Combination Order by Competition Commission of India: An Analysis Kumud Malviya ID NO. 477

COMBINATION ORDER BY COMPETITION COMMISSION OF INDIA
AN ANALYSIS KUMUD MALVIYA ID NO. 477
On 28th Aug., CCI passed an order under Sec.31(1) of the Competition Act to approve the combination among Wireless business services private Limited, Wireless broadband business services(Delhi) Pvt. Ltd., Wireless broadband business services(Kerala) Pvt. Ltd., Wireless broadband business services(Hariyana) Pvt. Ltd., [WBSPL, WBBS(Delhi), WBBS(Haryana), WBBS(Kerala)].
The merging companies are the subsidiaries of Qualcomm Inc. incorporated through its wholly own subsidiary Qualcomm Asia Pacific Pvt. Ltd. The combination was approved by the Board of Directors of all the companies i.e. WBSPL, WBBS [Kerala], WBBS [DELHI], WBBS [Haryana] under Sec.391-394 of the Companies Act.
STRUCTURE
QUALCOMM INC.
QUALCOMM ASIA PACIFIC PVT. LTD.
WBBS Delhi
WBBS Kerala
WBBS Haryana
WBSPL
WBSPL holds a category A ISP (Internet service provider) license. Category A license: territorial jurisdiction of the Union of India i.e. whole of India except specified areas that may be notified to be excluded from time to time. It also has been allotted BWA (Broadband wireless access) spectrum in four circles in India.
The Qualcomm Inc. 74% share capital in each of the merging companies and the rest was held by Tulip Telecom Ltd. (13%) & Global Holding company Pvt. Ltd. (13%) While the notice was still pending before CCI for approval of the proposed combination, Bharti Airtel acquired 26% shares from Tulip and Global Co. Airtel acquired additional shares . Thus, aggregate shareholding of Airtel in each of the merging company became 49%. As a result, a change in the proposed notice has been made on 28th May 2012.
After intimation of the proposed change by the parties to the combination Qualcomms shareholding in each of the merging company became 51% through its WOS QAPPL and Bharti has a shareholding of 49% in each of the merging company. There has been signed an another agreement between Qualcomm and Bharti according to which Bharti Airtel will assume the complete ownership till 2014.
Ground for seeking the approval

It is stated in the notice that the QAPPL has the control in each of the merging company and the shareholding pattern in each of the merging companies before the combination and share holding pattern of the WBSPL (the surviving entity) is same even after the combination. Therefore, no appreciable adverse effect on the competition in the relevant market.
The Commission approved the proposed combination through its order dated 28th August 2012.
Analysis of the CCIs order

Bharti Airtel is engaged in telecom services in India and has all- India presence in telecom access services through wire-line and wireless. Bharti has also been allotted BWA spectrum in four circles in India and holds a category A ISP license. Further Bharti also has presence in the telecom infrastructure.
EVALUATION OF APPRECIABLE ADVERSE EFFECT ON COMPETITION

The Act envisages appreciable adverse effect on competition in the relevant market in India as the criterion for regulation of combinations. In order to evaluate appreciable adverse effect on competition, factors under Comp. Act (Sec. 20(4). These factors are:
Factors: Sec.20(4)
(a) actual and potential level of competition through imports in the market; (b) extent of barriers to entry into the market; (c) level of concentration in the market ; (d) degree of countervailing power in the market; (e) likelihood that the combination would result in the parties to the combination being able to significantly and sustainably increase prices or profit margins;
Cont.
(f) extent of effective competition likely to sustain in a market; (g) extent to which substitutes are available or are likely to be available in the market; (h) market share, in the relevant market, of the persons or enterprise in a combination, individually and as a combination; (i) likelihood that the combination would result in the removal of a vigorous and effective competitor or competitors in the market;
(j) nature and extent of vertical integration in the market; (k) possibility of a failing business; (l) nature and extent of innovation; (m) relative advantage; (n) whether the benefits of the combination outweigh the adverse impact of the combination, if any.

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COMBINATION ORDER BY COMPETITION COMMISSION OF INDIA

AN ANALYSIS KUMUD MALVIYA ID NO. 477

QUALCOMM ASIA PACIFIC PVT. LTD.

Ground for seeking the approval

Analysis of the CCIs order

EVALUATION OF APPRECIABLE ADVERSE EFFECT ON COMPETITION

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