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Bank Of Baroda, In Re
Factual and Procedural Background
On 28 February 2018, the Competition Commission of India (“Commission”) received a notice from Bank of Baroda (“BoB”/“Acquirer”) under sub-section (2) of Section 6 read with sub-section (a) of Section 5 of the Competition Act, 2002. The notice was filed pursuant to the execution of a Share Purchase Agreement (“SPA”) dated 28 December 2017 between BoB, UniCredit, S.p.A (“UniCredit”), Baroda Pioneer Asset Management Company Limited (“BPAMCL”), and Baroda Pioneer Trustee Company Private Limited (“BPTCPL”) (collectively referred to as the “Parties”). The proposed combination involved BoB acquiring a 51% stake each in BPAMCL and BPTCPL from UniCredit.
BPAMCL is the asset management company for Baroda Pioneer Mutual Fund, managing various mutual fund schemes, while BPTCPL is the trustee approved by SEBI overseeing the operations and asset management of the mutual fund. The Commission observed this combination as a shift from joint to sole control without elimination of any market player or structural change in the market. Although there was no direct horizontal overlap between the Acquirer and the Target, BoB held an 18.25% stake in UTI Asset Management Company Limited and UTI Trustee Company Private Limited, creating some overlap at the scheme level in equity-oriented, debt-oriented, and hybrid mutual fund schemes.
Legal Issues Presented
- Whether the proposed acquisition of 51% stake in BPAMCL and BPTCPL by BoB is likely to cause an appreciable adverse effect on competition (AAEC) in the relevant markets in India.
- Whether the proposed combination leads to elimination of any market player or significant change in market structure.
- Whether the relevant market should be defined narrowly or broadly in the context of the proposed combination.
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 as a transition from joint to sole control without elimination of any competitor or alteration of market structure. It noted the absence of direct horizontal overlap between the Acquirer and Target, but acknowledged some overlap at the scheme level due to BoB’s existing shareholding in UTI AMC and UTI Trustee. The market shares of the combined entities in the relevant product segments—equity-oriented, debt-oriented, and hybrid mutual funds—were found to be minimal (all below 9%). The Commission also considered the presence of significant competitors in the mutual funds sector, indicating a competitive market environment.
Given these factors, the Commission kept the relevant market definition open but concluded that the proposed combination was unlikely to cause an appreciable adverse effect on competition in the broad market for mutual funds or its sub-segments. The decision was made pursuant to sub-section (4) of Section 20 of the Competition Act, 2002, leading to approval under sub-section (1) of Section 31 of the Act.
Holding and Implications
The Commission approves the proposed combination under sub-section (1) of Section 31 of the Competition Act, 2002.
The approval is contingent on the accuracy of the information provided by the Parties and is subject to revocation if any information is found to be incorrect. The decision does not establish new precedent but directly affects the Parties by permitting BoB’s acquisition of controlling stakes in BPAMCL and BPTCPL without competition concerns. The information submitted remains confidential under Section 57 of the Act.
1. On 28 February, 2018, the Competition Commission of India (“Commission”) received a notice filed by Bank of Baroda (“BoB”/“Acquirer”) under sub-section (2) of Section 6 of the Competition Act, 2002 (“Act”) read with sub-section (a) of section 5 of the Act. The notice has been given pursuant to execution of Share Purchase Agreement (“SPA”) dated 28 December, 2017 executed between BoB, UniCredit, S.p.A (“UniCredit”), Baroda Pioneer Asset Management Company Limited (“BPAMCL”) and Baroda Pioneer Trustee Company Private Limited (“BPTCPL”) (hereinafter BPAMCL and BPTCPL are jointly referred to as “Target” and Acquirer and Target are collectively referred to as the “Parties”).
2. The proposed combination relates to acquisition by BoB of 51% stake each in BPAMCL and BPTCPL from Unicredit. (“Proposed Combination”).
3. BPAMCL is is an asset management company (“AMC”) of Baroda Pioneer Mutual Fund (“Baroda Mutual Fund”). It manages mutual fund investments in equity-oriented, debt-oriented and hybrid (balanced) schemes of Baroda Mutual Fund. BPTCPL has been approved by the SEBI to act as the trustee for Baroda Mutual Fund. As a trustee, BPTCPL oversees the operations as well as the manner of management of assets of Baroda Mutual Fund.
4. The Commission observed that the Proposed Combination is a case of joint to sole control and it is not leading to elimination of any market player or change in market structure. Further, there is no direct horizontal overlap between the Acquirer and the Target. However, the Acquirer has a 18.25 per cent shareholding in each of UTI Asset Management Company Limited (“UTI AMC”) and UTI Trustee Company Private Limited (“UTI Trustee”). Accordingly, at the scheme level, there are overlaps in the business operations of the Acquirer (through its investment in UTI AMC) and the Target in the equity-oriented, debt-oriented and hybrid mutual funds schemes.
5. Considering the fact that the Proposed Combination is not likely to result in AAEC, either in the broad market of “Mutual funds in India” or in the sub-segments of “the market for equity-oriented mutual funds schemes”, “the market for debt-oriented mutual funds schemes” and “the market for hybrid mutual funds schemes”, as explained in the following paragraph, the definition of relevant market is kept open.
6. The Commission noted that the combined market share of Acquirer, Target and UTI, in each overlapping product segment i.e equity-oriented mutual funds schemes (less than 6 percent), debt-oriented (less than 9 percent) and hybrid mutual funds schemes (less than 4 percent) and the overall mutual funds schemes (less than 8 percent), is insignificant. Further, the mutual funds sector is characterized by the presence of significant players such as ICICI Prudential Mutual Fund, HDFC Mutual Fund, Reliance Mutual Fund, Aditya Birla Sun Life Mutual Fund, etc.
7. Considering facts on record and details provided in the notice given under sub-section (2) of Section 6 of the Act and on basis of the assessment of the proposed combination in terms of sub-section (4) of Section 20, 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 same under sub-section (1) of Section 31 of the Act.
8. This order shall stand revoked if, at any time, the information provided by the Parties is found to be incorrect.
9. The information provided by the Parties is confidential at this stage in terms of and subject to provisions of Section 57 of the Act.
10. The Secretary is directed to communicate to the Parties accordingly.
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