The Competition Commission has directed Linde and Praxair to divest their shareholding in certain businesses in India to address anti-competitive issues in the proposed merger of the two industrial gas companies.
The fair trade regulator has put in place various conditions while giving its nod earlier this month for the merger deal worth reportedly over USD 70 billion, which was announced in June 2017.
"Based on its investigation, the Commission was of the opinion that the proposed combination is likely to have an appreciable adverse effect on competition in some markets in India but the same could be addressed by way of modifications to the proposed combination," an official statement said Tuesday.
"In order to maintain effective competition, the parties (Linde and Praxair) shall divest or procure divestiture of the East Region Divestment Business as a going concern to one purchaser ...," an order said.
The East Region Divestment Business comprises the business of producing, distributing and selling various industrial gases from Praxair's three on-site industrial gases plants -- Tata 1 and Tata 2 and 3 -- located in Jamshedpur and also two of the company's cylinder filling stations located at Asansol and Kolkata.
The parties also have to procure divestiture of the South Region Divestment Business, comprises the business of producing, distributing and selling various industrial gases from Linde's JSW 2 on-site industrial gas plant located in Bellary and its cylinder filling stations located at Hyderabad and Chennai New Site.
Besides, divestment of Linde India's entire shareholding in Bellary Oxygen Company Pvt Ltd, a joint venture between Linde India and Inox Air Products Ltd, also has to be achieved.
According to the statement, the remedies have to be implemented by "way of sale and transfer of respective businesses to an independent entity(ies)".
"The remedies ordered by the Commission aim to eliminate the substantial overlap in terms of presence of the Parties in the affected regions and for establishment of independent competitor(s) or strengthening of the existing competitor(s) by ensuring that they have an integrated presence in markets for industrial gases encompassing tonnage, bulk and cylinder businesses," it said.
Munich (Germany) headquarted Linde is primarily active in industrial gases and medical gases, specialty gases, helium and the related engineering and services sectors.
Headquartered in Connecticut, US, Praxair is an international industrial gases company.
In January 2018, the Competition Commission of India (CCI) received a notice jointly given by Linde Aktiengesellschaft and Praxair, Inc in relation to their combination under a newly incorporated holding company, which will be owned by their current shareholders.
The conditional approval to the deal had come following a public scrutiny launched into the deal in earlier in May by the regulator.
A deal is placed for public consultation by the CCI if it is of the "prima facie opinion that the combination has, or likely to have an appreciable adverse effect on competition".
Similar public scrutinies were launched by the regulator in the case of merger deals such as Monsanto-Bayer, Ranbaxy-Sun Pharma and Holcim-Lafarge.
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