CCP clears Nishat Group consortium’s acquisition of Rafhan Maize shares

ISLAMABAD: The Competition Commission of Pakistan (CCP) has approved a proposed transaction under which a consortium linked to the Nishat Group and associated individuals will acquire shareholding in Rafhan Maize Products Company.

The approval was granted after a phase-I review carried out under Section 11 of the Competition Act, 2010, according to the commission.

The transaction covers the purchase of Rafhan Maize Products shares from Ingredion Incorporated, identified as the majority seller, as well as from other individual shareholders.

The acquiring side includes Nishat Hotels and Properties, DG Khan Cement, Nishat Mills, Lalpir Power, Pakgen Power, Nishat Power, Nishat Chunian Power, and associated individuals.

Competition assessment

The CCP said it examined the deal for its possible effects on competition in the relevant markets. Rafhan Maize Products operates in the upstream market for maize derivative products, including starch, liquid glucose, dextrose, dextrin and gluten meals.

Among the acquiring entities, Nishat Mills operates in the downstream textile sector, where starch is used as an input. The commission’s review identified a vertical overlap between these upstream and downstream markets.

Despite that overlap, the CCP concluded that the proposed acquisition was not likely to cause any substantial lessening of competition.

According to the commission’s analysis, Rafhan holds a significant position in the upstream market, but any potential anti-competitive conduct would be limited by the presence of other domestic suppliers and the availability of imports.

The CCP also noted that starch makes up a relatively small share of input costs in downstream textile production, which it said further reduced the risk of foreclosure.

Why the deal was cleared

The commission said Rafhan did not have both the ability and the incentive to engage in input foreclosure. It cited spare production capacity in the upstream market and competitive pressure from other suppliers as factors supporting that view.

On the downstream side, the CCP said the acquiring entity did not have sufficient market power to distort competition.

Following this assessment, the commission cleared the proposed acquisition of Rafhan Maize Products shareholding by the Nishat Group consortium and associated individuals.

The decision means the transaction, reviewed under the Competition Act, 2010, has passed the regulator’s initial competition scrutiny after the CCP found no substantial competition concerns arising from the vertical relationship between Rafhan’s maize derivative business and Nishat Mills’ textile operations.