CCP Clears Massive Nishat Group Deal to Take Control of Rafhan Maize

The Competition Commission of Pakistan (CCP) has approved the proposed acquisition of shareholding in Rafhan Maize Products Company Limited by a consortium of acquirers comprising entities of the Nishat Group and associated individuals, following a Phase I review conducted under Section 11 of the Competition Act, 2010.

The transaction involves the acquisition of shares in Rafhan Maize Products Company Limited from Ingredion Incorporated, the majority seller, and other individual shareholders.

The acquiring entities include Nishat Hotels and Properties Limited, D.G. Khan Cement Company Limited, Nishat Mills Limited, Lalpir Power Limited, Pakgen Power Limited, Nishat Power Limited, Nishat Chunian Power Limited, and associated individuals.

The commission assessed the transaction in terms of its potential impact on competition in the relevant markets. Rafhan Maize Products operates in the upstream market for maize derivative products such as starch, liquid glucose, dextrose, dextrin, and gluten meals, while one of the acquiring entities, Nishat Mills Limited, operates downstream in textile production, where starch is used as an input.

The assessment identified a vertical overlap between the upstream and downstream markets. However, the commission concluded that the transaction is unlikely to result in any substantial lessening of competition. The analysis highlighted that, despite Rafhan’s significant position in the upstream market, the presence of alternative domestic suppliers and the availability of imports would constrain any potential anticompetitive conduct.

Additionally, starch constitutes a relatively small proportion of input costs in downstream textile production, further limiting any foreclosure risks.

The commission also noted that Rafhan lacks both the ability and incentive to engage in input foreclosure, given the availability of spare production capacity in the upstream market and competitive pressures from other suppliers. On the downstream side, the acquiring entities do not possess sufficient market power to distort competition.

Based on the analysis, the commission determined that the proposed acquisition does not create or strengthen a dominant position in the relevant market and does not raise competition concerns.

Accordingly, the transaction has been authorized under Section 31(1)(d)(i) of the Competition Act, 2010.