Will UltraTech get CCI nod for Jaypee's Guj cement unit?

Cement Giant UltraTech Cement’s plans to acquire Jaypee Group’s Gujarat cement unit is in the cross hairs of the competition commission of India.

On September 11, Ultratech Cement announced acquisition of Jaypee Group's Gujarat cement unit for an enterprise value of Rs 3,800 crore. However, regulatory approvals are still pending. The primary concern of competition commission officials emanates from the fact that post the UltraTech-Jaypee deal, Ultratech’s market share in the state of Gujarat would rise to 35-40%. Ultratech would become stronger in terms of production capacity as well. Aditya Birla Group’s flagship company’s production capacity would increase to 12 mmt while its closest competitor in Gujarat, Ambuja Cement has a production capacity of 5.5 mmt. This could make Ultratech a dominant player and the deal may have an appreciable adverse impact on competition. Also read: Sentiment revival in cap good sector 2-3 qrts away: Thermax The competition watchdog is in the process of defining “relevant market” for the UltraTech-Jaypee deal.  According to section 2 (r ) of the Competition Act 2003 "relevant market" means the market which may be determined by the commission with reference to a relevant product or a relevant geographic region or both. The CCI is ascertaining if it should consider Gujarat as a relevant market or look at the entire western region to assess the impact of the deal on competition and consumer interest. According to a CCI official who did not want to be identified, “if only Gujarat is considered as a relevant market then competition concerns may arise. However, the deal is unlikely to have an appreciable adverse impact on competition in case the entire western region of India is considered as the relevant market”. The competition commission of India has sought comments from both Ultratech and Jaypee on how relevant market for this deal should be defined. Ultratech refused to comment on the story.