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The Competition Commission of India approves the proposed subscription of equity shares representing eight percent of the share capital of MG Motor India Private Limited by IndoEdge India Fund – LVF Scheme. The approval covers the acquisition of a board director seat and certain reserved and information rights. The Commission concludes that the proposed combination does not cause any appreciable adverse effect on competition in India. This approval becomes void if the provided information is incorrect.
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COMPETITION COMMISSION OF INDIA Combination Registration No. C-2024/02/1116
2nd April 2024
Notice under Section 6(2) of the Competition Act, 2002 given by IndoEdge India Fund – LVF Scheme
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
On 23rd February 2024, the Competition Commission of India (Commission) received a notice under Section 6(2) of the Competition Act, 2002 (Act), given by IndoEdge India Fund – LVF Scheme (IndoEdge Scheme/Acquiring Entity), a scheme of IndoEdge India Fund (IndoEdge). The Acquiring Entity made certain voluntary submissions on 18th March 2024, 19th March 2024 and 20th March 2024 (Voluntary Submissions).
The notice relates to the proposed subscription of equity shares representing eight (8) percent of the share capital of MG Motor India Private Limited (MG Motor), on a fully diluted basis, by IndoEdge Scheme pursuant to Share Subscription and Shareholders Rights Agreement dated 16th February 2024 executed, inter alia, by and between the Acquiring Entity and MG Motor (SSSHA) (Proposed Combination). Apart from the shareholding, the Acquiring Entity will acquire certain rights in MG Motor. These include a right to appoint a director to the board of directors of MG Motor, certain reserved matter rights, certain information rights, etc.
IndoEdge Scheme is a large value fund for accredited investors. IndoEdge is a contributory determinate trust registered with the Securities and Exchange Board of India (SEBI) as Category II Alternative Investment Fund (AIF). IndoEdge Scheme and IndoEdge are professionally managed by Everstone Capital Advisors Private Limited (ECAPL). As submitted, ECAPL is an independent investment manager and manages the investments made by the Acquiring Entity. The shareholders of ECAPL include Mr. Dhanpal Jhaveri, Mr. Ashutosh Lavakare, and Axia Enterprises Private Limited (Axia) and as stated, ECAPL is under ultimate control of Mr. Dhanpal Jhaveri. Accordingly, the Acquirer Group has been considered as comprising IndoEdge Scheme, IndoEdge, ECAPL, Mr. Dhanpal Jhaveri, Mr. Ashutosh Lavakare, and Axia.
MG Motor is a company incorporated in India as a wholly owned subsidiary of SAIC Motor HK Investment Limited (SMHK) and forms part of SAIC Group. The Commission noted that it had recently approved a combination transaction involving the acquisition of shareholding in MG Motor by JSW Ventures Singapore Pte. Limited, a wholly owned subsidiary of JSW International Tradecorp Pte. Limited (JSWIT) and belonging to the JSW Group (JSW Transaction)¹. Thus, pursuant to the Proposed Combination and JSW Transaction, MG Motor will be held by SAIC Group, JSW Group, and IndoEdge.
MG Motor is engaged in the automobile original equipment manufacturing (OEM) business which primarily includes the manufacture and sale of passenger cars (PVs) (including passenger electric vehicles (PEVs)) under the brand ‘MG’ (MG Cars) and provision of after-sale services for MG Cars. Additionally, MG Motor is engaged in sale of automobile parts and accessories for MG Cars through MG authorised dealers and the “My MG” app. As submitted, MG Motor is also developing an Electric Vehicle (EV) ecosystem in India to accelerate the adoption of EVs. In this regard, MG Motor has provided certain direct current chargers at its dealerships (Dealership EV Infrastructure) and is in the process of installing charging points in residential communities’ apartments and community spaces across India (as part of the ‘MG Charge’ initiative).
As submitted, the activities of the Acquirer Group (including their affiliates) exhibit certain linkages with the activities of MG Motor. Further, the Commission noted that ECAPL provides non-binding sub-advisory services to the investment manager(s) of the Everstone Group. In this regard, the Acquiring Entity clarified that there are no shareholding linkages between ECAPL and Everstone Group. However, IndoEdge Scheme also conducted the overlaps and/or linkages assessment between the Everstone Group, its Affiliates, and the Target and confirmed that there are no new areas of horizontal overlaps or existing and/or potential vertical or complementary linkages between the Everstone Group, its Affiliates, and the Target.
Considering the activities of the Acquirer Group and Target (including their affiliates), the activity segments relevant for competition assessment of the Proposed Combination were identified as: (i) PVs/PEVs; (ii) full fleet leasing and management of vehicles; (iii) engineering research & development services for PVs (ER&D); and (iv) EV charging infrastructure. For the reasons given in the ensuing paragraphs, the Proposed Combination is not likely to result in any appreciable adverse effect on competition (AAEC) irrespective of the manner in which the relevant market(s) are delineated for the aforesaid activity segments and accordingly, the Commission decides to leave precise delineation of relevant market open.
The Commission observed that the activities of the Acquirer Group and MG Motor (including their affiliates) primarily exhibit certain vertical linkages, viz., (i) activity of manufacturing and sale of PVs carried out by MG Motor upstream and provision of full fleet leasing and management services for PVs carried out by Lithium Urban Technologies Private Limited (LUT) downstream; and (ii) ER&D Services provided by Onward Technologies Limited (OTL) upstream and manufacture and sale of PVs carried out by MG Motor downstream, and complementary linkages considering the activity of manufacture and sale of PEVs carried out by MG Motor and the activity of owning and operating EV charging stations carried out by LUT and Greencell.
The Commission considered the presence of each of the Acquirer Group entities and MG Motor (including their affiliates) in respective activity segments and observed that the same is insignificant on a standalone and consolidated basis. Considering the insignificant presence and further considering the nature and competition landscape of the respective segments, the Proposed Combination is not likely to confer any ability/incentive to the parties involved for potentially engaging in any foreclosure strategies in any of the vertically affected or complementary segments.
Considering the material on record including the details provided in the Notice and the assessment of the Proposed Combination based on the factors stated in Section 20(4) of the Act, the Commission is of the opinion that the Proposed Combination is not likely to have any AAEC in India. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act.
This order shall stand revoked if, at any time, the information provided by the Acquiring Entity is found to be incorrect.
The information provided by the Acquiring Entity shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act.
The Secretary is directed to communicate to the Acquiring Entity accordingly.
¹ Combination Registration No. C-2023/12/1088 approved by the Commission vide order dated 23rd January 2024 issued under Section 31(1) of the Act.
