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Airtel to pay Rs. 1 Crore fine for failure to inform India’s Competition Regulator about acquisition of stake in Bharti Telemedia

The fine comes as a result of failure to comply with Section 6(2) of the Competition Act under which companies are to inform the CCI before entering into a combination (acquisitions, mergers, or amalgamation of enterprises).

Bharti Airtel is being fined Rs. 1 Crore by the Competition Commission of India (CCI) for failure to inform the CCI about its acquisition of a stake in Bharti Telemedia Limited, the Direct to Home (DTH) arm of Airtel, from Lion Meadow Investment Limited. Under the provisions of Section 6(2) of the Competition Act, companies are to inform the CCI before entering into a combination (acquisitions, mergers, or amalgamation of enterprises). Failure to do so can result in a fine under Section 43A of the Competition Act.

Airtel says that it is reviewing the order and evaluating its next steps in the matter. 

The context of the fine:

In February 2021, Bharti Airtel bought a 20% stake (102,040,000 shares) in Bharti Telemedia Limited from Lion Meadow Investment for Rs. 3,126 crore. Lion Meadow acquired a stake in Bharti Telemedia back in 2017. It was paid out by Airtel for its stake through the issuance of 36.47 million equity shares of Airtel at a price of INR 600 per share and Rs. 10,378 million in cash. 

The reason for this purchase of stake was to gain full control over and ownership of Bharti Telemedia. Airtel had said that this would allow it to offer, “differentiated and converged solutions to customers”  and promote its “One Home” Strategy. As per a report by the Hindu Business Line, analysts at BofA Securities had suggested at the time that this acquisition and consequently, the “One Home” Strategy was meant to compete against Jio. 

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