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The Competition Commission of India approves the combination involving the acquisition of voting rights in Hitachi Astemo Ltd. by JICC-01 Limited Partnership and Honda Motor Co. Ltd., alongside the acquisition of full shareholding in Hitachi Astemo Electric Motor Systems by Hitachi Astemo Ltd. The transaction involves existing vertical linkages in automotive parts and vehicles, but it does not alter competition dynamics or cause any appreciable adverse effect on competition in India. The approval stands revoked if the provided information is incorrect.
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COMPETITION COMMISSION OF INDIA Combination Registration No.C-2023/08/1049
10th October 2023
Notice under Section 6(2) of the Competition Act, 2002 filed by JICC-01 Limited Partnership, Hitachi Astemo, Ltd. and Honda Motor Co., Ltd.
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 14th August 2023, the Competition Commission of India (Commission) received a notice under sub-section (2) of Section 6 of the Competition Act, 2002 (Act) jointly filed by JICC-01 Limited Partnership (JICC), Hitachi Astemo Ltd. (HAL) and Honda Motor Co. Ltd. (HMCL).
The notice has been filed pursuant to following agreements executed on 30th March 2023: (a) Shareholders' Agreement (SHA) relating to operation of HAL executed amongst Hitachi Limited (HL), HMCL, and JICC; (b) Agreement on Contribution in kind and Share Transfer (ACST) executed between HL and HMCL; (c) Agreement on Acquisition of Treasury Shares (AATS) executed between HL and HAL; and (d) Subscription Agreement between HL and JICC (SSA) executed between HL and JICC.
The proposed combination envisages: (i) acquisition of 20% voting rights in HAL by JICC, together with certain control rights, board representation and other rights; (ii) acquisition of an additional 6.6% voting rights in HAL by HMCL, such that voting rights of HMCL in HAL will increase from 33.4% to 40% and; (iii) acquisition of 49% shareholding in Hitachi Astemo Electric Motor Systems (HAEMS) by HAL, such that 100% of the shareholding of HAEMS is held by HAL [Proposed Combination]. [Hereinafter JICC, HAL and HMCL are collectively referred to as 'Acquirers'. Further, Acquirers and HAEMS are collectively referred to as 'Parties'].
In terms of Regulation 14 of Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011, the Commission, vide communications dated 24.08.2023 and 20.09.2023, sought certain information(s)/ clarification(s), inter alia, relating to the activities of the Parties and the response to the same was received on 31.08.2023 and 22.09.2023.
Parties to the Proposed Combination
JICC-01 Limited Partnership (JICC) is a Japanese Limited Partnership managed by JICC G.K., which is a wholly owned subsidiary (WoS) of JIC Capital Ltd. (JIC Capital). JIC Capital is a WoS of Japan Investment Corporation (JIC). As such, JICC has no presence or activities in India, directly or indirectly.
JIC is a sovereign wealth fund of the Government of Japan (GoJ) located in Tokyo, Japan. JIC's purpose is to generate a virtuous cycle of risk capital to support next-generation industries in Japan. JIC has established three funds, namely, INCJ Limited, JIC Capital and JIC Venture Growth Investments Co. Ltd. It is stated in the notice that JIC Group is present in India only through the JIC Entities1 i.e., (i) Toyo Aluminium (Toyal2), which is present in India through its affiliates, namely, Toyal MMP India
1 The affiliates of JIC Group that have presence in India and / or derive certain turnover from India (JIC Entities). It is stated in the notice that an affiliate means any entity in which the other entity has: (a) direct or indirect shareholding of 10% or more; and / or (b) right or ability to exercise any special right (including any advantage of commercial nature with any of the party or its affiliates) that is not available to an ordinary shareholder; and/or (c) right or ability to nominate a director or observer to the board. 2 Toyal is a company based in Japan, engaged in the manufacture and sale of aluminium foil, sheet, paste, powder, alloy powder, high purity aluminium nitride powder, solar cell and related products.
Private Limited (TIMPL3), Svam Toyal Packaging Industries Private Limited (Svam4) and Sama Aluminium Co. Ltd. (Sama5); (ii) UACJ Foil Corporation (UACJ Foil 6); (iii) REALM IDx, Inc. (REALM7); and (iv) Cloudian Holdings Inc. (CHI8). It is submitted in the notice that whilst UACJ Foil, Sama, REALM and CHI do not have any physical presence in India, they derive insignificant revenue from India by way of exports to their customers in India, which are not engaged in the automobile sector or in supply of auto-parts in India.
HMCL, a listed company incorporated under the Commercial Code of Japan, is the flagship parent company of the Honda Group. HMCL develops, manufactures, and markets motorcycles, scooters, automobiles, and power products, worldwide. Globally, HMCL's business segments are motorcycle business operations, automobile business operations, financial services business operations, power products business, and other business operations. In India, HMCL is largely engaged in activities such as manufacture and sale of automobiles, two-wheelers, power products (such as generators, water pumps, tillers, etc.), auto parts for automobiles and two-wheelers, related research and development, etc.
HAL is part of HAL Group. It includes HAL and all its downward Affiliates. HAL is currently jointly controlled by HL and HMCL with 66.6% and 33.4% shareholding and voting rights, respectively. Globally, HAL is engaged inter alia in development,
3 TIMPL is a joint venture company set up to install a speciality aluminium paste manufacturing facility at the Maharashtra Industrial Development Corporation, in 2018. 4 Svam is engaged in the manufacturing and sale of product packaging materials for the pharmaceutical industry. Some of the products manufactured by Svam include plain alu alu foil, blister foil, tropical foil, etc. 5 Sama (an affiliate of Toyal) is engaged in production of aluminium foil products, packaging materials, industrial and construction materials, and related research and development activities. 6 UACJ Foil is headquartered in Japan. The scope of its business includes (a) manufacture and sale of rolled products in aluminium, copper, tin, lead and other metals; (b) manufacturing, processing and sale of products derived from the above listed rolled materials; (c) processing and sale of paper, cellophane and other film products; and (d) all business related to the above. UACJ Foil's products are used in industries, such as, automobiles, electronics, medical, food packaging, etc. However, the products manufactured by it cannot be used by HAL or its competitors. 7 REALM (an affiliate of INCJ Limited) provides genetic testing services for breast cancer, colon cancer, and other diseases. 8 CHI (an Affiliate of INCJ) is a Silicon Valley based company which provides file and object storage services, specialising in S3-compatible object storage systems
manufacture, sales and services of automotive components, transportation related components, industrial machines and systems, etc. In India, HAL is present through its subsidiaries9 that are largely engaged in manufacture of auto parts for automobiles and two-wheelers, and related research and development as an ancillary activity.
HL is the ultimate parent company of the Hitachi group. The Hitachi group has over 25 business bases and over 10,000 employees in India. The subsidiaries and associates of HL in India market and sell a wide range of products / services such as digital system and services, green energy and mobility (railway systems), connective industry systems and solutions, etc.
HAEMS is a company incorporated in Japan. It is a part of HAL Group. HAL and HMCL, hold 51% and 49% shareholding and voting rights, respectively, in HAEMS. Accordingly, HAEMS is currently jointly controlled by HAL and HMCL. It was previously known as Hitachi Automotive Electric Motor Systems Ltd. HAEMS does not have any activities / presence in India, directly or indirectly.
