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The Competition Commission of India approves the acquisition of shares and rights in Shiprocket Private Limited by MUFG Bank, Ltd. under Section 31(1) of the Competition Act, 2002. The combination involves acquiring compulsorily convertible preference shares and equity shares, resulting in a shareholding between 2.17 percent and 2.20 percent on a fully diluted basis. The competition assessment finds that horizontal and vertical overlaps between the parties involve miniscule market shares and numerous competitors. The Commission concludes that the combination does not cause an appreciable adverse effect on competition in India. The order remains subject to revocation if the provided information is incorrect.
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COMPETITION COMMISSION OF INDIA Combination Registration No. C-2024/10/1198
3rd December 2024
Notice under Section 6(2) of the Competition Act, 2002 given by MUFG Bank, Ltd.
CORAM:
Ms. Ravneet Kaur Chairperson
Mr. Anil Agrawal Member
Mr. Deepak Anurag Member
Order under Section 31(1) of the Competition Act, 2002
On 24th October 2024, the Competition Commission of India (Commission) received a Notice under Section 6(2) of the Competition Act, 2002 (Act) given by MUFG Bank, Ltd. (MUFG/Acquirer). The Notice was filed pursuant to the execution of (i) Share Purchase Agreement dated 12th August 2024 executed amongst Shiprocket Private Limited (Shiprocket/Target), the Acquirer and Beenos Asia Pte. Ltd. (Beenos SPA); (ii) Share Purchase Agreement dated 12th August 2024 executed amongst the Target, the Acquirer and 9 Resident Individuals (Resident SPA); (iii) Share Subscription Agreement dated 12th August 2024 executed amongst the Target, the Acquirer and the Senior Management Personnel/SMPs^1 (SSA); and (iv) Shareholders Agreement dated 12th August 2024 executed inter alia amongst the Target, the Acquirer and certain shareholders (SHA).
The Proposed Combination entails acquisition by MUFG acquiring certain Compulsorily Convertible Preference Shares (CCPS) and equity shares of the Target, such that it will hold at least 2.17% and up to 2.20% of the total issued, subscribed and paid-up share capital of the Target on a fully diluted basis, along with certain rights.
^1 SMP means Saahil Goel, Akshay Ghulati, Vishesh Khurana and Gautam Kapoor.
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Combination Registration Number: C-2024/10/1198
In terms of Regulation 14 of the Competition Commission of India (Combinations) Regulations, 2024 (Combinations Regulations), vide letter dated 7th November 2024, certain information and clarifications were sought from the Acquirer. The response, dated 15th November 2024, was submitted by the Acquirer. The Acquirer also submitted additional information vide a voluntary submission given on 25th November 2024.
The Acquirer is a banking institution incorporated in Japan and is a wholly-owned subsidiary of Mitsubishi UFJ Financial Group, Inc. (MUFG), the latter being the ultimate parent company of MUFG Group (Acquirer Group). With respect to the business activities of the Acquirer (the core banking unit of the Acquirer Group) in India, it is engaged in the provision of banking services and provides the following services: (i) corporate loans; (ii) deposit accounts; (iii) remittances; (iv) trade finance; and (v) bank guarantees. In India, it has branches in Mumbai, New Delhi, Bengaluru, Chennai, Neemrana and Gujarat International Finance Tec – City.
The Acquirer Group has international presence, with operations across the America, EMEA (Europe, Middle East, and Africa), and Asia-Pacific regions through its subsidiaries. Apart from banking and financial services, the Acquirer group also provides asset management and investor services to individual consumers, small and medium enterprises, and large corporations.
The Target, a company incorporated in India, is primarily a logistics platform whereby it provides logistics services to other businesses, domestically and internationally, through logistics service providers listed on its platform. In addition to its core business activity of logistics aggregation, the Target is engaged inter alia in provision of warehousing services, sale of packaging material, software services for supply chain management services and value-added services such as facilitation of loans to companies (hereinafter, Acquirer, Acquirer Group and Target are collectively referred to as Parties).
For the purpose of overlap assessment, the activities of the Acquirer Group, Acquirer and Target (including their affiliates) have been considered. Considering their presence,
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Combination Registration Number: C-2024/10/1198
it was observed that affiliates of the Acquirer Group, namely Dotpe Private Limited (Dotpe), Finnovation Tech Solutions Private Limited (KreditBee) and Saarathi Finbiz Private Limited (Saarathi), exhibit a horizontal overlap with the Target, in the market for facilitation of loans^2 in India. Additionally, Dotpe exhibits a horizontal overlap with the Target's affiliate, namely Shiprocket Omuni Private Limited (Shiprocket Omuni), in the market for the provision of software services for supply chain management services in India.
The Commission observed that considering the nature and extent of aforesaid overlap and the competition assessment given in the subsequent paragraph, the Proposed Combination is not likely to cause a significant change in market dynamics in any of the plausible markets that could be delineated and accordingly, decided to keep the definition of relevant market open.
The combined market share of the Parties (including their affiliates) in the horizontally overlapping markets for loan facilitation services and software services for supply chain management services is miniscule and is in the range of [0-5]%. Further, the market segments are fragmented with the presence of other competitors in each of the market segment that has been analysed. Therefore, given the miniscule presence of the Parties and/or their affiliates, they do not seem to possess the ability or incentive to cause foreclosure in any of the markets.
With respect to vertical overlaps, the Parties exhibit the following vertical interlinkages:
(i) The Acquirer Group (through the Acquirer and affiliates, i.e., KrazyBee and DMI Finance Private Limited) is present in the market for provision of loans in India (Upstream Market 1) and the Target is engaged in the market for facilitation of loans in India (Downstream Market 1);
(ii) The Target is engaged in the market for provision of warehousing services in India (Upstream Market 2) and the Acquirer Group [through its affiliate, i.e.,
^2 'Facilitation of loans' means provisioning of credit facilitation services to facilitate and connect various lenders to borrowers i.e., it provides borrowers access to loans in a quick manner. Facilitators connect the lenders and the borrowers and do not themselves provide or distribute any financial products or services (including loans).
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Combination Registration Number: C-2024/10/1198
Magenta EV Solutions Private Limited (Magenta EV)] is engaged in the market for provision of logistics services in India (Downstream Market 2). Upstream Market 2 can be further delineated into the narrow segments for the provision of (i) organized warehousing services; and (ii) organized warehousing services for ecommerce; and
The presence of the Parties and/or their affiliates, in the vertically overlapping markets is limited, as their market share in all the upstream and downstream markets, on the basis of value of outstanding loan/revenue generated/volume in square feet (as may be applicable for each market), is in the range of [0-5]%, except the narrow segment for provision of organized warehousing services for ecommerce, for which the market share is in the range of [5-10]%. Given the aforesaid presence of the Parties and/or their affiliates in the vertically overlapping markets, coupled with the presence of significant competitors, it appears that the Parties do not possess the ability or incentive to cause foreclosure in any of the markets.
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.
