On September 30, 2022, the CCI penalised Trian Partners AM Holdco, Ltd. (‘Trian Holdco’) and Trian Fund Management, L.P. (‘Trian Fund’) (collectively referred to as ‘Acquirers’) under Section 43A of the Competition Act in relation to the acquisition of 9.9% shareholding in Invesco Limited (‘Target’).^[1]

The Acquirers, indirectly, acquired 4.8% of the shares of Target, through open-market purchases, and subsequently, Trian Holdco acquired beneficial ownership over 5.1% of the shares of the Target through open-market purchases and derivative transactions.

Trian Holdco is an alternate investment vehicle. Trian Fund is a global investment management firm. Target is a public listed company and has 4 subsidiaries in India. After closing of the transaction, the Acquirers filed a statement with the United States Securities Exchange Commission (‘SEC’) where they disclosed that the Acquirers and Target will engage in strategic and operational initiatives. They also disclosed that the Acquirers have requested the Target to include the partners of the Acquirers in its board of directors. Subsequently, the Target expanded its board and invited 2 of the Acquirer’s partners.

The CCI initiated inquiry of gun jumping against the Acquirers because the transaction was consummated without the CCI’s approval, and the transaction was not exempt under Item 1 Schedule I of the Combination Regulations.

On a detailed analysis the CCI held that the Acquirers negotiated for the board seat(s) on the Target’s board on the date of closing of the transaction and acquired two board seats in less than two months from the date of the closing of the transaction. Thus, Acquirers clearly had the intention to participate in the affairs and management of Target and the transaction was not solely as an investment. The CCI also held that the Acquirers considers the transaction as an ‘investment’ and that investments are capital transactions and not revenue transactions. It was held that the intent of the Acquirers to operate as an engaged shareholder and work with the management to earn a higher return on investment, fulfils the characteristics of an ‘investment’ and cannot be considered in the ordinary course of business for competition law purposes.

The CCI concluded that the transaction is not exempt under Item 1 Schedule I of the Combination Regulations. It was also held that even if Acquirers’ contentions were to be believed, that there was no such intention or understanding to participate in the management and affairs of the Target, they should have approached the CCI before accepting the positions on the Target’s board, which allowed the Acquirers to participate in the management or affairs of the Target.

The CCI thus penalized the Acquirers for gun jumping and violating the provisions of Section 6(2) and Section 6(2A) of the Act. Consequently, under Section 43A of the Act, the CCI levied a penalty of ₹20,00,000 on the Acquirers for their conduct.

[1] Ref. No. C-2021/01/810.