The deal will help generic medicines maker Torrent enter new categories as well as expand operations in segments such as women's healthcare and pain management.
In an order released today, the Competition Commission of India said that "the proposed combination is not likely to have appreciable adverse effect on competition in India".
Among other things, CCI observed that in most of the therapeutic categories, the combined market share of the both the companies "is not significant enough to raise any competition concern".
The Commission also noted that both Elder and Torrent are engaged in the production and sale of generic medicines wherein "entry is relatively easier".
"It is further observed that the prices of the medicines are regulated/monitored by National Pharmaceutical Pricing Authority in accordance with applicable rules and regulations," the Commission added.
As per the order, the business to be acquired by Torrent comprises approximately 30 brands across segments of womens healthcare, nutraceuticals and pain & wound management.
The manufacturing know-how and the intellectual property associated with the business would also be transferred to Torrent under the deal, it added.
After getting into a 'Business Transfer Agreement' on December 13, 2013, the companies had approached the Commission seeking its clearance.
CCI had directed the firms to remove certain defects and provide additional information and documents. Following this the firms removed the defects and gave complete information through their response submitted in February.
During the assessment of the proposed deal, CCI had asked the firms to provide clarification and justification on certain aspects of Non-Compete Obligations entered between the two companies.
In their response, Elder and Torrent while providing clarification for the duration as well as the scope of the business activities restricted under the 'Non-Compete Obligations' had also proposed certain modifications which was approved by the fair trade regulator.
The modifications include reduction of the duration of the 'Non-Compete Obligations' for the primary therapeutic areas from five years to four years.