On August 6, 2018, CCI approved the acquisition of up to 100% of the total issued and paid up share capital of Bhushan Power and Steel Limited (‘BPSL’) by Tata Steel Limited. (‘TSL’). [1] The combination was proposed pursuant to proceedings under Insolvency and Bankruptcy Code, 2017 (‘IBC’) that BPSL had been subject to (‘Proposed Combination’). TSL and BPSL are collectively referred to as ‘Parties’.

TSL is a public limited company engaged in integral steel manufacturing operations, ranging from mining to steel-making and further downstream processing. Similarly, BPSL is also engaged in steel manufacturing operations, including downstream processing of flat carbon steel products as cold rolled sheets and coils, surface coated products, tubes and pipes and alloy based long steel products, etc. CCI observed that TSL’s annual crude steel capacity across India is nearly 18.6 million ton per annum (‘MTPA’) and that of BPSL is 2.30 MTPA.

In consideration of the fact that steel making process involves various steps and the finished products obtained pursuant to each step could also be sold in the market, CCI identified the following overlapping product segments between TSL and BPSL:

i.     Hat rolled coils (‘HR-CS’) and plates (‘HR-P’) (together ‘HR-CSP’);

ii.   Cold rolled coils and sheets (‘CR-CS’);

iii.  Surface coated products (‘SCP’) (including galvanized products (‘GP’) and colour coated products (‘CCP’)); and

iv.  Flat steel tubes and pipes (‘T&P’) (including precision and non-precision T&Ps).

(collectively ‘Identified Overlaps’)

In identifying the abovementioned product segments as distinct from each other, CCI relied on the fact that HR-CSP, CR-CS, SCP and T&P differ on the basis of technical characteristics, intended use, price levels, etc. However, CCI did not define the exact relevant market in consideration of the fact that the Proposed Combination was not likely to give rise to AAEC regardless of how the relevant market was defined.

For its assessment of the competitive effects of the combination, CCI considered market share data in terms of installed production capacity, gross production, production for sale, and domestic sales. CCI noted that the combination was not likely to cause AAEC in any of the Identified Overlaps since the post combination market shares of TSL and BPSL in each of the Identified Overlaps would be in a range of 20% – 30% with an insignificant increment of 0-5% Even in certain Identified Overlaps such as CR-CS, GP and CCP, where the increment in market share was 5-10%, CCI noted that the combined market share was in the range of 20% – 30% and that the parties would continue to compete with several large and significant competitors such as JSW, Essar and SAIL etc. CCI also took into consideration the fact that the Parties’ competitors in the Identified Overlaps had significant unutilized production capacity, and such competitors could increase their production, if required, thereby impeding any attempts of the Parties at capturing the market. In the GP segment, CCI also observed that imports constituted 15% – 20% of the total domestic sales and therefore exerted considerable competitive constraint on the Parties. CCI also observed that Parties were also present in the markets for pig iron, sponge iron and alloy billets although the Parties either had limited presence in the domestic market, or produced qualitatively distinguishable products, such as basic pig iron (BPSL) and foundry pig iron (TSL). Accordingly, as per CCI, it was unlikely that the Proposed Combination would have adversely impacted the market.

[1] Combination Registration No. C-2018/07/582