case, it will set a precedent as post-merger scenarios have not been taken up for review till now. However, it is unlikely that... it will suggest that the merger be undone, said Diljeet Titus, corporate attorney with Titus and Co, a Delhi-based law firm.