CCI clears Daido stake buy in Sunflag Iron and Steel

Fair trade regulator CCI has approved Japan-based Daido Steel's proposed 10 per cent stake purchase in Sunflag Iron and Steel Company.
In an order released today, the Competition Commission of India (CCI) said that "the proposed combination is not likely to have an appreciable adverse effect on competition in India".
Sunflag manufactures special alloy steel, stainless steel, micro alloyed steel, special carbon steel and bearing steel, while Daido is into making speciality steel, among others.
As per a 'Share Subscription Agreement' entered on July 9, this year, Daido Steel Co would acquire 10 per cent stake in Sunflag 'on a fully diluted basis'.

According to CCI, "the overlap between the products and the vertical relationship between the parties is insignificant and would not raise any competition concerns in India".
The fair trade regulator observed that Daido and its group firms do not manufacture steel in India and only exports mechanical construction steel and stainless steel to its subsidiary Daido Kogyo India Private Ltd for sale in India.

It also noted that previously Sunflag had entered into agreement with Daido in 2010 for advisory support and technical assistance for selection and installation of special steel making equipment and plant expansion.
Besides, Sunflag had also entered into a non-exclusive license agreement with Daido in 2012 to use its technology for manufacture of speciality steel bars for supplying it to an automobile company in India as well as a pact in 2013 for making different types of speciality steel bars.

The Commission had received a notice by Daido on August 1 seeking the regulator's approval on the deal.