Mitsubishi Corporation

Page 1 of 5 COMPETITION COMMISSION OF INDIA Combination Registration No. C-2024/04/1133 11th June 2024 Notice under Section 6(2) of the Competition Act, 2002 given by Mitsubishi Corporation 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 12th April 2024, the Competition Commission of India (Commission) received a Notice under Section 6(2) of the Competition Act, 2002 (Act) given by Mitsubishi Corporation (Mitsubishi/Acquirer). The Notice was filed pursuant to the execution of (i) Joint Venture Agreement, dated 6th March 2024, amongst TVS Mobility Private Limited (TVS Mobility), Mitsubishi, Arai Shoji Co. Limited (Arai) and TVS Certified Private Limited (TVS Certified/Target 1) (Auction JVA); (ii) Joint Venture Agreement, dated 23rd February 2024, amongst TVS Mobility, Mitsubishi, TVS Vehicle Mobility Solution Private Limited (TVS VMS/Target 2) and Dinram Holdings Private Limited (Auto Retail JVA); and (iii) Share Subscription Agreement, dated 23rd February 2024, amongst TVS Mobility, Mitsubishi and TVS VMS (Auto Retail SSA). 2. The Proposed Combination envisages (i) acquisition of equity stake of 35% in TVS Certified by Mitsubishi (Auction Transaction), and (ii) acquisition of equity stake of 32.26% in TVS VMS by Mitsubishi (Auto Retail Transaction). Combination Registration Number: C-2024/04/1133 Page 2 of 5 3. In terms of Regulation 14 of the Competition Commission of India (Procedure in regard to the transaction of Business relating to Combinations) Regulations, 2011 (Combination Regulations), vide letter dated 29th April 2024, certain information and clarifications were sought from the Acquirer. The response to this letter was submitted by the Acquirer on 20th May 2024, after seeking extension of time. 4. The Acquirer, a company incorporated in Japan, is the ultimate parent entity of the Mitsubishi Group (Acquirer Group). As on 31st March 2024, the Acquirer is a listed multinational corporation and has 10 business groups that operates across industries including natural gas, industrial materials, petroleum & chemicals, mineral resources, industrial infrastructure, automotive & mobility, food industry, consumer industry, power solution, and urban development. Further, presently, the Acquirer has about 1,700 group companies in 90 countries and regions. 5. It is submitted that the Acquirer Group’s affiliate, i.e., Isuzu Motors Limited (Isuzu) is engaged in the business of manufacturing and, through its dealers, in the selling of Passenger Vehicles (PVs), Light Commercial Vehicles (LCVs) (such as four – wheeler pick-ups), providing after sale services for its automobiles, and selling of spare parts of Isuzu brand in India. 6. TVS Certified, a company incorporated on 31st January 2024, will be engaged in the business of sale of used Commercial Vehicles (CVs) and PVs by conducting auctions through (i) an online platform, and (ii) offline channels in physical auction yards (Auction Business). TVS Certified may also, in future, provide value added services which are ancillary to the business of selling used commercial vehicles and passenger vehicles. 7. TVS VMS, a company incorporated on 9th May 2023, is a wholly-owned subsidiary of TVS Mobility Private Limited1 (TVS Mobility), and is currently not engaged in any 1 TVS Mobility is a multi-generational, family-owned company that provides premium automobile solutions, serving as a total resource for independent service centres, dealerships, fleets and aftermarket. It was founded in the year 1911 as M/S. T V Sundram Iyengar & Sons Private Limited, TVS Mobility is currently managed by the family members of Mr. T.S. Rajam and the fourth generation of Mr. T.V. Sundaram Iyengar. Combination Registration Number: C-2024/04/1133 Page 3 of 5 business activity. However, based on the Memorandum of Association and Articles of Association of TVS VMS, it is authorized to engage in the business of inter alia, (i) dealership and distribution of CVs and PVs including Electric Vehicles (EVs) and Construction Equipment And Material Handling Vehicles (CEMH Vehicles), and (ii) motor vehicle services and undertaking dealership and distribution of spare parts for vehicles. 8. As a condition precedent to the Auto Retail Transaction, the following businesses will be transferred from TVS Mobility to TVS VMS: (i) sale and after sales service of CVs manufactured by Ashok Leyland Limited (Ashok Leyland) and Mahindra and Mahindra Limited (Mahindra) (trucks and buses division) (i.e., business of CV dealership) (CV Business); (ii) sales, rental / leasing and after-sales service of CEMH Vehicles manufactured by Escorts Kobuta Limited, Palfinger, Doosan, Zoomlion, MB Crushers and BYD (CEMH Manufacturers), and the leasing / rental of CEMH Vehicles (i.e., business of CEMH Vehicles) (CEMH Business); and (iii) distribution of vehicles spare parts manufactured by Ashok Leyland (i.e., business of distribution of spare parts) (Spare Parts Business). 9. In parallel to above, the following businesses of TVS Mobility are proposed to be transferred to a TVS Personal Mobility Solution Private Limited (TVS PMS), a newly incorporated wholly-owned subsidiary of TVS VMS (incorporated on 23rd March 2024), by way of a slump sale: (i) sale and after sales service of PVs manufactured by Honda Cars India Limited (Honda) and Renault India Private Limited (Renault) (i.e., business of PV dealership) (PV Business); and (ii) sale of membership, products (in relation to operational needs of automobiles) and operation of online e-commerce platform to enable the users registered on this Combination Registration Number: C-2024/04/1133 Page 4 of 5 platform to obtain services such as purchase of fastags, purchase of GPS tracking devices, purchase and of new tyres and re-treading of tyres, old and new batteries, purchase of insurance products, obtaining financing facilities etc. from various third- party vendors (TVSOne Business). [Hereinafter, CV Business, CEMH Business, Spare Parts Business, PV Business and TVSOne Business are collectively referred to as Demerged Businesses]. 10. Considering the presence of the Parties, the following vertical linkages were identified for the purposes of competition assessment (i) manufacture and sale of PVs in India (upstream market 1), and (ii) manufacture and sale of CVs in India (upstream market 2), which can be further narrowed to the market for manufacture and sale of LCVs in India (narrow upstream market); and the market for sale of vehicles and provision of ancillary services through automobile dealerships in India (downstream market). 11. With respect to the presence of Isuzu in the upstream markets for manufacture and sale of PVs and CVs (including LCVs), the market shares are in the range of [0-5%]. Therefore, Isuzu does not have the ability or incentive to cause any foreclosure in any of the upstream markets. 12. Similarly, with respect to the presence of TVS VMS and/or TVS PMS in the downstream market for sale of vehicles and provision of ancillary services through automobile dealerships in India, Mitsubishi has provided details pertaining to the total number of dealerships operated by TVS Mobility for the CV, PV and CEMH business and the number of vehicles sold by them cumulatively (segmented on the basis of brands) vis-a- vis the pan-India sales of these brands. The wallet share of TVS Mobility with respect to the sale of vehicles manufactured by Ashok Leyland is in the range of [15-20]% and for Mahindra, Honda, Renault and CEMH Vehicles, the wallet share is in the range of [5-10]% for each of these brands, respectively. 13. On the basis of information available in public domain, the Commission also noted that the dealerships operated by TVS Mobility (or for most other brands also) for PVs and LCVs are not multi-brand in nature and will only sell the vehicles of the particular OEM