In its first ever order dealing with combinations, the Competition Commission of India recently approved the Reliance Group's proposed acquisition of a 74 percent stake in the Bharti-Axa life and general insurance joint ventures.
The commission's July 26 order notes that the insurance sector in India is highly regulated and fragmented, with 49 private players competing for 30 percent of the country's life insurance business and 40 percent of the country's general insurance business.
The commission found that as the Reliance Group and the Bharti-Axa joint venture insurance companies did not operate in interchangeable or substitutable products there was no horizontal overlap in the proposed combination.
It also found that although the Reliance Group included an insurance brokerage business, this vertical relationship did not present any significant competitive constraint because there are several registered insurance brokers in India, and because insurance regulations restrict the amount of business an insurance broker is permitted to place with an insurance company in the same group during any financial year.
Based on these findings, the commission approved the proposed combination within three weeks of the application for approval being made by the Reliance Group. Hopefully, that response time will be matched in dealing with future applications, and the commission will allay fears of its procedures unduly delaying transactions.