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The Competition Commission of India approves the proposed combination involving the acquisition of equity stakes by Mitsubishi Corporation in TVS Certified Private Limited and TVS Vehicle Mobility Solution Private Limited. The combination includes business transfers from TVS Mobility Private Limited to TVS Vehicle Mobility Solution Private Limited and its subsidiary TVS Personal Mobility Solution Private Limited. The Commission concludes that the combination does not cause an appreciable adverse effect on competition in India due to miniscule market shares and lack of foreclosure incentives.
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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
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).
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).
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.
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.
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.
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.
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 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.
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.
[Hereinafter, CV Business, CEMH Business, Spare Parts Business, PV Business and TVSOne Business are collectively referred to as Demerged Businesses].
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).
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.
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.
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 for which the dealerships have been established. Therefore, if the vehicles of Isuzu were to be sold by TVS Mobility, the latter would have to establish new dealerships exclusively for Isuzu, implying that TVS Mobility may not be able to leverage its existing market position that it holds on account of operating dealerships for other OEMs. Moreover, given the miniscule market share of Acquirer Group in the upstream market through Isuzu, there does not seem to be any ability or incentive for the Acquirer to indulge in any anti-competitive conduct.
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 appreciable adverse effect on competition in India. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act.
The order may be revoked if, at any time, the information provided by the Acquirer is found to be incorrect.
The information provided by the Acquirer 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 Acquirer accordingly.
