 "Sun-Ranbaxy deal: CCI says it is worried about monopoly over molecules")
New Delhi: The Competition Commission, whichhas put the multi-billion dollar Sun-Ranbaxy deal for public scrutiny, today said the major issue is whether thecombination would result in high market concentration of certain molecules.
“This is the first case” of combination where theCompetition Commission of India (CCI) has gone for a public scrutiny, the fair trade watchdog’s Chairman Ashok Chawlasaid.
In April this year, Sun Pharma and Ranbaxy had announceda USD 4-billion deal that would create one of the top fivelargest speciality generics company in the world.
Chawla said the major issues related to the deal are withregard to molecules market.
“The major issues obviously are that in many of themolecules, the basic building block in the pharmaceutical industry, whether in some of those molecules there is highmarket concentration which will emerge as a result (of theconsolidation). That is the matter,” Chawla said here.
He was speaking on the sidelines of an event organised byindustry body Assocham.
The CCI has asked Sun Pharma and Ranbaxy to make publicdetails of their proposed transaction in a “prescribed format"within 10 working days.
Both companies informed the stock exchanges, on Thursday,about the CCI direction, which comes under Section 29(2) ofthe Competition Act, 2002.
Under this section, if the CCI is “prima facie of theopinion that the combination has, or is likely to have, an appreciable adverse effect on competition, it shall… directthe parties to the said combination to publish details of thecombination within ten working days of such direction…”
Such disclosure needs to be made “in such manner, as it(CCI) thinks appropriate, for bringing the combination to theknowledge or information of the public and persons affected orlikely to be affected by such combination.”
In case the CCI finds the deal in the current form couldhurt fair competition in the domestic pharma market, it can even direct the companies to divest some assets as apre-requisite for approval.
Sun Pharmaceutical Industries would acquire Ranbaxy Laboratories in a USD 4-billion deal that includes USD 800 million debt. The transaction has valued Ranbaxy at 2.2 times its USD 1.8 billion revenue for 2013, or about Rs 457 per share.
The deal was approved last month by leading stock exchanges BSE and NSE.
PTI