Fine of Rs 20 lakh on Investcorp India Asset Managers by CCI

The Competition Commission of India (CCI) has struck a fine of Rs 20 lakh on Investcorp India Asset Managers Pvt Ltd for failing to notify the regulator about its acquisition of real estate fund management and private equity fund management businesses of IDFC Alternatives Ltd.

The transaction was on a slump sale basis for a lump sum consideration and got completed in February 2019.

For the transaction, Investcorp India was required to give a notice to the fair trade regulator.

However, it failed to do so.

“The Commission concludes that the acquisition of real estate fund management and private equity fund management businesses of IDFC Alternatives by Investcorp India was a combination…and de minimis exemption was not available in relation to the same.

“Accordingly, Investcorp India, being acquirers, failed to give notice to the Commission,” the regulator said.

On the contention of Investcorp India that the investment manager does not enjoy ownership or controlling rights over the assets of any of the funds, the CCI said Investcorp India has become the manager of the concerned venture capital funds and alternative investment fund.

Though the beneficial ownership of these categories of funds lies with unitholders, the control over the operations and management of the fund is entrusted to the investment manager.

The Commission noted that the acquisition of control is one of the forms of combination and accordingly, the acquirer needs to give notice in terms of applicable laws.

“The said requirement of law is not dispensed with only on account of the beneficial interest being vested in person(s) other than the acquirer,” the CCI said.

Investcorp India is required to pay the penalty within 60 days from the date of receipt of this order, as per an order dated December 17, 2021.

IDFC Alternatives was engaged in investment management and offered portfolio and risk management, investment banking and advisory services, the order noted.

Besides, primary business activities of Investcorp India were investment management services and management, operation and supervision of the investment vehicles including alternate investment funds and venture capital funds.