Share acquisition by a dominant undertaking does not equal acquisition of an undertaking under the restrictive trade law.

Section 23(4) of the Monopolies and Restrictive Trade Practices Act, 1969 applies only to a proposal to acquire the whole or part of an undertaking by purchase, takeover or otherwise. A proposed acquisition of all shares in a newly floated subsidiary that had not yet become an enterprise engaged in production did not amount to acquisition of the undertaking itself. The acquisition of shares would give control and management, but the undertaking could be owned only by the company as a separate juristic person. Any possible issue under section 22 was left undecided.

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Issues: Whether section 23(4) of the Monopolies and Restrictive Trade Practices Act, 1969 applied to a proposal by a dominant undertaking to acquire 100% shares in a newly floated subsidiary company proposed to take over a sugar unit, and whether such a proposal amounted to acquisition of an undertaking within the meaning of the Act.

Analysis: The Act defines an undertaking as an enterprise engaged in the production, supply, distribution or control of goods or the provision of service, and section 23(4) is confined to a proposal to acquire by purchase, take-over or otherwise the whole or part of an undertaking. On the facts, the proposed company had not yet become an enterprise engaged in production and the sugar unit had not become an undertaking of that company at the material time. Acquisition of all the shares in the proposed company would confer control and management, but would not amount to acquisition of the undertaking itself, because the company as a separate juristic person alone could own the undertaking. The possibility that the arrangement might fall within section 22 was not finally decided.

Conclusion: Section 23(4) was not attracted, and the impugned order under that provision could not stand.

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