The Competition Commission has approved online food delivery platform Zomato’s proposed purchase of 9.3 percent stake in online grocery shopping player Grofers India.
Zomato, last month, said it has invested $ 100 million (around Rs 745 crore) for acquiring a minority stake in Grofers as the company looks to have more exposure to the online grocery segment.
The recently-listed Zomato will acquire 9.3 per cent stake in Grofers India Pvt Ltd and Hands on Trades Pvt Ltd (HoT). Grofers International Pte is the holding company of Grofers India and HoT.
In a tweet on Friday, Competition Commission of India (CCI) said it has cleared the “proposed acquisition by Zomato of approximately 9.3 percent stake in Grofers India and Hands on Trades”.
Zomato was incorporated in January 2010 while Grofers India was set up in May 2015.
HoT is into the business of B2B wholesale trading with third party merchants, contract manufacturing of food products, grocery and other goods for the purpose of onward sale on a wholesale basis, and providing warehousing services, including storage of food products and grocery goods to third party merchants. It was incorporated in September 2015.
Under the transaction, Zomato would snap up around 9.3 per cent stake in “each of Grofers India and HoT along with certain rights in each of the targets,” as per a notice filed with the regulator.
The notice mentioned about potential relevant markets and segments where the activities of the parties overlap.
Such markets include those for supply of groceries, household items, general merchandise, personal hygiene products, fruits and vegetables in India as well as the narrower segment of B2B supply of groceries, household items, general merchandise, personal hygiene products, fruits and vegetables in the country.
Another potential relevant market is the one for services provided by online platforms for the sale of groceries, household items, general merchandise, personal hygiene products, fruits and vegetables in India.
“The parties submit that the potential relevant markets/ segments identified above are highly fragmented with the presence of multiple players, including several unorganised players, who will continue to impose significant competitive constraints.
“The proposed transaction will have no impact on the competitive landscape in any potential relevant market in India, in any manner,” the notice said.
The parties are Zomato, Grofers India, HoT and Grofers International.
“It (grocery) is a large opportunity. The online grocery is nascent right now but is growing rapidly not just in India but across the world… We are actively experimenting in that space and recently invested $ 100 million for a minority stake in Grofers, with the idea of getting more exposure to that space and building our strategies and plan around that business,” Zomato CFO Akshant Goyal said in July.