CCI imposes penalty of ₹55 lakh on ADIA, TPG-controlled entities

In the first-ever case of gun jumping in green channel route, the Competition Commission of India (CCI) has imposed a penalty on Platinum Trust and TPG Upswing with regard to their stake acquisition in UPL Sustainable Agri Solutions Ltd (UPL SAS), which is part of UPL Group.

Is India emerging as a hub for Gun Jumping?

While a penalty of ₹5 lakh has been imposed under Section 43A for ‘gun jumping’, a penalty of ₹50 lakh was slapped for making false declaration before the Commission while availing green channel facility. The acquirers have been asked to pay the penalty within 60 days of the issue of order.

In its 15-page order, the CCI concluded that UPL SAS acquisition is not eligible for the benefit of green channel approval facility and the green channel declaration was incorrect and false on material particulars. Further, the notifying parties made statements in the Notice, including Notice Declaration which are false in material particulars.

Platinum Trust is established under the laws of the Abu Dhabi Global Market (ADGM) by a deed of settlement dated January 27, 2019. The Abu Dhabi Investment Authority (ADIA) is the sole beneficiary and settlor of the trust. TPG Upswing is part of the TPG Group.

Upswing Trust is jointly owned by subsidiaries of ADIA and TPG Inc. Upswing Trust —through its Jersey registered trustee company Upswing Trustee Company Limited (Upswing Trustee) picked 5% stake in UPL SAS.

Green channel is an automatic system of approval for certain mergers, amalgamations and acquisitions (combinations) where there are no business overlaps of any kind, be it horizontal, vertical or complementary in nature, between the parties to the combination. 

The Green Channel was introduced by an amendment to the Combination regulations in August 2019.

The main advantage of ‘Green Channel’ is that parties can give effect to the Combination i.e consummate the combination upon filing of the form under this facility without waiting for the completion of the statutory standstill obligation of 210 days.

Gun Jumping occurs when parties to a combination fail to notify the Competition Commission of India about a combination prior to its consummation or violate the 210 day standstill obligation.  Gun jumping also occurs when false declaration is made on the Notice sent to CCI for notifying a combination.

Meanwhile, in its 15 page order, the CCI highlighted that Green Channel dispensation providing for deemed approval of certain categories of combinations was conceived and designed to facilitate faster clearance of the combinations which had no Horizontal Overlap, Vertical Interface or Complementarity.

By its very nature, the Green Channel approval facility is a trust-based mechanism based on self-assessment and correct declaration, the CCI said.

“Thus, it is incumbent upon the person choosing to avail the Green Channel approval facility to observe uberrima fides (utmost good faith) in availing the same and should subject only the eligible combinations for this Channel. 

Subjecting ineligible combinations for the Green Channel approval facility would erode and strike at the very basis of this trust based regulatory mechanism and undermine the sanctity of its framework”, the CCI order said.

CCI also made clear that the penalty imposed by it upon the Acquirers has been determined in the background and totality of the present case. Going forward, any disregard to the conditions for availing Green Channel would be dealt with seriously with attendant consequences in accordance with law based on the specificities of the case, the CCI order added.

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