Punjab State Power Corporation Limited

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Page 1 of 4 COMPETITION COMMISSION OF INDIA (Combination Registration No.C-2023/12/1087) 2nd January 2024 Notice under Section 6(2) of the Competition Act, 2002 filed by Punjab State Power Corporation Ltd. CORAM: Mr. Anil Agrawal Member Ms. Sweta Kakkad Member Mr. Deepak Anurag Member Order under Section 31(1) of the Competition Act, 2002 1. On 06th December 2023, the Competition Commission of India (Commission) received a notice under sub-section (2) of Section 6 of the Competition Act, 2002 (Act) filed by Punjab State Power Corporation Ltd (PSPCL/Acquirer) for the proposed acquisition of GVK Power (Goindwal Sahib) Limited (GVK/Target) [Hereinafter, the Acquirer and Target are collectively referred to as ‘Parties’]. The notice has been filed pursuant to the Resolution Plan dated 28th June, 2023 submitted by the Acquirer to the Resolution Professional in relation to the CIRP of the Target. Combination Registration No. C-2023/12/1087 Page 2 of 4 2. The proposed combination envisages an acquisition of 100% shareholding of GVK/Target, by PSPCL/Acquirer, as per terms of the IBC and the Resolution Plan submitted by PSPCL/Acquirer. [Proposed Combination]. 3. In terms of Regulation 14 of Competition Commission of India (Procedure in regard to the transaction of business relating to Combinations) Regulations, 2011, the Commission, vide communication dated 18th December 2023, sought certain information(s)/ clarification(s), inter alia, relating to the activities of the Parties. The response to the same was received on 26th December 2023. 4. The Acquirer is a fully owned undertaking of the Government of Punjab. The erstwhile Punjab State Electricity Board (PSEB), was a statutory body formed on 01st February 1959 under the Electricity Supply Act, 1948. The PSEB was “unbundled” by the Government of Punjab vide Notification No. 1/9/08-EB(PR)196 dated 16th April 2010 into two separate entities i.e., Punjab State Power Corporation Limited (PSPCL) and Punjab State Transmission Corporation Limited (PSTCL). However, both remain under the common ownership and control of the Department of Power, Government of Punjab. Thus, PSPCL and PSTCL can be said to form part of the Department of Power, Government of Punjab (Acquirer Group). 5. The Target, incorporated in December 1997, is a wholly owned subsidiary of GVK Energy Limited, which in turn is the subsidiary of GVK Power and Infrastructure Limited. The Target is engaged in power generation through a 540 MW (2 Units of 270 MW each) coal based thermal power plant. The Target is currently undergoing CIRP in light of the order of the Hon’ble NCLT, Hyderabad. The Target has no downstream affiliates or subsidiaries. 6. Considering the activities of the Acquirer and the Target, it is noted that the parties exhibit horizontal overlaps in overall market of generation of power in India and narrow market for power generation through thermal source (using coal) in India. The Parties have submitted that relevant markets for Horizontal Overlaps may be defined as the market for Combination Registration No. C-2023/12/1087 Page 3 of 4 generation of power in India (Broad Relevant Market) and the market for generation of power through thermal source (using coal) in India (Narrow Relevant Market). 7. Further, based on the submissions of the Parties it is noted that the Acquirer Group, through PSTCL1, is present in the market of transmission of power in India, while Target is present in the market of generation of power in India, which is at a different level of the distribution chain. Accordingly, there exists a vertical overlap between the activities of the Parties in India and it is submitted that the relevant market may be considered as the market for generation of power in India (Upstream Market) and the market for transmission of power in India (Downstream Market). 8. The Commission decided to leave the delineation of the relevant market open, as it was observed that because of the reasons stated below, the Proposed Combination is not likely to cause an appreciable adverse effect on competition in any of the relevant markets in India. 9. Based on the submissions of the Parties, it is noted that the combined market shares of Parties in the Broad and Narrow relevant markets are in the range of [0-5] % in terms of both volume and value. Further, there are other players present in the market such as NTPC Limited, Adani Power Ltd., Maharashtra State Power Generation Company Ltd., Tata Power and Reliance Power Limited who will continue to pose competitive constraints to the Parties post the Proposed Combination. 10. Further, it is noted that in the Upstream Market for ‘generation of power in India’ the Parties, both in terms of volume and value, have insignificant market shares. In the Downstream Market for ‘transmission of power in India’ parties have market shares in the range of [0-5] % in terms of volume. 1 While PSPCL is engaged primarily in generation and distribution of power (PSPCL’s transmission projects are upto 66KV and limited to its own captive use), transmission of power is undertaken by PSTCL. Combination Registration No. C-2023/12/1087 Page 4 of 4 11. Considering the material on record, including the details provided in the Notice, the existing regulatory framework in the electricity sector and the assessment of the Proposed Combination based on the factors stated in Section 20(4) of the Act, the Commission is of the opinion that the Proposed Combination is not likely to have any appreciable adverse effect on competition in India. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act. 12. This order may stand revoked if, at any time, the information provided by the Acquirer is found to be incorrect. 13. The information provided by the Acquirer shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act. 14. The Secretary is directed to communicate to the Acquirer accordingly.