On March 22, 2019, CCI approved the acquisition of the entire equity share capital of Sunfresh Agro Industries Private Limited (‘SAIPL’) by Tirumula Milk Products Private Limited (‘TMPPL’). The transaction involved: (i) a share purchase agreement (‘SPA’) under which TMPPL would acquire the entire equity share capital of SAIPL from Prabhat Dairy Limited (‘PDL’) (70.71%) and, a PDL subsidiary, Cheese Land Agro India Private Limited (‘CLAIPL’) (29.29%); and (ii) a business transfer agreement (‘BTA’) whereby SAIPL would acquire PDL’s dairy business as a going concern, leading to indirect acquisition of PDL’s dairy business by TMPPL. [1]

TMPPL is a part of BSA International Lactalis (‘Lactalis Group’), a family-owned dairy group based in France. It is engaged in the business of selling milk and milk products in India. The Lactalis Group also owns 100% shares in Anik Industries Limited (‘AIL’) which is also engaged in the dairy business in India.

PDL, through its subsidiary SAIPL, is involved in the procurement, manufacture, processing and packaging of milk and milk products and in wholesale trading of milk and milk products and in the business of third party labels for brands such as Britannia, Mother Dairy, Nandini, Future Group and D-mart. CLAIPL, a PDL subsidiary, trades in cattle feed and is not engaged in selling of dairy products.

While assessing the transaction, CCI noted that dairy products can be split into two categories: (i) perishable dairy products (for short term consumption like milk, curd, paneer etc.); and (ii) non-perishable dairy products (for long term consumption like ghee, milk powder etc.). CCI further observed that the relevant product market could also be defined more narrowly, on a product-wise basis. Assessing the relevant geographic market, CCI observed that for non-perishable dairy products, the relevant market was India-wide, while for perishable dairy products, the relevant markets were state-wide.

Based on CCI’s assessment, the parties overlapped in the following products –  Curd, Lassi, Milk; and Fresh Paneer – in the perishable product category; and the following – Ghee; Butter, skimmed milk powder, dairy whitener, ultra-high temperature processed milk, and ice-cream in the non-perishable category.  CCI reviewed parties’ combined market share and/or incremental market share for the perishable products and non-perishable products, and found them to be too insignificant to cause any adverse effect on competition in any relevant market.

[1] Combination Registration No. C-2019/02/644