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Notice Given By Jsw Energy Limited
Factual and Procedural Background
On 12th December 2014, JSW Energy Limited (JSW) filed a notice under sub-section (2) of Section 6 of the Competition Act, 2002, seeking approval for the proposed acquisition of two hydro-electric power projects located in Himachal Pradesh: the 300 MW Baspa II project and the 1091 MW Karcham Wangtoo project (collectively referred to as the Target Assets). The acquisition was proposed pursuant to a securities purchase agreement dated 16th November 2014 between JSW, Jaiprakash Power Ventures Limited (JPVL), Himachal Baspa Power Company Limited (SPV), and Jaypee Group Employees Welfare Trust.
The combination involved two principal steps: (a) transfer of the Target Assets from JPVL to SPV under a scheme of arrangement; and (b) acquisition by JSW of 100% stake in SPV from JPVL and the minority shareholder Jaypee Group Employees Welfare Trust pursuant to the SPA.
Following the filing, the Commission required JSW to remove certain defects and provide additional information on multiple occasions in December 2014 and January 2015, to which JSW responded accordingly.
Legal Issues Presented
- Whether the proposed acquisition of the Target Assets by JSW is likely to have an appreciable adverse effect on competition in India, thereby affecting market dynamics in the power generation and trading sectors.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Commission analyzed the proposed combination by examining the market positions of JSW, SPV, and the Target Assets within the power generation sector in India. It noted that both JSW and SPV are engaged in power generation and that JSW’s subsidiary, JSW Power Trading Co. Limited, has occasional business engagement with the Karcham Project on a short-term basis.
The Commission observed that the power generation market in India is populated by numerous players, including large public sector undertakings and private entities, which dilutes any significant market concentration. The combined market shares of JSW and the Target Assets were found to be insignificant based on installed capacity. Additionally, the vertical relationship between JSW’s power trading subsidiary and the Karcham Project was deemed insignificant.
Considering these factors and the relevant criteria under sub-section (4) of Section 20 of the Competition Act, the Commission concluded that the proposed acquisition would not cause an appreciable adverse effect on competition in India.
Holding and Implications
The Commission approved the proposed combination under sub-section (1) of Section 31 of the Competition Act, 2002.
This approval is granted without prejudice to any other applicable legal or statutory obligations. The order also stipulates that the approval shall be revoked if any information provided by JSW is found to be incorrect. The direct effect of this decision is to permit JSW to proceed with the acquisition of the Target Assets. The opinion does not establish any new precedent beyond this specific approval.
Fair Competition For Greater Good COMPETITION COMMISSION OF INDIA (Combination Registration No. C-2014/12/230) 28.01.2015 Notice u/s 6 (2) of the Competition Act, 2002 (Act) given by: JSW Energy Limited (JSW). Order under Section 31(1) of the Competition Act, 2002
1. On 12th December 2014, the Competition Commission of India (Commission) received a notice under sub-section (2) of Section 6 of the Competition Act, 2002 (Act) filed by JSW Energy Limited (JSW or Acquirer). The notice relates to proposed acquisition of two power projects, namely (i) 300 MW Baspa II hydro- electric project; and (ii) 1091 MW Karcham Wangtoo hydro-electric project, (Karcham Project), both located in Himachal Pradesh (the two power projects collectively referred to as the Target Assets) by JSW from Jaiprakash Power Ventures Limited (JPVL), pursuant to a securities purchase agreement dated 16th November 2014 (SPA) entered into between JPVL, JSW, Himachal Baspa Power Company Limited (SPV) and Jaypee Group Employees Welfare Trust.
2. The proposed combination, which relates to acquisition of the Target Assets by JSW primarily entails two steps, namely, (a) Target Assets to be transferred to SPV by JPVL, pursuant to a scheme of arrangement; and (b) acquisition of 100 per cent stake in SPV by JSW from JPVL and Jaypee Group Employees Welfare Trust, a minority shareholder in SPV, pursuant to the SPA.
3. JSW, incorporated on 10th March, 1994 under the provisions of the Companies Act, 1956 is a public limited company, listed on the National Stock Exchange of India and Bombay Stock Exchange. It is the power utility arm of JSW group of companies (JSW Group). JSW is, inter-alia, engaged in the business of power generation, power transmission, power trading and manufacture of mining equipment. As per the information given in the notice and information available in public domain, JSW has an installed capacity of 3140 MW, apart from around 8630 MW under implementation and development. COMPETITION COMMISSION OF INDIA Fair Competition For Greater Good C-2014/12/230 Page 2 of 3
4. SPV is a company which would acquire the Target Assets from JPVL. JPVL is, inter alia, engaged in the business of power generation and power transmission. Apart from the Target Assets, JPVL operates various other power projects in India.
5. In terms of Regulation 14 of the Competition Commission of India (Procedure in regard to transaction of business relating to combinations) Regulations, 2011 (Combination Regulations), vide letter dated 22nd December, 2014, the Acquirer was required to remove defects in the notice and provide certain information/document(s). The Acquirer submitted its reply vide letter dated 29th December 2014. Further, in terms of Regulation 14 of the Combination Regulations, vide letter dated 2nd January 2015, the Acquirer was required to remove certain defects in the notice and its response dated 29th December, 2014, for which the reply was submitted on 8th January, 2015. Further, in terms of Regulation 14 of the Combination Regulations, vide letter dated 15th January 2015, the Acquirer was again required to remove certain defects in the notice. The Acquirer filed its response on 20th January 2015.
6. As stated, the Target Assets together have an installed capacity of 1391 MW. As such, as a part of the proposed combination, both JSW and SPV are engaged in power generation in India. Further, it is noted that JSW Power Trading Co. Limited (JSWPTL) which is a subsidiary of JSW and is involved in the power trading business, has occasional business engagement with Karcham Project for sale of power on merchant/short term basis. In this regard, it is observed that there are many players engaged in the power generation business in India which include public sector undertakings like National Thermal Power Corporation Ltd., Maharashtra State Power Generation Company Ltd., Damodar Valley Corporation, National Hydroelectric Power Corporation Ltd., Nuclear Power Corporation of India Ltd., along with various private players. Further, on the basis of installed capacity, the market shares of each of JSW and the Target Assets in the power generation business in India, is insignificant. It is also noted that the vertical relation between JSWPTL and Karcham Project is insignificant.
7. Considering the facts on record and the details provided in the notice given under sub- section (2) of Section 6 of the Act and the assessment of the combination after COMPETITION COMMISSION OF INDIA Fair Competition For Greater Good C-2014/12/230 Page 3 of 3 considering the relevant factors mentioned in sub-section (4) of Section 20 of the Act, the Commission is of the opinion that the proposed combination is not likely to have appreciable adverse effect on competition in India and therefore, the Commission hereby approves the Proposed Combination under sub-section (1) of Section 31 of the Act.
8. This approval is without prejudice to any other legal/statutory obligations as applicable.
9. This order shall stand revoked if, at any time, the information provided by JSW is found to be incorrect.
10. The Secretary is directed to communicate to JSW accordingly.
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