Allowed

1. Puran Associates Private Limited 2. Vic Enterprises Private Limited 3. M.B. Finmart Private Limited 4. Milky Investment & Trading Company

CCI23 Jan 2024C-2023/10/1068

Case brief

AI extract

What is this about?

The Competition Commission of India assessed a proposed combination involving share acquisition by Puran, VIC, MB Finmart, and Milky Investment in Religare. Analyzing market overlaps in insurance and lending, the Commission found no appreciable adverse effect on competition and approved the combination.

What did the court decide?

The proposed combination was approved under Section 31(1) of the Competition Act, 2002.

1. Puran Associates Private Limited 2. Vic Enterprises… — Company and Corporate | CCI (2024)

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COMPETITION COMMISSION OF INDIA Combination Registration No. C-2023/10/1068

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23^rd January 2024

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Notice under Section 6(2) of the Competition Act, 2002 jointly given by Puran Associates Private Limited, VIC Enterprises Private Limited, M.B. Finmart Private Limited and Milky Investment & Trading Company

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CORAM:

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Ms. Ravneet Kaur Chairperson

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Mr. Anil Agrawal Member

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Ms. Sweta Kakkad Member

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

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On 19^th October 2023, the Competition Commission of India ( Commission ) received a notice ( Notice ), under sub-section (2) of Section 6 of the Competition Act, 2002 ( Act ), jointly given by Puran Associates Private Limited ( Puran ), VIC Enterprises Private Limited ( VIC ), M.B. Finmart Private Limited ( MB Finmart ) and Milky Investment & Trading Company ( Milky Investment ) [collectively the Acquirers ]. The Notice was given pursuant to the Board Resolutions of each of the Acquirers dated 25^th September 2023 approving the proposed combination, Purchase Orders dated 25^th September 2023 by the Acquirers to JM Financial Services Limited regarding the purchase of shares from open market, public announcement dated 25^th September 2023 issued by the Acquirers regarding the proposed combination under the provision of Regulations 3(1) and 4 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 ( Takeover Regulations ).

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The Commission vide its communications dated 31^st October 2023, 24^th November 2023 and 12^th January 2024 issued under Regulation 14 of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 ( Combination Regulations ), required the notifying parties to remove the defect from the Notice and furnish certain information relevant for the

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Combination Registration No. C-2023/10/1068

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purpose of assessment of the proposed combination. The notifying parties furnished their responses vide submissions dated 10^th November 2023, 29^th November 2023, and 16^th January 2024. The notifying parties also made submissions dated 27^th October 2023, 15^th December 2023, and 12^th January 2024.

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The Commission vide its order dated 12^th December 2023, under Regulation 9(2) of the Combination Regulations, directed Religare Enterprises Limited ( Religare ) to furnish certain information. Religare furnished its response vide submissions dated 11^th January 2024.

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The Commission vide its another order dated 12^th December 2023 directed the Acquirers to furnish certain information required under the Form I, as specified in Schedule II of the Combination Regulations. The Acquirers furnished their response vide submissions dated 5^th January 2024.

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Religare made a submission dated 20^th November 2023 and inter alia submitted about overlaps because of the presence of the Acquirers in the financing/lending business and the insurance business. Such overlaps have been considered in subsequent paragraphs of this order. Further, it has also referred to certain criminal matters. However, these are not related to assessment of the likely effect of the proposed combination on competition in India. It has also referred to Section 6A, inserted by the Competition (Amendment) Act, 2023 into the Act. The Section 6A is yet to come into effect.

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Religare also submitted copies of submissions made by it to other regulators vi z., the Securities and Exchange Board of India, the Insurance Regulatory and Development Authority of India ( IRDAI ) and the Reserve Bank of India ( RBI ). However, no prayer was made to the Commission under the said submissions.

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The Acquirers collectively already holds 21.25% of the issued and outstanding equity share capital of Religare.

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Combination Registration No. C-2023/10/1068

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The proposed combination envisages an acquisition of additional shareholding of Religare through the following steps:

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Step 1 : Open market purchase of approx. 5.27% of the issued and outstanding equity share capital of Religare by M.B. Finmart, Puran, and VIC; and

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Step 2 : Triggered by Step 1, an open offer under the provisions of the Takeover Regulations, for the acquisition of up to 9,00,42,541 equity shares representing 26% of the Expanded Voting Share Capital of Religare.

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(Collectively, the Step 1 and Step 2 are referred to as the Proposed Combination )

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Acquirers are systematically important non-deposit accepting non-banking financial companies ( NBFC ) registered with the RBI. They are primarily engaged in the business of making investments in the primary and secondary markets and providing secured and unsecured loans and advances. The Acquirers are controlled by various members of the Burman Family. The Burman Family has investments across various sectors such as home healthcare, restaurants, life insurance, consumer goods, FMCG, etc . The various members of the Burman Family undertake their investments through several NBFCs and have independent diversified investments in several businesses in the areas of pharmaceuticals, real estate, financial services, hospitality, education and sports.

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Religare is a public limited company listed in India on the BSE and National Stock Exchange. It is registered as a systematically important non-deposit accepting NBFC and a core investment company with the RBI. It is active in the financial services business through its subsidiaries and operating entities, namely in the business of provision of loans to SMEs, affordable housing finance, health insurance and retail broking.

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Universal Sompo General Insurance Co. Ltd. ( Universal Sompo ), a portfolio company of the Burman Family, provides general insurance products in India. Similarly, Care Health Insurance Ltd. ( Care Health ), a subsidiary of Religare, provides health

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Combination Registration No. C-2023/10/1068

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insurance products in India. Therefore, the Burman Family and Religare exhibit horizontal overlaps in relation to the provision of general insurance products in India, and more specifically, in the sub-segments of provision of: (a) health insurance, (b) personal accident insurance, and (c) travel insurance product. Further, DMI Finance Pvt. Ltd. ( DMI Finance ), a portfolio company of the Burman Family, and two subsidiaries of Religare viz ., Religare Finvest Ltd. ( Religare Finvest ) & Religare Housing Development Finance Corporation Limited ( Religare HDFC ) provide loans and lending services. Therefore, the activities of the Burman Family and Religare exhibit horizontal overlaps in relation to the provision of loans and lending services in India as well its sub-segment of MSME lending.

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From the submissions dated 11^th January 2024 of Religare, it was observed that Religare Broking Limited ( Religare Broking ), a subsidiary of Religare, has a certain outstanding amount for the loan given by it. However, details relating to overlap with the lending activity of Religare Broking were not furnished in the Notice. Therefore, the Acquirers were required to furnish their clarification. In this regard, the Acquirers vide their submissions dated 16^th January 2024 have inter alia submitted that Rule 8(3)(f) of the Securities Contract (Regulation) Rules, 1957 ( SCRR ) categorically prohibits entities registered with any stock exchange (such as stockbrokers) from engaging in any activity other than that of securities or derivatives. The National Stock Exchange of India, vide its circular dated 7^th January 2022, has provided a list of illustrative activities that would construed to be in violation of Rule 8(3)(f) of the SCRR, which includes, inter alia :

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(i) Entering into any arrangement with any entity for extending loans/giving deposits/advances to any entity not in connection with or incidental to or consequential to its securities/commodity derivatives business;

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(ii) Entering into any arrangement with clients to extend loans, financing the securities transactions directly/indirectly except as allowed for margin financing purposes;

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Combination Registration No. C-2023/10/1068

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(iii) Issuing corporate guarantees towards credit facilities availed by any entity or incidental to or consequential to its securities/commodity derivatives business;

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(iv) Borrowing of funds for the purpose of granting loans to other entities.

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The Acquirers have further submitted that the stockbrokers such as Religare Broking are statutorily prohibited from engaging in the provision of loans and lending services in India. As per the SCRR and the clarifications issued thereunder, stockbrokers such as Religare Broking are permitted to offer margin trade facilities ( MTF ) to their customers as an ancillary part of their brokerage businesses. MTFs are short-term facilities extended by stockbrokers as an allied part of their brokerage business to enable their customers to purchase additional securities using its brokerage services. Such facilities are aimed at increasing the customer’s engagement and transactions with the stockbroker itself and are generally provided to seasoned day traders with a good record. The market for loans and lending services in India is separate from the provision of MTFs by stockbrokers which constitutes a distinct relevant market. Notwithstanding the above, even assuming Religare Broking is active in the market for the provision of loan and lending services in India, it would have a negligible presence in the market with less than 0.001% market share.

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Universal Sompo provides general insurance products in India. Further, Aviva Life Insurance Company India Ltd. ( Aviva Life ), a portfolio company of the Burman family, provides life insurance products in India. MIC Insurance Web Aggregators Private Limited ( MIC ) and Religare Broking Limited ( Religare Broking ), subsidiaries of Religare, are engaged in the distribution of insurance products in India. Therefore, activities of Universal Sompo and Aviva Life on one hand, and MIC and Religare Broking on another exhibit a vertical interface.

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Jetways Travels Pvt. Ltd. ( Jetways Travels ), a portfolio company of the Burman Family, provides travel-related services in India. The services provided by Jetways inter alia include traveller and transaction services; travel program optimization; safety and security; passport and visas; expense management; meetings management; and holiday

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Combination Registration No. C-2023/10/1068

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planning. Travel-related services activity of Jetways Travels, and the provision of general insurance products (specifically travel insurance) by Care Health exhibit complementarity. Further, another portfolio entity of the Burman Family, viz. , Healthcare at Home India Pvt. Ltd. ( HCAH ) is engaged in the provision of healthcare services, particularly the provision of out-of-hospital/home healthcare services. Religare, through Care Health, provides health insurance products in India. Therefore, the activities of HCAH and Care Health exhibit complementarity.

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Religare vide its submissions dated 11^th January 2024 reported existing supply arrangements in relation to insurance policy distribution between DMI Finance and Care Health. In this regard, the Acquirers vide their submissions dated 16^th January 2024 have submitted that entities operating in the market for the distribution of insurance products necessarily require a Certificate of Registration from the IRDAI. The Acquirers have been informed by DMI Finance that, as on date, DMI Finance does not have the requisite registration to operate in the insurance distribution market. Accordingly, DMI Finance is not present in the market for distribution of insurance products in India and it has not distributed any insurance policies of Care Health. The Acquirers have inter alia submitted that earlier DMI Finance was a customer of Care Health and had a group master policy from Care Health.

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With respect to horizontal overlaps relating to insurance, it is noted that the combined market shares of Universal Sompo and Care Health, both in terms of value and volume, for general insurance products, health insurance products, and personal accident insurance products for the financial year ( FY ) 2022 – 23 are [0-5]% or [5-10]% with incremental market share being [0-5]%. The combined market share of Universal Sompo and Care Health, both in terms of value and volume, for travel insurance products for FY 2020 – 21 is [5-10]%, and for FY 2021 – 22 is [10-~15]%. Further, the combined market share of Universal Sompo and Care Health for travel insurance products for FY 2022 – 23, in terms of volume, is [15-20]% and, in terms of value, is [10-15]%. However, the incremental market share, both in terms of value as well as volume, for travel insurance for all of the last three FYs is less than 1%. Further, the general insurance business is characterised by the presence of other players such as New

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Combination Registration No. C-2023/10/1068

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India Assurance, ICICI Lombard, United India Insurance, HDFC Ergo and Bajaj Allianz. The health insurance business is characterised by the presence of other players such as New India Assurance, Star Health, Oriental Insurance, United India Insurance and National Insurance. The personal accident insurance business is characterised by the presence of other players such as SBI General Insurance, New India Assurance, ICICI Lombard, HDFC Ergo and Oriental Insurance. The travel Insurance business is characterised by the presence of other players such as Tata AIG, ICICI Lombard, Bajaj Allianz, Reliance General Insurance and HDFC Ergo. Therefore, the horizontal overlap related to general insurance and its above-referred sub-segments is not likely to raise any competition concerns.

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With respect to horizontal overlaps relating to loan/lending, it is noted that the combined market shares of DMI Finance and subsidiaries of Religare for provision for loan/lending, and MSME loans for FY 2022 – 23 are less than 1%. Further, these businesses are characterised by the presence of other players such as the State Bank of India, HDFC Bank, Punjab National Bank, and ICICI Bank. Therefore, the horizontal overlap related to loan/lending and its sub-segments of MSME lending is not likely to raise any competition concerns.

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With respect to the vertical interface between the activity of: (i) provision of general insurance and life insurance products and (ii) distribution of insurance products, it is noted that for FY 2022 – 23, the market share, both in terms of value and volume, of Aviva Life for provision of life insurance products in India is less than 1%, and of Universal Sompo for general insurance, health insurance, travel insurance and personal accidental insurance are [0-5]%. Further, the market share of Religare Broking and MIC for the distribution of general insurance, health insurance, and life insurance for each of the FYs 2020 – 21, 2021 – 22, and 2022 – 23 are less than 1%. Religare Broking and MIC did not distribute personal accident insurance products and travel insurance products during the last three financial years viz ., 2020 – 21, 2021 – 22, and 2022 – 23. In view of the limited presence of Avia Life, Universal Sompo, Religare Broking and MIC, this vertical interface is not likely to raise any competition concerns.

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Combination Registration No. C-2023/10/1068

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With respect to the complementarity between the activity of: (i) provision of travelrelated services, and (ii) distribution of general insurance products (and more specifically travel insurance), it is noted that the markets share of Care Health, both in terms of value and volume, for the provision of general insurance products for FY 2022 – 23 is [0-5]%. Further, its market share, in terms of volume, for the provision of travel insurance products for FY 2020 – 21, 2021 – 22 and 2022 – 23 are [5-10]%, [10-~15]%, and [15-20]%, respectively. Further, its market share, in terms of value, for the provision of travel insurance products for FY 2020 – 21, 2021 – 22 and 2022 – 23 are [5-10]%, [10-~15]%, and [10-15]%, respectively. However, the market share of Jetways for FY 2022 – 23, for travel-related services is less than 1%. Considering the limited presence of Jetways and the presence of other players in the travel insurance business, this complementarity is not likely to raise any competition concerns.

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With respect to the complementarity between the activity of: (i) provision of healthcare at home service provided by HCAH, and (ii) provision of general insurance products (and more specifically health insurance) by Care Health, it is noted that the market share of Care Health, both in terms of value and volume, for health insurance for FY 2022 – 23 are [5-10]%. Further, the market share of HCAH for the provision of home healthcare services in India for FY 2022 – 23 is less than 1%.

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

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This order is without prejudice to any proceeding that may be initiated against the Acquirers under Sections 43A, 44 and/or 45 of the Act.

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Combination Registration No. C-2023/10/1068

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This order may be revoked if, at any time, the information provided by the notifying parties is found to be incorrect.

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It is made clear that nothing contained in this order shall be deemed to be confidential, as the same has been used for the purposes of the Act in terms of the provisions contained in Section 57 of the Act.

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The Secretary is directed to communicate this order to the Acquirers.

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1. Puran Associates Private Limited 2. Vic Enterprises Private Limited 3. M.B. Finmart Private Limited 4. Milky Investment & Trading Company

Case brief

What is this about?

What did the court decide?

1. Puran Associates Private Limited 2. Vic Enterprises Private Limited 3. M.B. Finmart Private Limited 4. Milky Investment & Trading Company

Case brief

What is this about?

What did the court decide?

What the court decided

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