In a set of ‘voluntary commitments”, IHH promised there will be no “common directors” appointed by them on the board of the Apollo JV, and the combined entity. It also committed that no commercially “sensitive information” related to pricing or day-to-day operations would be disclosed to any of the directors.
IHH also promised that a violation of these principles will constitute a ground for disciplinary action and punishment.
“Such disciplinary action could include removal from service, denial of promotion and demotion to a lower rank,” the company said. Mint has reviewed a copy of the document.
Apollo Gleneagles is an equal JV between IHH and Apollo Hospitals Enterprise Ltd.
The CCI had also sought certain clarifications on the overlapping services in healthcare due to their presence throughout India and in many overlapping cities.
In a bid to alleviate any potential concern of conflict of interest, in its reply to CCI on 22 October, the IHH committed that both-JV and the combined entity (IHH-Fortis) shall operate as separate, independent and competitive businesses.
Ensuring that the acquisition will not endanger competition in the Indian market, IHH has agreed to prohibit exchanging information internally within the JV, combined entity and said that it will submit an annual certificate of compliance to the commission supported by affidavits from the authorized director and the IHH-Gleneagles’ nominated directors on the JV.
IHH operates in Bangalore, Chennai, Mumbai, Hyderabad and Kolkata with seven multi-speciality tertiary hospitals and two feeder centres with approximately 1,800 operational beds under Gleneagles, Global and Continental brands. It also offers PET-CT services through a joint venture in India.
Email queries to IHH and Apollo did not elicit any response till press time.
Among many other things, the regulator gave its approval to the Fortis-IHH deal in October-end, bringing the curtains down on the saga that started in February.
“The commission is of the view that the proposed combination is not likely to have any appreciable adverse effect on competition in India and therefore the commission approves the same,” it said in its order. Adding, that the order shall stand revoked if the information is found to be incorrect.
The search for an investor for cash-strapped Fortis hospital chain ended in July with the board unanimously accepting the binding offer from IHH to invest ₹4,000 crore, outbidding TPG-Manipal.
On 13 November, Malaysia’s IHH Healthcare Bhd became the controlling shareholder of Fortis Healthcare Ltd by acquiring a 31.1% stake in the company. Fortis Healthcare also appointed four IHH Healthcare executives to its board. The board approved the allotment of over 230 million shares through preferential issue to Northern TK Venture Pte Ltd, a wholly owned indirect subsidiary of IHH Healthcare, at ₹170 per share of ₹10 face value.
The transfer of shares came after IHH Healthcare in July won the bid to acquire Fortis Healthcare, which operates 34 hospitals, with a capacity of over 4,600 beds, 2,600 doctors and 13,200 support staff, catering to 2.6 million patients in 2017-18.