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COMPETITION COMMISSION OF INDIA
Combination Registration No. C-2023/10/1060
14th November 2023
Notice under Section 6(2) of the Competition Act, 2002 given by Mirae Asset Naver New
Growth Fund I, Mirae Asset – GS Retail New Growth Fund I, Mirae Asset – Naver Asia
Growth Investment Pte. Ltd and Mirae Asset Late Stage Opportunities Fund
CORAM:
Ms. Ravneet Kaur
Chairperson
Mr. Anil Agrawal
Member
Ms. Sweta Kakkad
Member
Mr. Deepak Anurag
Member
Order under Section 31(1) of the Competition Act, 2002
1.
On 6th October 2023, the Competition Commission of India (Commission) received a
notice under Section 6(2) of the Competition Act, 2002 (Act), given by Mirae Asset Naver
New Growth Fund I (Mirae I), Mirae Asset – GS Retail New Growth Fund I (Mirae II),
Mirae Asset – Naver Asia Growth Investment Pte. Ltd (Mirae III) and Mirae Asset Late
Stage Opportunities Fund (Mirae IV) [collectively, Mirae Entities/Acquirers]. The
notice relates to proposed acquisition of shares of Shadowfax Technologies Private
Limited (Target/Shadowfax).
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2.
Mirae I, Mirae II and Mirae III are existing shareholders of Shadowfax and collectively
hold around 5 percent shareholding along with certain rights. The notice relates to
acquisition of compulsorily convertible preference shares of Shadowfax representing
around 3 percent of the fully diluted share capital of the Target by Mirae IV (“Share
Acquisition”); and contemporaneously with the completion of the Share Acquisition,
acquisition of, inter alia, the right to appoint one director on the board of Shadowfax
collectively by Mirae I, Mirae II, Mirae III and Mirae IV (“Right Acquisition”) [Share
Acquisition and Right Acquisition collectively constitute “Proposed Transaction”]. The
Proposed Transaction will be effectuated through: (i) the Share Subscription Agreement
(SSA); (ii) the Shareholders’ Agreement (SHA), each executed on 26th September 2023.
Pursuant to the Proposed Transaction, the collective shareholding of Mirae Entities in
Shadowfax would be around 8 percent.
3.
In terms of Regulations 14(3) of the Competition Commission of India (Procedure in
Regard to the Transaction of Business related to Combinations) Regulations, 2011
(Combination Regulations), the Commission, vide letter dated 1st November 2023
(RFI), sought certain information and clarifications regarding, inter alia, existing
shareholding/rights of Mirae I, Mirae II and Mirae III in Shadowfax, commercial linkages
of Shadowfax with the investee entities of Mirae Entities, etc. The response was submitted
by the Acquirers on 8th November 2023 (Response to RFI). Along with the Response to
RFI, the Acquirers provided a clarification under Regulation 16 of the Combination
Regulations to rectify a typographical error relating to the number of shares. The
Commission considered the same and decided to take the clarification on record.
4.
The Acquirers are controlled by entities that are ultimately directly or indirectly controlled
by the Mirae Group which is a global financial group headquartered out of Seoul, South
Korea. The Mirae Group offers globally diversified financial services and products
including a diversified investment platform which provides its investors with investment
solutions.
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5.
As submitted, the Target is a crowdsourced, tech-enabled logistics platform. The company
has over 3 million delivery partners registered on its platform, serving a diverse set of
200+ enterprise customers. The Target is present in 2000+ cities in India, delivering over
1.5 million parcels every day to end consumers ordering a wide array of food, grocery,
FMCG, electronics, consumer durables, pharma and apparel products.
6.
As stated above, the Target is engaged in provision of third-party logistics services (3P
logistics). 3P logistics is a broader term and in addition to transportation and delivery, it
also includes various types of value-added services such as warehousing, terminal
operations, customs brokerage, and supply chain management which can also include
analytic services for tracking and tracing the delivery status of different products.
Accordingly, for the purposes of competition assessment, 3P logistics services can be
further segmented or sub-segmented considering the characteristics, intended use, pricing
of services, business models in practice etc.
7.
As regards the assessment of the Proposed Transaction, there are no horizontal overlaps
even considering the activities of Target as 3P logistics services provider as a broader
frame of reference. However, the same gives rise to two potential/existing vertical
relationships. Two portfolio entities of the Mirae Group are engaged in activities which
are at different stages or levels of the production chain in which the Target is involved.
The first relates to the Mirae Group’s minority stake in Big Basket, which is an entity
involved in online B2B/B2C sales and the second relates to investment by some entities
within Mirae Group in Nextbillion, which is an entity involved in providing geospatial
data and services.
8.
Big Basket undertakes online B2B/B2C sales through its website and mobile application,
and for the same, it requires 3P logistics services of the nature provided by Shadowfax.
For the assessment of this vertical linkage, the plausible relevant markets can include the
segment of 3P logistics services such as 3P logistics services for e-commerce etc., and
online B2B/B2C sales or even narrower sub-segments of aforesaid segments. However,
for the reasons given in ensuing paragraphs, the Proposed Transaction is not likely to
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result in any appreciable adverse effect on competition in any of the plausible markets that
could be delineated, and accordingly, the question of the exact delineation of relevant
market is left open.
9.
The Commission observed that the existing linkage in form of provision of 3P logistics
services by Shadowfax to Big Basket is insignificant both in terms of actual revenue
derived by Shadowfax from Big Basket or in terms of proportion of total revenue of
Shadowfax derived from Big Basket or in terms of reciprocal proportion of Big Basket’s
total logistics spend. The same is indicative of lack of any likelihood of the Proposed
Transaction conferring any ability/incentive to the parties involved for potentially
engaging in any foreclosure strategies.
10.
Nextbillion is the developer of a geospatial data platform designed to help enterprises such
as Shadowfax to tackle location problems with the help of tailored location and navigation
technology solutions. As submitted, the Target and Nextbillion do not have any existing
relationships. Further, the overall presence of Nextbillion as reflected in its total turnover
derived in India is insignificant to confer any ability/incentive to the parties involved for
potentially engaging in any foreclosure strategies in any of the plausible markets that
could have been delineated.
11.
Considering the material on record including the details provided in the Notice and the
assessment of the Proposed Transaction based on the factors stated in Section 20(4) of the
Act, the Commission is of the opinion that the Proposed Transaction is not likely to have
any appreciable adverse effect on competition in India. Therefore, the Commission
approves the Proposed Transaction under Section 31(1) of the Act.
12.
This order shall stand revoked if, at any time, the information provided by the Acquirers
is found to be incorrect.
13.
The information provided by the Acquirers shall be treated as confidential in terms of and
subject to provisions of Section 57 of the Act.
