Ultratech Cement Limited

Abstract

In pursuance to the Implementation Agreement (IA) entered between UltraTech Cement Ltd. (Acquirer) and Jaiprakash Associates Ltd. (JAL/ Target Entity) on 23.01.2015, a notice was received by Competition Commission of India (CCI) under section 6(2) of the Act. Prior to the IA, a Memorandum of Understanding (MoU) was executed between the parties on 23.12.2014 to indulge in due diligence and negotiations for proposed combination. The proposed combination was with regarding to transfer of business of two cement plants of JAL situated in Bela and Sidhi of Madhya Pradesh to UltraTech. CCI approved the combination under section 31(1) subject to any proceeding under section 43A of the Act. While reviewing the combination, it was found that the acquirer provided a corporate guarantee in favour to JAL to Axis Bank for a short-term loan of INR 500 Cr. The commission formed a prima facie opinion that this conduct led to the part consummation of the combination prior to the approval. On 23.04.2015, a show cause notice (SCN) was issued by CCI to the acquirers. An opportunity was provided to the concerned party to cite the reasons as to why penalty shall not be imposed on them for violation of section 6(2) of the Act. A response was submitted on 22.05.2015 under which a request for oral hearing was made by the acquirers. The request was granted by CCI on 25.08.2017. ISSUES: Whether the conduct of providing corporate guarantee to Axis Bank by UltraTech in favour of JAL for the short-term loan can constitute as part consummation of combination thus violative of section 6(2) of the Act?