Abstract
The Competition (Amendment) Act, 2023 expanded India's definition of control to include “material influence on the conduct or management of affairs of the enterprise” through a landmark decision in Goldman Sachs India AIF Management v. Biocon Biologics (2025). However, the approach is fundamentally flawed by being limited to a bilateral structure that fails to evaluate the total impact of competition in cases where an institutional investor controls the affairs of competing firms. This blog highlights these gaps in substance and procedure, and suggests three reforms for the CCI under the Competition Act, 2002.
Introduction
Common ownership is characterized by the same institutional investor holding sizable minority stakes in a number of rival firms at once. It does not involve any direct agreement as there is no price fixing, no market allocation and no cartel. The problem lies in the structural feature of having the same firm hold minority stakes in rival firms and hence earning maximum profits across the portfolio creates a motive to weaken competition among them. A seminal study by Azar, Schmalz and Tecu in 2018 revealed that prices of air tickets on particular routes were 3-7% higher where rival firms had common ownership.
The Indian Evidence
Goldman Sachs & Biocon Biologics (January 2025)
The Competition Commission of India imposed a penalty of INR 40 lakhs on Goldman Sachs India Alternative Investment Management for non-notification in relation to its acquisition of optionally convertible debentures in Biocon Biologics that represents 3.81% of stake on fully diluted basis. The order passed by the CCI rejected the defence of passive investment on the ground that the fund manager enjoyed rights over access to board minutes, reserved matters and facility visit apart from normal shareholder rights. The order shows that a sub-5% stakes are subject to CCI's regulation where such a holding is coupled with special rights. However, the order fails to address the situation where the fund manager holds similar stakes in multiple competing entities.
SoftBank, Ola, and Uber: 2017 to 2022
From 2017 until 2022, SoftBank concurrently had approximately 26% shareholding in Ola and also an interest in Uber India, the two competing companies in the cab aggregator market. The Competition Commission of India (CCI) considered these transactions on their own and failed to look at the whole picture or evaluate whether a portfolio cross-ownership would have an Appreciable Adverse Effect on Competition (AAEC). In Meru Travel Solutions v ANI Technologies, the Commission acknowledged the shared ownership but delayed its investigation, stating that the specifics of the common investor's investments are yet unknown. In August 2022, SoftBank divested all of its stakes in Uber. The competitive issue resulting from five years of concurrent cross-holdings remained unexamined, leaving the next investor to manage stakes in competing Indian firms in the same position.
The Legal Gap
The enforcement structure leaves two structural flaws, substantive provisions do not adequately account for the economic damage of common ownership and procedural provisions lack detection capability.
A. The Substantive Gap
The statutory regime is based on anti-competitive agreements (Section 3) and combinations (Sections 5 and 6).
Inapplicability of Section 3: Section 3 needs a concerted agreement. On the other hand, common ownership does not take the form of a separate agreement but instead works through the financial incentives available in the portfolio, and would therefore not be covered by Section 3.
The drawbacks of Sections 5 and 6: Sections 5 and 6 require thresholds relating to assets and turnover; and they regularly fail to cover minority interests. For instance, a 15% minority acquisition with special rights in a competitor generally is not considered to trigger pre-merger notification requirements. There is no systematic tracking of the portfolio in post-closing interventions like in Goldman Sachs/Biocon.
Material influence is still “bilateral” as defined in the 2023 Amendment as the lowest threshold of control under Section 5. Under Section 3(3), however, there is a conceptual link, as a common investor is envisioned as a “hub”, with the various shareholders and creditors serving as “spokes”.
B. The Procedural Gap
Horizontal overlaps are not discovered by the Green Channel as the investor must disclose them first. Further penalties from CA Plume (2025) and ADIA/TPG (2023) follow that the CCI is not subject to independent ex-ante oversight. Without portfolio-level disclosure, deciding the value of deals based on individual pieces of information will not allow the CCI to map ownership concentration. Finally procedural failure is substantive failure, if the law captured the common ownership, the CCI is not visible to track it.
Three Specific Actions for India's Need
None of these are legislative. They all lie squarely within the regulatory powers of the CCI.
First, a cross-holding portfolio disclosure obligation
Managers of funds listed with SEBI holding 10% or more of two or more companies in the same relevant market should file with the CCI an annual consolidated cross-holding portfolio disclosure. It would give the CCI visibility it is currently lacking by being able to analyse proactively the concentration of common ownership and not only to react years later to violations. It can be implemented by a regulation of the CCI under section 64 of the Competition Act.
Second, a common ownership analysis framework
Indian competition law has a double structural defect. These frameworks should set clear regulatory thresholds, specify certain types of governance rights that pose competitive risks and establish measures of market concentration. The Commission can introduce international benchmarks (like OECD diagnostic criteria and US substantive criteria) to the Indian regime to replace the currently reactive and ad-hoc approach with a predictable, transparent and robust legal benchmark.
Third, an explicit and calibrated toolkit
Existing power of the CCI to impose conditions such as information barriers, prohibitions on board membership and even divestiture of shares in competing firms, as per Section 31 of the Competition Act, must be explicitly calibrated to the context of common ownership. Information barriers between competing portfolio companies where fund managers are unable to exchange commercially sensitive information between competing portfolio companies is the bare minimum. Prohibitions on simultaneous board membership of competing firms is the second option. Divestiture as a last resort must be considered where common ownership concentration in a market becomes so high that it is proven to have reduced competition.
Conclusion
The decision in the Goldman Sachs/Biocon case is important from a law enforcement perspective because it shows that the CCI does not tolerate “passive” defence in cases where the possession of special rights allows the acquirer to exert strategic influence. However, the imposition of a penalty for failure to notify four years after the fact cannot be a system to remedy the problem of common ownership that causes competition problems in all portfolio holdings. SoftBank has withdrawn its investments from Uber in 2022. The legal system that allowed five years of common ownership in India's ride-sharing industry to go by without any scrutiny from the CCI cannot simply go away with it.