Roquette Frères S.A.

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Page 1 of 7 COMPETITION COMMISSION OF INDIA Combination Registration No. C-2025/01/1230 04th March 2025 Notice under Section 6(2) of the Competition Act, 2002 given by Roquette Frères S.A. CORAM: Ms. Ravneet Kaur Chairperson Mr. Anil Agrawal Member Ms. Sweta Kakkad Member Mr. Deepak Anurag Member Order under Section 31(1) of the Competition Act, 2002 1. On 16th January 2025, the Competition Commission of India (‘Commission’) received a notice (‘Notice’) under Section 6(2) of the Competition Act, 2002 (‘Act’), given by Roquette Frères S.A. (‘Roquette’/’Acquirer’). 2. The Notice was filed pursuant to the Transaction Agreement (‘TA’) dated 19th March 2024, executed between International Flavors & Fragrances Inc. (‘IFF’/‘Target’) and Roquette. 3. The Proposed Combination is in relation to the proposed acquisition by Roquette of the Pharma Solutions business and certain product lines of the Nourish business (the ‘Target Business’) of IFF by way of Roquette’s purchase of equity interests in certain IFF entities (‘Transferred Entities’) that collectively comprise the Target Business. Roquette will own and exercise sole Combination Registration No. C-2025/01/1230 Page 2 of 7 control over the Target Business as Roquette will acquire the entire equity interest in all the Transferred Entities comprising the Target Business. 4. In terms of Regulation 14 of the Competition Commission of India (Combinations) Regulations, 2024, vide letter dated 29th January 2025, certain information and clarifications were sought and the response to the same was submitted by the Acquirer through communication dated 7th February 2025 (‘Response 1’). As the response was incomplete, another letter was issued on 11th February 2025 and response to the same was received on 14th February 2025 (‘Response 2’) by the Acquirer. Acquirer also made a voluntary submission on 25th February 2025. 5. Roquette is a family-owned French company active in the production and sale of plant-based ingredients, excipients, and plant proteins for various applications. Roquette’s main business segment/Core Ingredients is production and sale of plant-based ingredients such as starches, fibres and polyols, for use in a variety of food & nutrition, animal nutrition, personal care, and industrial applications. Roquette’s Pharma business segment produces and supplies excipients for pharmaceutical, nutraceutical, and biopharmaceutical applications. Following Roquette’s recent acquisition of Qualicaps Co., Ltd. (‘Qualicaps’), it produces and supplies hard shell capsules (‘hard capsules’) and manufacturing equipment for the pharmaceutical industry. Further, Roquette’s Proteins business segment produces plant-based proteins for non-dairy alternatives to serve the food and animal industries. 6. Roquette is active in India through its India-based subsidiaries, namely; Crest Cellulose Pvt. Ltd. (‘Crest Cellulose’), Sethness-Roquette India Ltd. (‘Sethness-Roquette’) and Roquette India Pvt. Ltd. (‘Roquette India’) and a joint venture Clean Max Vital Energy LLP (‘Clean Max’). Crest Cellulose is active in the production of Microcrystalline Cellulose (‘MCC'), pregelatinized maize starch, and magnesium stearate. Sethness-Roquette is active in the production and supply of caramel colours, burnt sugars, aromatic and textured caramels, and brewing syrups. Roquette India produces and supplies maize starch, dextrose monohydrate, glucose syrup, and maltodextrin, and acts as the sales agent in India for the products manufactured by Crest Cellulose and imported into India from other plants. Clean Max is active in renewable power generation. Combination Registration No. C-2025/01/1230 Page 3 of 7 7. The Target Business primarily comprises the business, operations, and activities of IFF’s Pharma Solutions segment, with certain adjustments to include relevant businesses and product lines of the Nourish segment in order to align customers, businesses and manufacturing footprint. The Target Business is currently part of IFF, a U.S. public company listed on the New York Stock Exchange. Danisco Nutrition and Biosciences India Private Ltd. (‘Danisco India’), an indirect subsidiary of IFF, is the only entity in India which forms part of the Transferred Entities comprising the Target Business. 8. The Target Business produces, among other things, a range of cellulosics and other types of plant-based pharmaceutical excipients, used to improve the functionality and delivery of active pharmaceutical ingredients (‘APIs’), including controlled or modified drug release formulations, and enabling the development of more effective pharmaceutical finished dosage formulations. The Target Business’ main products are MCC, Hydroxypropyl methyl cellulose (‘HPMC’), alginates, and Croscarmellose sodium (‘CCS’). 9. In terms of the overlaps between the Acquirer’s (including its affiliates) products and those of Target Business, both supply MCC and CCS for pharmaceutical/nutraceutical applications in India. In addition, the Target Business (but not Roquette) also supplies HPMC in India. Roquette is not active in HPMC but uses it as an input in the production of hard capsules, which it also supplies in India. 10. The Proposed Combination relates to the manufacture and supply of cellulosics, which are chemical substances made from cellulose, i.e., a natural polymer found in the cell walls of plants. 11. Cellulose can be processed into various forms, including microcrystals to form MCC. MCC is the most common cellulose used in pharmaceutical/nutraceutical and food applications. Cellulose can also be chemically modified to produce derivatives, including HPMC and CCS. Combination Registration No. C-2025/01/1230 Page 4 of 7 12. Cellulosics are used across many purposes, including as excipients in pharmaceuticals/nutraceuticals as well as in food, personal care, construction, and other industrial applications. 13. MCC is a purified, partially depolymerized cellulose. It is produced by converting fibrous cellulose to a re-dispersible gel or aggregate of crystalline cellulose using acid hydrolysis. This material is then dried to a pure, fine-particle form for powdered grades of MCC or co-processed with a hydrophilic dispersant to deliver a colloidal form of MCC. Powdered MCC is available in different particle sizes, density, and moisture grades, and can be customized to meet specific formulation requirements. The larger particle size grades/higher-density grades generally provide better flow properties, while low-moisture grades are used with moisture-sensitive materials. Powdered MCC is used primarily in pharmaceuticals/nutraceuticals as a filler/binder in various oral dosage formulations (tablets, capsules, granules, etc.) including both wet granulation and direct compression processes. MCC also has some lubricant and disintegrant properties that make it useful in direct tableting. It is also used in food and beverage applications as an insoluble fibre, extrusion auxiliary, anti-caking, and compression agent. 14. Colloidal MCC is used primarily in food applications, where it serves as a stabilizer, opacifier, suspending agent, and thickener in processed foods and beverages. It is also used in pharmaceuticals, nutraceuticals, personal care, and other industries (e.g., construction) as a stabilizer, viscosifier, opacifier, thickener, and suspending agent in semi-solid formulas such as suspensions, emulsions, aerosols, creams, lotions, and gels. 15. In India, both the parties manufacture and sell MCC for pharmaceutical/nutraceutical applications. Roquette produces MCC locally (at its Crest Cellulose manufacturing plant) as well as imports the same from one of its overseas plants. The Target Business is only active in the supply of MCC in India through imports. 16. CCS (croscarmellose sodium), also known as sodium CMC, is an internally cross linked polymer of CMC (sodium carboxymethyl cellulose). It is made by soaking crude cellulose in sodium hydroxide and then reacting the cellulose with sodium monochloroacetate to form Combination Registration No. C-2025/01/1230 Page 5 of 7 CMC. The excess sodium monochloroacetate slowly hydrolyses to glycolic acid and the glycolic acid catalyses the cross-linkage to form CCS. Chemically, CCS is the sodium salt of a cross-linked, partly O (carboxymethylated) cellulose. 17. CCS is mainly used as a disintegrant for pharmaceutical/nutraceutical applications (including tablets, capsules, and granules), but can also be used in industrial applications. In tablet formulations, it may be used in both direct compression and wet granulation processes. In India, both Parties sell CCS for pharmaceutical/nutraceutical applications. Neither Acquirer (including its affiliates) nor Target Business produce CCS in India. 18. It is submitted that any narrower segmentation (e.g., between pharmaceutical and nutraceutical applications or between different MCC grades) would, not be appropriate, as from a demand- side perspective, the same products/grades can be used for both pharmaceutical and nutraceutical formulations. Similarly, from a supply-side perspective, despite being held to different regulations, the raw materials and production processes are identical. Various MCC grades are produced with the same drying equipment. Further, all MCC manufacturers can, and in fact do, manufacture different grades of MCC. 19. With regards to the CCS, it has been submitted that it may belong to a separate product market from other cellulose ethers, which could potentially be further sub-segmented by industry application. As the activities of parties overlap only with regard to CCS for pharmaceutical/nutraceutical applications, the only potential sub-segment that would be relevant for purposes of the Proposed Combination is CCS for pharmaceutical/nutraceutical applications. However, as per submissions any narrower segmentation (e.g., by end-application or grade) would not be appropriate, as CCS products are largely of the same grade and quality and the same products can be used for both pharmaceutical and nutraceutical formulations. 20. In relation to the vertical overlaps, it has been submitted that there are no actual vertical links between Roquette and the Target Business in India or globally, as there are no existing supply relationships between them for vertically linked products. However, there is a potential for a vertical link between the Target Business’ global supply of HPMC (‘Upstream’), a type of Combination Registration No. C-2025/01/1230 Page 6 of 7 derived cellulose that can be used as an alternative to gelatin in the manufacture of hard capsules, and Roquette’s manufacture and supply of HPMC based hard capsules (‘Downstream’). 21. Considering that the proposed combination is not likely to alter the competition landscape in both horizontal and vertical contexts in any significant manner regardless of how the relevant market(s) are delineated, the issue of exact delineation of the relevant market(s) is left open. 22. The Commission observed that the Acquirer (including its affiliates) and Target business’ combined market share in the segment of MCC for pharmaceutical/nutraceutical applications for CY 2023 is [15-20]% (volume terms) and [20-25]% (value terms). However, the incremental market share is in the range of [0-5]% only in both volume and value terms. With regard to the segment of CCS for pharmaceutical/neutraceutical applications, the combined market share of Acquirer (including its affiliates) and Target business for CY 2023 is [25-30]% (volume terms) and [40-45]% (value terms). However, the incremental market share is in the range of [0-5]% only in both volume and value terms. 23. In relation to the vertical links/overlaps, it is observed that the market share of Acquirer (including its affiliates) in the market for alternative polymer hard capsules in CY 2023 is only [0-5]% (in both volume and value terms) which rules out the possibility of any foreclosure- related concerns. 24. Considering the material on record, including the details provided in the Notice and the assessment of the Proposed Combination based on factors stated in Section 20(4) of the Act, 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 Proposed Combination under Section 31(1) of the Act. 25. This order may be revoked if, at any time, the information provided by Acquirer is found to be incorrect. Combination Registration No. C-2025/01/1230 Page 7 of 7 26. The information provided by the Acquirer shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act. 27. The Secretary is directed to communicate this order to the Acquirer.