1.

Would you classify Big Bucket’s acquisition of Best Dairy as horizontal, vertical
or conglomerate? What is the nature of overlap between the businesses of these
entities? Give reasons for your answer.

Big Bucket’s acquisition of Best Dairy is a vertical acquisition as it was announced by Big
Bucket that the acquisition is to strengthen its distribution network (for door delivery
services) by acquiring Best Dairy. With a vertical acquisition, Big Bucket will have more
control over the entire production and distribution process. So the main aim is to improve its
supply chain coordination and reduce the cost of sourcing and distribution. The nature of
overlap is that Best Dairy is India’s second largest online retailer of dairy products, a niche
dairy retailer with a market share of 35%; while the Big Bucket is one of the largest grocery
retailers in India that also deals with dairy products. If Big Bucket acquires Best Dairy its
market share which is currently at 7 % (in dairy products) will acquire a combined market
share of 42% rivalling Farm House, the biggest retailer of dairy products in India with a
market share of 45%.

2. Should the acquisition be notified to the CCI? If so, why, and will it require a
Form I or a Form II filing? Explain by detailing why the transaction may or may
not qualify for an exemption from notification requirements.

Mergers and Acquisitions (M&As) or combinations that exceed a certain threshold require
approval from the CCI under the Competition Act.  According to the guidelines, transactions
in which the target's assets (including its divisions, units, and subsidiaries) are valued at less
than INR 350 crore in India; or the target's turnover (including its divisions, units, and
subsidiaries) is less than INR 1,000 crore in India ("Small Target Exemption") are exempt
from the requirement of seeking CCI approval. Because Best Dairy's assets are worth INR
400 crores, the acquisition must be reported to the CCI.

According to the Act, before the execution of any agreement or other documents (shares,
voting rights, or control) notice is required to be filed within 30 days. The notice in respect
of a combination is required to be filed with the registry of the CCI. The notice should be
complete in all respects (must be filed in the required format) and accompanied by filing fees.
1
In the case of an acquisition, the acquirer is responsible for filing the notice. Parties may file
1
Harman Singh Sandhu, Neetu Ahlawat, Rohan Arora and Shweta Shroff Chopra, August 17 2021, at,
https://www.lexology.com/library/detail.aspx?g=00b75a5c-f407-4cab-b048-6248bd1a0972
a notice in either Form I or Form II, as specified in Schedule II of the Combination
Regulations. Usually, the notice is filed in the (short) Form I; however, where there is a
horizontal overlap of more than 15 per cent or a vertical overlap of more than 25 per
cent,2 it is recommended that the notice is filed in the (long) Form II. The fee for filing Form
II is INR 50 Lakhs3.

The filing fee is to be paid by the acquirer in this case. Form II is required to be filled as there
is a vertical overlap of more than 25 %, as Big Bucket will acquire 35% market share and
assets of INR 400 crores of Best Dairy. The transaction does not qualify for an exemption
from notification requirements because it does not come under Small Target Exemption.

There is also a limitation period - The CCI cannot evaluate a merger or acquisition after one
year. However, no time limit is set for the CCI to initiate Penalty proceedings against
enterprises that fail to notify the CCI. A future antitrust investigation is not precluded by the
CCI clearance.4

3. Are the remedies offered by Big Bucket behavioural or structural in nature? Describe
what are behavioural remedies and structural remedies. Evaluate whether either or
both of the remedies offered by Big Bucket are suitable to alleviate the CCI’s
concerns of an AAEC arising from the acquisition

To quell the CCI’s concerns of collusion between two large entities and cause an Appreciable
Adverse Effect on Competition (AAEC), Big Bucket proposed two remedies they are –

a) To sell Best Dairy’s brand of milk and cheese products to a buyer approved by the
CCI; or
b) To enter into contracts with local farmers for the supply of milk and dairy products on
terms agreeable to the CCI to prevent concerns of collusion.

The remedies offered by the Big Bucket are behavioural. Behavioural remedies are intended
to regulate the future conduct of the relevant party or parties and may necessitate extensive

2
https://www.khuranaandkhurana.com/2019/06/29/vertical-overlaps-in-merger-control/
3
https://www.cci.gov.in/faqs
4
Samir R Gandhi, Toshit Shandilya, Sanjeev Kumar, Nitin Nair and Rishabh Jain, AZB & Partners, April 01, 2022,
at: https://uk.practicallaw.thomsonreuters.com/0-501-2861?
transitionType=Default&contextData=(sc.Default)&firstPage=true#:~:text=All%20forms%20of%20(domestic
%20and,the%20transaction%20can%20be%20completed.
monitoring by the CCI. The behavioural type of remedy is not a one-time remedy; it intends
to address the future behaviour taken by the company after the acquisition. Here the Big
Bucket company has presented a remedy regarding the terms and conditions that will be
offered by them to the local farmers that are in line with the CCI.

Behavioural remedies subject companies to certain operating rules. It includes interim supply
agreements, exclusive long-term supply agreements, ensuring access to key facilities and
inputs, and granting of licenses to intellectual properties.

When one company buys another company or when two companies agree to merge, the CCI
investigate them and if during the investigation they find problems like high prices for the
consumers or poor quality of product or services. The CCI try to fix the problem and these
solutions are called remedies.

1. Structural Remedies

This remedy is considered the go-to agency approach. Measures enacted by a competition
authority necessitate some form of structural change on the part of the party or parties to
whom the measures are directed, such as asset divestment. The prohibition and sale of
various assets are referred to as structural remedies. Structural remedies have the advantage
of not requiring ongoing monitoring in the medium or long term. Another type of structural
remedy is the removal of links to competitors. This can include promises to exit a joint
venture or sell a minority stake in a competitor.

2. Behavioural Remedies

Behavioural remedies, which can take many different forms, are intended to regulate the
ongoing conduct of the enterprises in question. To reverse antitrust abuse,
behavioural remedies are proposed in antitrust cases: for example, a refusal to supply would
be remedied with a commitment to supply, and anti-competitive tying would be addressed
with a commitment to untie. In simple words, companies agree to change their behaviour,
which might pertain to limiting their prices or giving other companies access to something
they have, to enable them to compete.

Behavioural remedies can be "positive" in the sense that they require a particular behaviour
or "negative" in the sense that they prohibit a particular behaviour. Behavioural remedies that
have previously been accepted include:
- amending corporate governance provisions;

- refraining from limiting the capacity of certain infrastructure available to competitors;

- enabling customers to switch;

- introducing a new pricing system;

- capping of prices (putting price ceiling);

If the CCI is satisfied that the combination does not cause or is not likely to cause an AAEC
or that its concerns can be addressed by remedies or modifications offered by the parties, the
transaction will be cleared at the end of Phase. The second remedy offered by the Big Bucket
about entering into the contracts with local farmers for the supply of milk and dairy products
on terms agreeable to the CCI to prevent concerns of collusion is adequate as the terms and
conditions will have the approval of the CCI.