This presentation by India was prepared for the break-out Session 1, “Surveys and other data gathering techniques”, in the discussion “Economic Analysis in Merger Investigations” at the 19th OECD Global Forum on Competition on 9 December 2020. More papers and presentations on the topic can be found at http://oe.cd/eami. This presentation was uploaded with the author’s consent.

1. Economic analysis in merger investigations
Survey and other data gathering techniques
19th Global Forum on competition
7-10 December 2020

2. CCI - Merger Activity
 Enforcement: 1st June 2011
 Total Cases: 790
⁃ Short Form: 694
⁃ Long Form: 96
 Remedies: 22
⁃ Phase I: 14
⁃ Phase II: 8

3. Merger – Evidence and Threshold
Board docs
Business Plans
Accounts
Docume
nts
Sales
Capacity
Customer base
Data
Competitors
Suppliers
Procurers
Dealers
Stateme
nts
To commence investigation
Prima facie view of harm based on complete
notice given by parties (curing of defects
and RFI)
Determination of harm & remedies
Final view based on in-depth investigation
(public comments/objections and parties
submission)

4. Schneider – L&T Combination
Final Distribution Board
Wiring Devices/Accessories
Main LT Panel (PCC )
Sub Main Panel
Feeder Panels, Floor Panel, Utility Panel (MCC/PDB)
Combination - Acquisition of electrical and
automation business of L&T by Schneider
Horizontal Overlap - in 29 LV switchgear products
Parties claim - low market share in only 6 products
and effective competition from Siemens, ABB & Ors.
CCI’s Prima Facie
Opinion:
 - merger of 1st and 2nd leading players
 - next player 3 times smaller
 - portfolio effects
 - locking distribution network

5. Key differences
CCI
o Portfolio effects – customers’
preference to use same brand
components in LV panels
o Limited dealers pool – a larger part
would be locked with the resultant
entity
o Fringe players (Tier II participants)
- not constraints– merger of 4 to 3
o Entries of competition significance
not likely
SCHNEIDER
o Customers can mix and
match components in LV
panels
o No exclusivity imposed in
dealership agreement
o C&S, BCH, Eaton, Mitsubishi
are significant constraints
o Several expansions noticed
in the last 5 years

6. Focus of Investigation
• Customer habits
• Industry discipline
• Market position of competitors
• Is there a preference for use of single
brand products?
• Distribution arrangements – pros & cons
of multi brand dealership
• Reconstruction of market share data
― Individual product level
― main & sub-main board level
Understanding Issues for investigation
• Market survey
• RFIs to parties
• 3rd party reach outs
Tools

7. Market survey – Key features
• Respondents: Panel builders, distributors & electricity consultants
• Respondent selection : nomination by top 4 players & snow bowling
• Respondents size – 10 % of the total consumption in the industry
• Confidentiality – identity of the respondent
• Survey Teams: At least one professional from law, Eco and FA streams

8. Preference for use of Single Brand
across the LV panel
91%
9%
Single Brand Depends on consumer
preference and cost
advantage
Panel Builders: Single brand preference:
‒ Customer preference
‒ no type test report in case of mix
and match
‒ better discrimination
‒ cost savings
‒ servicing requirements
‒ buffer stock
‒ differential payment term
‒ Consultants Preference

9. Single brand and multi-brand dealership
Single brand preference:
• financially, logistically,
on a focused
perspective, and for
easy stocking
• difficult to deal in
multiple brands when
quality is good across
brands
Single Brand
50%
Multi brand
33%
Multi brand but one
component not
procured from different
brands
17%

10. Constraints posed by unorganized segment & imports
11
1
No Have not seen unoraganised
players
Yes
17%
No
83%
ImportsUnorganised Players

11. Ranking brands in terms of price
(from highest to lowest)
Siemens
Schneider
L&T
ABB
Legrand
C&S
Havells
1st 2nd 3rd 4th 5th 6th
customer habits

12. Learnings
• Survey could establish single brand preference and resultant portfolio advantage:
– besides the loss in vigorous and effective competition between two ranges of
independent economic options in the market, the widest portfolio and reach
of the Combined Entity would lock a larger part of the distribution network,
panel builders and other downstream players with the Combined Entity,
thereby making entry further difficult. Thus the extent of vertical integration
in the market would create a significant barrier to entry.
• Market survey - effective tool to understand customer habits & preference
- Practical exposure to case teams to understand market realities
• RFIs remain the tool to gather facts from parties and competitors

13. Thank You