KARACHI: The Competition Commission of Pakistan (CCP) has approved the proposed acquisition of shares in Rafhan Maize Products Company Ltd by a consortium led by Nishat Group, following a Phase-I review under Section 11 of the Competition Act, 2010.
The transaction involves the acquisition of shares from Ingredion Incorporated, the majority seller, along with other individual shareholders. The acquiring parties include Nishat Hotels and Properties Ltd, DG Khan Cement Company Ltd, Nishat Mills Ltd, Lalpir Power Ltd, Pakgen Power Ltd, Nishat Power Ltd, Nishat Chunian Power Ltd, and associated individuals.
The regulator assessed the deal for its potential impact on competition in relevant markets. Rafhan Maize Products operates in the upstream market for maize-based derivatives, including starch, liquid glucose, dextrose, dextrin and gluten meal. One of the acquiring entities, Nishat Mills Ltd, operates downstream in textile manufacturing, where starch is used as an input.
The assessment identified a vertical overlap between upstream and downstream markets. However, the CCP concluded that the transaction is unlikely to substantially lessen competition. It noted that despite Rafhan’s strong position in the upstream market, the presence of alternative domestic suppliers and import availability would limit any potential anti-competitive behaviour.
The commission also observed that starch accounts for a relatively small share of input costs in textile production, reducing the risk of market foreclosure.It further noted that Rafhan does not have the ability or incentive to engage in input foreclosure, given spare capacity in the upstream market and competition from other suppliers. On the downstream side, the acquiring entities do not hold sufficient market power to distort competition.
Based on its findings, the CCP concluded that the acquisition does not create or strengthen a dominant position in the relevant market and does not raise competition concerns. The transaction has therefore been authorised under Section 31(1)(d)(i) of the Competition Act, 2010.
