CCI cleared PepsiCo India’s proposal to sell its bottling plants to franchisee Varun Beverages

PepsiCo India and Varun Beverages entered into the deal on 15 November 2014 following which they had approached CCI for its approval.

Created On: Jan 7, 2015 18:11 IST

Competition Commission of India (CCI) on 6 January 2015 cleared the proposal of beverages and snacks firm PepsiCo India to sell its bottling plants in North India to Varun Beverages.

PepsiCo India and Varun Beverages entered into the deal on 15 November 2014 following which they had approached CCI for its approval.

Proposed Deal

  • PepsiCo India's franchisee bottler Varun Beverages would acquire the beverage maker's four bottling plants in Haryana, Himachal Pradesh, Uttarakhand and Uttar Pradesh on a going concern on a slump sale basis
  • Varun Beverages, which is an arm of RJ Corp, would also have the rights to distribute and sell Pepsi products in the territory of Chandigarh.
  • Besides, Varun Beverages would also buy an undertaking in Punjab from Aradhana Drinks and Beverages Private Ltd-a group company of PepsiCo India-on a going concern on a slump sale basis.

CCI Order on Proposed Deal

  • In its order dated 29 December 2014 but released on 6 January 2015, CCI said that the proposed combination is not likely to have an appreciable adverse effort on competition in India.
  • Further it noted that PepsiCo India and Varun Beverages are not competitors but have an existing vertical relationship with each other.
  • Also, it noted that the proposed combination involves transfer of ownership of the bottling plants/factories, certain distribution rights and an undertaking to an existing bottler/ franchisee (Varun Beverages).
  • Further, post combination, PepsiCo India will continue to own, maintain and promote the Pepsi brand in India and thus there will be no significant change in the market structure as a result of the proposed combination.

About Varun Beverages

  • Varun Beverages is PepsiCo's largest independent bottler in India.
  • It currently operates PepsiCo bottling operations across parts of Haryana, Uttar Pradesh, Madhya Pradesh and Rajasthan, North East, Goa, West Bengal and Delhi with nine plants in India.
  • It also handles PepsiCo bottling operations in Nepal, Sri Lanka, Zambia, Morocco and Mozambique.

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