On October 04, 2021, CCI approved the acquisition of: (i) production and/or commercialisation of organic pigments, pigment preparations, and dyes conducted by Colorants International AG (‘Colorants International’), Colorants Solutions USA LLC (‘Colorants Solutions’), and their subsidiaries (in various countries including India) (collectively ‘Clariant Pigments Business’); and (ii) business of the production, manufacturing, and trading of corrosion protection pigments as well as organic and inorganic colour pigments, hybrid pigments, and pigment preparations as carried out by Heubach and its subsidiaries in various countries including India (‘Heubach Business’).^[1]

As per the transaction, the entity holding the combined business (of Clariant Pigments Business and Heubach Business) will be indirectly controlled by SK Capital Partners (‘SKCP’) (through Luxembourg Investment Company 428 S.à r.l (‘Lux Bidco’)) and the minority shareholding will be held by Heubach Holding GmbH (‘Heubach’) and Clariant AG (‘Clariant’).

The parties to the transaction are engaged in the following activities:

i.    Clariant is engaged in six main businesses: (a) additives; (b) catalysts; (c) functional minerals; (d) industrial and consumer specialties; (e) oil and mining services; and (f) pigments. The Clariant Pigments Business (including Colorants International, Colorants Solutions, and their subsidiaries) mainly supplies: (a) organic pigments; (b) pigment preparations; and (c) dyes to provide colour in a variety of products.

ii.   Heubach (present in India through two subsidiaries and one joint venture: (a) Heubach Colour Private Limited (Heubach India); (b) Heubach Pigment Private Limited; and (c) Heubach Toyo JV) is a manufacturer of corrosion protection pigments as well as organic and inorganic colour pigments and pigment preparations.

iii.  SKCP is a private investment firm focused on the specialty materials, chemicals, and pharmaceuticals sectors. Lux Bidco is ultimately controlled by funds controlled by SKCP’s affiliate. Lux Bidco has been incorporated for the purpose of this transaction. In India, SKCP is active in the pigments sector through its portfolio companies (‘SKCP Portfolio Companies’): (a) Archroma, which is active in the sales of dyes and pigment preparations; and (b) Venator, which is active in the sale of inorganic pigments.

The parties identified the following overlaps in the business activities of the parties to the transaction:

i.    Manufacture or sale of organic pigments and inorganic pigments: Based on assessment of the characteristics and application, CCI concluded that organic pigments cannot be substituted with inorganic pigments. CCI also identified overlaps based on narrower segmentation of pigments based on each chemical class of the pigments.

ii.   Pigment preparation: Pigment can be sold in the original form (powder), but can also be offered with different preparation and dispersion forms. The business activities of all parties overlapped in the market of pigment preparation in India.

iii.  Sale of dyes: Clariant Pigments Business and Archroma (an SKCP Portfolio Company) are engaged in the sale of dyes in India. This may be further segmented based on the chemical class (e., the manner in which the dye is applied to the substrate). Accordingly, CCI assessed an overlap in the market for sale of acid dyes.

CCI ultimately left the delineation of relevant markets open for all overlaps identified above as the transaction was not likely to result in AAEC in any of the possible relevant markets because of: (i) low combined market shares; (ii) low increment in market shares as a result of the transaction; (iii) presence of several other players that pose competitive constraints to the parties; and/or (iv) presence of a fragmented market.

CCI also analysed the existing vertical relationships between the parties in the markets for: (i) sale of products as input material for production and for resale from the Clariant Pigments Business to SKCP Portfolio Companies; (ii) purchase of products as input material for the manufacture of pigment preparations and diarylide pigments from Heubach by Clariant Pigments Business; (iii) purchase of products by Clariant Pigments Business used for the manufacturing of dyes as a toller for Archroma.

CCI also analysed the potential vertical relationships between the parties: (i) Clariant Pigments Business’ potential purchases from Heubach or SKCP Portfolio Companies (currently, Clariant Pigments Business is purchasing the input materials from third parties to manufacture its own products); (ii) Heubach’s potential purchases from Clariant or SKCP Portfolio Companies (Heubach is currently purchasing input materials from third parties for resale or manufacturing of Phthalocynine Pigments).

CCI considered these existing and potential vertical relationships between the parties to the transaction and concluded that they are not likely to cause any competition foreclosure concerns, given their overall presence in the existing and potential vertical overlaps and the presence of other players in these overlapping segments.

CCI concluded that the transaction was not likely to result in AAEC in India and approved the transaction.

[1] Combination Registration No. C-2021/10/856.