On 29 September 2022, the CCI approved the 100% acquisition of the share capital and economic rights in Diliigent Power Private Limited (‘Target 1’) and DB Power Limited (‘Target 2’) by Adani Power Ltd. (‘Acquirer’). Prior to the notice filed for acquisition, a Binding Memorandum of Understanding (‘Binding MoU’) dated 18 August 2022 between the Acquirer, Target 1 and the Selling Shareholders (comprising DB Group, The Rohatyn Group and Warburg Pincus) was executed. (collectively Target 1 and Target 2 are referred as ‘Targets’) (collectively Acquirer and Targets are referred as ‘Parties’).^[1]

The Acquirer, belonging to the Adani group (‘Acquirer Group’), is a power company with eight operational power plants in India. It has a power generation capacity of 13,650 Mega Watt (‘MW’) comprising thermal power plants in many states, and a 40 MW solar power project in Gujarat. Acquirer Group is also engaged in the business of thermal power, coal management services, building, commissioning, operating and maintaining electric power transmission systems, and distribution of electricity.

Target 1 is primarily engaged in the activities of a holding company. It also provides project management and consultancy services to Target 2. Target 2 is engaged in the business of the generation of thermal power and operates a coal-based thermal power plant in Chhattisgarh.

In the power sector, the CCI has considered generation, distribution and transmission of power as separate relevant product markets. It has further segmented the market for generation of power based on the source of power generation (renewable sources and non-renewable sources). The market for generation of power through non-renewable sources has further been sub-segmented as thermal power generation (through coal) and other sources.

The CCI noted that there is a horizontal overlap in the market of power generation in India at a broader level. At a narrower level, there is an overlap in power generation in India through the thermal source (using coal). However, since the combined market shares of Parties were less than 10% on the basis of installed capacity and actual production, both in the broad market and in the narrower market, the CCI noted that the acquisition will not cause any AAEC.

Further, Parties exhibited a vertical overlap in the provision of coal management services by Acquirer Group (upstream market) and generation of power by Target 2 (downstream market).

The CCI observed that the presence of Target 2 is insignificant in the downstream market and the market share of Adani Group is less than 5% in the upstream market. Additionally, the Parties exhibit the following potential vertical overlaps as well: (i) generation of power by Target 2 and transmission of power by Acquirer Group; and (ii) generation of power by Target 2 and distribution of power by Acquirer Group. The CCI observed that the market share of Target 2 is minimal in the upstream market and the market share of Adani Group is less than 5% in the downstream markets of transmission of power as well as distribution of power.

Thus, on the proper assessment of the acquisition, the CCI opined that the acquisition is not likely to have any AAEC in India. Therefore, the CCI approved the acquisition under Section 31(1) of the Competition Act.

[1] Combination Registration No. C-2022/08/963.