CCI reviewing online and offline aspects of Reliance-Future Group deal

The Competition Commission of India (CCI) is reportedly reviewing the online and offline aspects of the Reliance-Future Group deal both separately and together to ascertain their impact on competition. The first step for the watchdog would is to ascertain the relevant market.

On September 21, Reliance Retail Ventures, the holding company of RIL's retail assets, sought CCI's approval for its Rs. 24,713 crore acquisition of the online and offline businesses of the Future Group, which including retail, wholesale, logistics and warehousing operations.

In the past the CCI has always considered the online as well as offline aspects together and separately. Experts say that the RIL-Future deal is a first-of-its-kind deal where both offline and online businesses are being acquired so CCI may not have a precedent.

According to an official, "It depends on how the practice of the commission has evolved. First, a market is defined broadly, for example, the whole of retail. Then it is narrowed down to see if there are overlaps or not."

Reliances' push to strengthen its presence in the market is one of its key focus and Mukesh Ambani had highlighted that its retail unit had received a "strong interest" from strategic and financial investors.

According to experts, "The four verticals—front-end retail, wholesale, logistics and warehousing—will be looked at as separate markets which are linked to each other. Within front-end retail, there's offline and online. So the regulator will examine the vertical and horizontal overlaps in all these markets."

Horizontal overlaps are when the company operates in the same market at the same level, whereas vertically they operate in the same market at different levels.

In its filing, Reliance said that the transaction will not lead to "any change in the competitive landscape or cause any appreciable adverse effect on competition in India," irrespective of the manner in which the markets are defined.