Competition Commission has slapped a penalty of Rs 3 crore on British retailer Tesco for delay in filing notice related to its purchase of 50 per cent stake in Tata Group firm Trent Hypermarket.
The fair trade watchdog, on May 22, had cleared the Tesco-Trent deal which is the first FDI transaction in multi- brand retail since the sector was opened up in 2012.
Competition Commission of India (CCI), in an order dated May 27, has imposed a penalty of Rs 3 crore on Tesco Overseas Investments for delay in filing notice seeking approval for the deal.
A Tesco spokesperson could not be contacted for comments.
Under the Competition Act, any person or enterprise, who or which proposes to enter into a combination, shall give notice to the Commission, disclosing the details of the proposed combination, "within thirty days of execution of any agreement or other document for acquisition".
As per the Commission, Tesco should have filed the notice seeking approval within 30 days of its application to the Department of Industrial Policy and Promotion (DIPP) and the Foreign Investment Promotion Board (FIPB).
However, the notice was given only on March 31, 2014, after a delay of around 73 days. Going by Competition Act, the acquirer as required to give the notice by January 16.
In case of such violations, the watchdog can impose penalties.
"... the maximum penalty that may be imposed could be one per cent of the total turnover or the assets, whichever is higher, of such a combination, which in the instant case is more than Rs 600 crore," according to the May 27 order, which is posted on CCI website.
However, the fine has been at a nominal amount of Rs 3 crore after taking into consideration the fact that Tesco, despite delay of around 73 days in giving notice, had voluntarily filed the notice within 30 days of executing the Joint Venture Agreement and Share Purchase Agreement.
The Commission said that Tesco in its application to DIPP/FIPB on December 17, 2013, had provided enough details of the proposed combination which demonstrate that the parties were aware about the type, nature and purpose of the proposed combination at the time of making the said application.
Hence the watchdog said the acquirer's claim that had the notice been filed with the Commission without executing the definitive agreement (s), it would have been incomplete