The full bench of Monopolies and Restrictive Trade Practices Commission (MRTPC) on the merger of Hindustan Lever Ltd (HLL) and Tata Oil Mills Company Ltd (Tomco) will not look at the allotment of shares as a trade practice. The bench will confine itself to the post-merger situation.
"Let us assume at the moment that allotment of shares is not a trade or trade practice," MRTPC chairman A N Divecha, heading the three-member full bench, said at a hearing yesterday. As a consequence, the commission will not look at the pre-merger aspects or the merger itself. Instead, it will focus mainly on whether the merger has created a monopolistic situation.
The hearing resumes tomorrow. The full bench has been set up to determine whether the commission can examine the post-merger situation.
A decision in the affirmative may open up other recent mergers for examination.
The commission had in November 1994 and January 1995 ordered issue of notices of enquiry (NOE) in the merger. Divecha said yesterday that the NOE had been ordered keeping in mind only the implications of the merger and that NOE was only a 'prima facie consideration' of the case.
The NOE had been ordered to evaluate whether the merger had created a monopolistic situation. The commission will now decide whether it can prepare a report on the case and present it to the government.
The need for the full bench to decide on the commission's power to examine the issue was felt since the HLL-Tomco merger has been cleared by the high court. The bench will look into all the legal aspects, especially to determine if the high court's clearance of the merger would be binding on the commission.
A case against the HLL-Tomco merger has been filed with the commission by the Maharashtra Small Scale Soap Manufacturers Association, HLL Employees Union and the Maharashtra General Kamgar Union, alleging that the merger had led to a monopoly situation and the small-scale manufacturers of soap had been pushed out of the market.
MRTPC can review post-merger situations under Section 31 (ii) of the MRTP Act.
he Supreme Court had ruled in the HLL-Tomco case: "As a result of amalgamation, if it is found that the working of the company is being conducted in a way which brings it within the mischief of the MRTP Act. It would be open to the authority under the MRTP Act to go into it and decide the controversy as it thinks fit."
