Allowed

Jointly by M/s Epic Concesiones Private Limited and M/s Infrastructure Yield Plus II

CCI14 Mar 2023C-2023/01/999

Case brief

AI extract

What is this about?

The Competition Commission of India approved a proposed combination between Epic Concesiones Private Limited, Infrastructure Yield Plus II, and L&T IDPL under Section 31(1) of the Competition Act, 2002. After assessing horizontal and vertical overlaps in road and power sectors, the Commission found the combination unlikely to cause an appreciable adverse effect on competition.

What did the court decide?

Approval of the Proposed Combination under Section 31(1) of the Competition Act, 2002.

Jointly by M/s Epic Concesiones Private Limited and M/s… — Company and Corporate | CCI (2023)

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COMPETITION COMMISSION OF INDIA

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(Combination Registration No. C-2023/01/999)

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14^th March 2023

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Notice under Section 6(2) of the Competition Act, 2002 given by jointly given by Epic Concesiones Private Limited and Infrastructure Yield Plus II

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CORAM:

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Ms. Sangeeta Verma Acting Chairperson

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Mr. Bhagwant Singh Bishnoi Member

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Order under Section 31(1) of the Competition Act, 2002

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On 30^th January 2023, the Competition Commission of India ( ‘Commission’ ) received a notice under Section 6(2) of the Competition Act, 2002 ( ‘Act’ ), jointly given by Epic Concesiones Private Limited ( ECPL) and Infrastructure Yield Plus II ( IYP II ) [Hereinafter, ECPL and IYP II are collectively referred to as ‘Acquirers’ ]. The notice was filed pursuant to the execution of (i) Securities Purchase Agreement, dated 16^th December 2022 , entered amongst ECPL, L&T Infrastructure Development Projects Limited ( L&T IDPL/‘Target 1’), Larsen & Toubro Limited ( ‘Seller 1’ ), CPPIB India Private Holdings Inc. ( ‘Seller 2’ ) ( ‘SPA 1’ ); and (ii) Securities Purchases Agreement, dated 16^th December 2022, entered amongst IYP II, L&T IDPL and Kudgi Transmission Limited ( KTL/‘Target 2’ ) ( ‘SPA 2’ ). [Hereinafter, Acquirers, L&T IDPL and KTL are collectively referred to as ‘Parties’ ].

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Page 1 of 6

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Combination Registration No. C-2023/01/999

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The Proposed Combination is envisaged as follows:

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Step 1: ECPL will acquire 51% and 49% of the equity share capital of L&T IDPL from Seller 1 and Seller 2, respectively; and

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Step 2: IYP II will acquire 100% of the equity share capital of KTL from L&T IDPL.

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In terms of Regulation 14 of the Competition Commission of India (Procedure in regard to the transaction of Business relating to Combinations) Regulations, 2011 ( ‘Combination Regulations’ ), vide letter dated 17^th February 2023, certain information and clarifications were sought from the Acquirers. The Acquirers furnished their response vide submission dated 22^nd February 2023. As the response was incomplete, the Acquirers were required to provide complete information vide letter dated 28^th February 2023. The Acquirers furnished their response vide submission dated 6^th March 2023.

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ECPL is a private limited company incorporated in 2022 and is wholly owned by IYP II. ECPL proposes to provide, develop, own, maintain, operate, instruct, execute, carry out, improve, construct, repair, work, administer, manage, control and transfer infrastructure projects.

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IYP II is a scheme of Infrastructure Yield Trust, an irrevocable and determinate contributory investment trust under the Indian Trusts Act, 1882, and registered with the Securities and Exchange Board of India ( SEBI ) as a Category I – Infrastructure Alternative Investment Fund under the SEBI (Alternative Investment Funds) Regulations, 2012. The investment manager and sponsor of IYP II is Edelweiss Alternatives Asset Advisors Limited ( EAAAL ), which is an indirect wholly owned subsidiary of Edelweiss Financial Services Limited ( EFSL ).

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EFSL, the ultimate parent company of the Acquirers, is principally engaged in providing investment banking services and holding company activities comprising development, managerial and financial support to the business of the Edelweiss Group ( ‘Acquirer Group’ ). Further, the Acquirer Group is primarily engaged in (i) agency

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Combination Registration No. C-2023/01/999

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business, which includes advisory and other fee-based services; (ii) capital business, which includes lending business and other activities; (iii) life insurance and general insurance business; (iv) asset reconstruction business; and (v) treasury business, which includes income from trading activities.

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L&T IDPL is involved in the business of development, operation and maintenance of infrastructure projects under the Public Private Partnership model through its subsidiaries. L&T IDPL is, inter alia, engaged in activities of developing, building, tolling, operating and maintaining roads and highways and operating concessions granted by governmental authorities through its core assets and relevant non-core assets. L&T IDPL’s core assets are:

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(i) L&T Deccan Tollway Limited;

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(ii) Ahmedabad-Maliya Tollway Limited;

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(iii) L&T Interstate Road Corridor Limited;

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(iv) Panipat Elevated Corridor Limited;

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(v) L&T Rajkot Vadinar Tollway Limited;

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(vi) L&T Sambalpur Rourkela Tollway Limited;

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(vii) L&T Samakhiali Gandhidham Tollway Limited;

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(viii) L&T Transportation Infrastructure Limited;

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(ix) Vadodara Bharuch Tollway Limited; and

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(x) Watrak Infrastructure Private Limited

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L&T IDPL’s relevant non-core assets are:

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(i) PNG Tollway Limited; and

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(ii) L&T Chennai-Tada Tollways Limited

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KTL, a wholly owned subsidiary of L&T IDPL, is engaged in developing a transmission system required for the evacuation of power.

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Based on the business activities of the Parties (including their affiliates), it is observed that these are broadly present in the (i) provision of operations and maintenance

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Combination Registration No. C-2023/01/999

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( O&M ) of highways (provision of concessionaire services) in the road infrastructure sector and (ii) power sector in India.

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The Parties exhibit horizontal overlap in the market of O&M of highways (provision of concessionaire services) in the road infrastructure sector in India through the business activities of EFSL’s existing portfolio assets and L&T IDPL.

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The Commission decided to leave the delineation of the relevant market open, as it was observed that the Proposed Combination is not likely to cause an appreciable adverse effect on competition in any of the relevant markets.

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Based on the submissions of the Acquirers, it is observed that in the segment for O&M of highways in the road infrastructure sector in India, the combined market shares of the Parties (including EFSL’s existing portfolio assets) is [0–5]% and incremental market share is also [0–5]% in terms of volume. Further, this segment is fragmented, with several competitors such as IRB Group, Cube Highways Group, Oriental Structural Engineers Group and Shrem InvIT.

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Further, it is submitted in the notice that the existing road projects of ECPL and L&T IDPL do not exhibit any overlaps. As all these road projects are unique, the relevant geographic market may be considered the combination of a point of origin and point of destination. In this regard, the Commission noted that each individual road project operates in its confined geographical area catering to a different set of users/commuters, thereby operating in a distinct market. Accordingly, there is no horizontal overlap between these road projects.

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With respect to the presence of the Parties in the power sector in India, the following overlaps are identified:

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(i) Horizontal overlap in the market for power transmission in India between KTL and Acquirer Group through its portfolio entities Darbhanga-Motihari

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Combination Registration No. C-2023/01/999

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Transmission Company Limited ( DMTCL ) and NRSS XXXI (B) Transmission Limited ( NBTL );

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(ii) Potential vertical overlap between the power generation business of Acquirer Group [through its affiliates]¹ ( upstream market ) and the power transmission business of KTL ( downstream market ).

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The Commission observed that the production/distribution chain of electricity consists of three segments, i.e., generation, distribution and transmission, and that each of these market segments has a distinct set of producers and consumers. Further, from a demand substitutability point of view, switching can only take place internally within each segment. Also, each segment of the electricity supply chain is characterised by different competitive dynamics and governed by different regulatory frameworks. Accordingly, generation, distribution and transmission of power may be delineated as separate relevant product markets.

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In relation to relevant geographic market, the Commission observed that the regional power transmission grids have been synchronised by interconnection, resulting in the operation of a national grid which serves as the single seamless network for transmitting power across the nation. Thus, the relevant geographic market for both power generation and transmission activities may be defined as the “entire territory of India”.

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However, precise definition of the relevant market is being left open, as the material on record does not suggest that the Proposed Combination is likely to have any appreciable adverse effect on competition in India.

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With respect to the horizontal overlap, based on the submissions of the Acquirers, it is observed that both the combined market shares and incremental market share of the Parties in the sector for transmission of power in India is insignificant in terms of total length of transmission lines. Further, with regard to vertical relationship, it is stated

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1 13 power generating assets with an aggregate installed capacity of 1,145.51 megawatts.

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Combination Registration No. C-2023/01/999

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that the market share of the Acquirer Group in the power generation sector in India ( upstream ) is insignificant and the market share of the Target in the transmission sector in India ( downstream ) is also minuscule. Therefore, pursuant to the Proposed Combination, it appears that there will be no ability or incentive to foreclose competition in any market.

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Considering the material on record, including the details provided in the notice and the assessment of the Proposed Combination based on the factors stated in Section 20(4) of the Act, the Commission is of the opinion that the Proposed Combination is not likely to have any appreciable adverse effect on competition in India. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act.

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The order may be revoked if, at any time, the information provided by the Acquirers is found to be incorrect.

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The information provided by the Acquirers shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act.

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The Secretary is directed to communicate to the Acquirers accordingly.

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Jointly by M/s Epic Concesiones Private Limited and M/s Infrastructure Yield Plus II

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Jointly by M/s Epic Concesiones Private Limited and M/s Infrastructure Yield Plus II

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