DSV Holding Germany GmbH

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COMPETITION COMMISSION OF INDIA Combination Registration No.C-2024/10/1192

12th November 2024

Notice under Section 6(2) of the Competition Act, 2002 filed by DSV Holding Germany GmbH

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 $04^{\text{th}}$ October 2024, the Competition Commission of India (Commission) received a notice under sub-section (2) of Section 6 of the Competition Act, 2002 (Act) filed by DSV Holding Germany GmbH (DSV Germany/Acquirer) pursuant to the Sale and Purchase Agreement dated $13^{\text{th}}$ September 2024 (SPA) entered into amongst DSV Germany, DSV A/S, and Deutsche Bahn Aktiengesellschaft (Seller).

2. The notice relates to the proposed acquisition by Acquirer (which is wholly owned and solely controlled by DSV A/S) of 100% of the shares and sole control in Schenker Aktiengesellschaft (Schenker/Target) from the Seller (Proposed Combination). [Hereinafter, the Acquirer and the Target are collectively referred to as the Parties].

Combination Registration No. C-2024/10/1192

3. In terms of Regulation 14 of Competition Commission of India (Combinations) Regulations, 2024, letter dated $16^{\text{th}}$ October 2024 was issued to the Acquirer seeking certain information(s)/clarification(s), inter alia, relating to the activities of the Parties and the response to the same was received on $25^{\text{th}}$ October 2024.

4. DSV Germany is ultimately wholly owned and solely controlled by DSV A/S. It belongs to the DSV Group. It is an acquisition vehicle and does not carry on any operating activities, either in India or in any other country.

5. DSV A/S is the ultimate parent/controlling entity of the DSV Group (Acquirer Group). No company or individual controls DSV A/S, and no shareholder holds more than 10% of its share capital. Further, no shareholder of DSV A/S exercises material influence over it. DSV A/S is a global asset-light freight forwarding and logistics company active internationally in road/land, air, and sea freight forwarding services as well as contract logistics services. DSV A/S is present in India through various subsidiaries and affiliates, namely, DSV Air & Sea Private Limited, DSV Air & Sea International Private Limited, DSV Coload & Clearance Private Limited, DSV Solutions Private Limited, and DSV Charitable Foundation.

6. DSV A/S is the parent company of the Acquirer Group and it has three divisions: (a) DSV Air & Sea, (b) DSV Road, and (c) DSV Solutions. The Acquirer Group is present in more than 80 countries. As a freight forwarder, the Acquirer Group serves as an intermediary and uses its relationships with both carriers and other logistic partners to negotiate favourable terms to the benefit of its customers (the shippers). It does not generally provide transportation capacity via its own fleets of vehicles, vessels or aircrafts, and majority of its warehousing capacity is leased from third parties. In India, the Acquirer Group is engaged in all the logistics business activities mentioned above other than road/land-based freight forwarding services.

7. The Target, headquartered in Germany, currently belongs to the DB Group (which comprises of the Seller as the ultimate parent entity of the group, along with its subsidiaries and joint venture entities). The Seller holds 100% of the shares in the

Combination Registration No. C-2024/10/1192

Target. As a subsidiary of the Seller, Schenker constitutes a separate business unit within the DB Group. It is the top-holding company of its group of companies. In India, it is present through its wholly owned subsidiary, namely, Schenker India Private Limited.

8. Schenker is a global freight forwarding and logistics company active in road/land, air, and sea freight forwarding services as well as contract logistics services. It acts as a freight forwarder, with an asset-light business model. It does not generally provide transportation capacity via its own fleets of vehicles, vessels or aircrafts, instead procuring the necessary freight space from certain external carriers or on the spot market. Schenker uses its own vehicles only in some segments of land transport, thus also acting as a transporter. However, Schenker's activities as a transporter are very small when compared to its activities as a freight forwarder. In India, Schenker does not own or lease any trucks. In India, Schenker is engaged in all the activities mentioned above.

9. As part of their respective businesses, the Acquirer Group and the Target provide freight forwarding services and contract logistics services:

• (i) With respect to freight forwarding services, the Acquirer Group and the Target serve as an intermediary and provide traditional freight forwarding services including the organisation, supervision and tracking of the goods' shipment using haulage contractors, carriers, shipping companies and airline companies, to carry out the actual transportation. They may also assist customers in simplified customs clearance operations as well as deferred import duties and charges to allow swift release and delivery of goods to the destination; and
• (ii) With respect to contract logistics services, their activities relate to resource management vis-à-vis their customers by handling the designing and planning of supply chains, warehousing and managing inventory. Similar to their freight forwarding activities, the Acquirer Group and the Target enter into contracts with various players providing different types of logistics services to manage any or all parts of their customers' supply chain requirements and to ensure that their customers' requirements in this respect are addressed.

Combination Registration No. C-2024/10/1192

10. It is submitted that both the Acquirer Group and the Target do not have their own fleets of vehicles, vessels or aircrafts, other than, for instance, a small fleet of vehicles/trucks for land-based freight forwarding. In addition, the Acquirer Group and the Target operate warehouses in India which are used as part of their freight forwarding and or contract logistics services.

11. With respect to warehousing activities of the Parties, it is submitted that these are a part of their freight forwarding and contract logistics businesses. Neither the Acquirer Group nor the Target own any warehouses in India; any space that they require is leased / rented from owners of warehousing spaces in India. The warehouses that are operated by the Acquirer Group and the Target are primarily for captive purposes i.e., to provide freight forwarding and contract logistics (of which warehousing services form a part). Any warehousing services are provided to their respective customers, and not to each other. Thus, there is no horizontal overlap or vertical linkage between the Acquirer Group and the Target in this respect.

12. In view of above, it is submitted that the business activities of the Acquirer Group/its affiliates and the Target exhibit overlap in the overall market for logistics services and at the narrower levels in the air freight forwarding services, sea freight forwarding services, and contract logistics services. Accordingly, the Parties have defined the following relevant markets: (a) broad market for overall logistics services in India (Overall Logistics Market), (b) the market for air freight forwarding services in India (Air Freight Forwarding Market), (c) the market for sea freight forwarding services in India (Sea Freight Forwarding Market), and (d) the market for provision of contract logistics services in India (Contract Logistics Market).

13. The Commission assessed the Proposed Combination considering all plausible relevant market(s) and decides to leave the precise delineation of the relevant market open as the Proposed Combination, for the reasons stated below, is not likely to cause an appreciable adverse effect on competition irrespective of the manner in which the relevant market is delineated.