The Competition Commission has imposed Rs. 1 crore penalty on three entities, including Thomas Cook and Sterling Holiday Resorts, for carrying out certain market purchases related to their deal before seeking the fair trade watchdog’s approval.
The imposition of penalty by CCI was disclosed by Thomas Cook (India) in a regulatory filing on Saturday.
Fine has also been imposed on Thomas Cook Insurance Services (India) Ltd, a party to the deal. The Rs. 870 crore-deal involving merger of Sterling Holiday Resorts (India) with travel firm Thomas Cook (India) has already been cleared by Competition Commission of India.
However, the fine relates to market purchases carried out as part of the deal between February 10 and 12 this year.
The CCI had issued a show cause notice to all the three entities stating that “market purchases, being part of the composite combination (under the competition regulations), were consummated before giving notice to the Commission and as such invited penalty under the (Competition) Act”.
Through these purchases, Thomas Cook Insurance Services (India) Ltd acquired more than 90.26 lakh shares, representing 9.93 per cent stake of Sterling Holiday Resorts (India) Ltd.
The entities had filed notice seeking CCI nod for the deal on February 14, two days after the purchases.
According to a regulatory filing by Thomas Cook (India) on Saturday, the CCI was of the opinion that the facts suggested that the conduct of the parties was not such that attracts severe penalty.
“Considering the facts and circumstances of the case, the Commission...considered it appropriate to impose a relatively nominal penalty of Rs 1 crore on the parties,” Thomas Cook said in the filing to the BSE.
In March this year, CCI had approved the multi-structured deal saying it was not likely to have an adverse impact on competition in the country.
Under the deal, Chennai-based Sterling Holiday Resorts’ (India) resorts and some other business would be transferred to Thomas Cook Insurance Services, a subsidiary of Thomas Cook (India). Further, Thomas Cook would issue certain equity shares of the subsidiary to Sterling Holiday’s shareholders.
Besides Sterling Holiday, with its residual business, would merge into Thomas Cook (India). In lieu, certain amount of shares of the travel firm would be issued to shareholders of Sterling Holiday, as per the ratio set out.
Among others, CCI had observed that “the business of hotel services across India is relatively fragmented and there are different channels for availing the hotel services along with the presence of large number of big players as well as intermediaries/agents”.
