Nissan Finance Co. Limited Nissan Motor Ltd. Renault SaS

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Page 1 of 6 COMPETITION COMMISSION OF INDIA (Combination Registration No. C-2023/09/1053) 26th October 2023 Notice under Section 6(2) of the Competition Act, 2002 jointly given by Nissan Finance Co. Limited, Nissan Motor Co. Limited and Renault S.A.S CORAM: Ms. Ravneet Kaur Chairperson Anil Agrawal Member Sweta Kakkad Member Deepak Anurag Member Order under Section 31(1) of the Competition Act, 2002 1. On 1st September 2023, the Competition Commission of India (Commission) received a notice (Notice) under Section 6(2) of the Competition Act, 2002 (Act), jointly given by Nissan Finance Co. Limited (NFC), Nissan Motor Co. Limited (Nissan) and Renault S.A.S (Renault SaS) [collectively, the „Parties‟]. 2. The Notice has been given pursuant to the Framework Agreement dated 6th February 2023, executed between Renault S.A. (Renault) and Nissan (Framework Agreement); and New Alliance Agreement dated 26th July 2023, executed between Renault and Nissan (New Alliance Agreement). 3. In terms of Regulations 14(3) of the Combination Regulations, the Commission, vide communication dated 22nd September 2023, sought certain information and clarifications from the Parties. The response was submitted by the Parties on 3rd October 2023, after seeking an extension of time. Combination Registration No. C-2023/09/1053 Page 2 of 6 Description of the Parties 4. Nissan is a multinational automobile manufacturer headquartered in Japan. Nissan is active in the automotive sector and mainly designs, develops, manufactures and sells passenger vehicles and light commercial vehicles (LCVs) under the brands “Nissan” and “Infiniti”. Its vehicles cover several ranges of passenger vehicles and light commercial vehicles. In India, Nissan engages in the sale of passenger vehicles and automotive parts through its subsidiaries: Nissan Motor India Private Limited (NMIPL), Nissan Trading India Private Limited (NTIPL), Nissan Digital India LLP (Nissan Digital) and its joint ventures Renault Nissan Automotive India Private Limited (RNAIPL), Renault Nissan Technology & Business Center India Private Limited (RNTBCI), and Nissan Renault Financial Services India (NRFSI). Presently, Renault holds 43.4 percent of the shares in Nissan, carrying 43.7 percent of the voting rights. 5. Renault is a French multinational automobile manufacturer headquartered in Boulogne-Billancourt, France. Renault operates in India through its subsidiaries, Renault India Private Limited (RIPL) and its joint ventures (RNAIPL, RNTBCI, NRFSI), engaging in sale of passenger vehicles and automotive parts. Renault‟s business is divided into two operational sectors across 134 countries, namely „Automotive‟ including the design, production and distribution of products through a sales network, and „Services‟ including sales financing, rental, maintenance and service contracts. At present, Nissan holds 15 percent of the shares in Renault, through NFC, though the voting rights associated with Nissan‟s shareholding in Renault are suspended because of the operation of the French Commercial Code. Under the French Commercial Code, if the shares or voting rights of a company are held by one or several companies which are controlled directly or indirectly by the company, the voting rights attached to such shares or the voting rights cannot be exercised at the general shareholders‟ meeting of the company. 6. In India, Renault and Nissan currently cooperate through their joint ventures (namely RNAIPL, RNTBCI and NRFSI) in the areas of procurement, research and advanced Combination Registration No. C-2023/09/1053 Page 3 of 6 engineering for certain technologies, vehicle and component development for certain segments or components, and production for certain models or regions, with the objective of generating synergies which benefit both Parties and ultimately their respective consumers, including cost reduction, technology innovation and product line-up expansion for each group. RNAIPL is engaged in the manufacturing and assembly of passenger vehicles including transmissions, components, vehicle parts and provision of related services captively to Renault and Nissan. Currently, Nissan owns 70 percent of the total issued share capital through itself and Nissan Overseas Investments B.V., („NOI‟) which is its wholly owned subsidiary, and Renault SaS owns 30 percent of the total issued share capital through Renault Group BV. 7. RNTBCI is a captive automotive technology and business centre supporting Renault and Nissan‟s activities in relation to research and development, engineering, manufacturing, technology, product planning, process and information technology. NRFSI provides financial services to customers and dealers of Renault and Nissan in India. NRFSI is categorised as Systematically Important Non-Deposit taking Non- Banking Financial Company (SIND- NBFC). Currently, Renault SaS through Renault Group BV, owns 66.67 percent of the total issued share capital and Nissan, through Nissan International Holding B.V. („NIH‟), its wholly owned subsidiary, owns 33.33 percent of the total issued share capital in RNTBCI. Proposed Transaction 8. The proposed transaction relates to a re-balancing of the existing cross-shareholdings between Renault and Nissan (Rebalancing) wherein Nissan, through NFC, will retain its 15 percent shareholding in Renault. Renault, however, will transfer 28.4 percent of its Nissan shares into a trust estate administered by a trustee governed by French law, where the voting rights will be neutralized, subject to limited exceptions. Post the proposed transaction, Renault and Nissan will have a cross-shareholding of 15 percent of the total issued share capital and freely exercisable voting rights in each other. Further, the parties are proposing to make certain changes to the shareholding structure and governance of two of their joint ventures in India, namely, RNAIPL and RNTBCI Combination Registration No. C-2023/09/1053 Page 4 of 6 (collectively, the „JV Transaction‟). The Rebalancing and the JV Transaction are collectively referred to as „Proposed Combination‟. 9. Based on the submissions, it has been observed that Nissan and its affiliate entities in India are primarily engaged in the sale of passenger vehicles and automotive parts under the „Nissan‟ brand, whereas Renault and its affiliate entities in India, offer passenger and utility vehicles along with automobile parts under the „Renault‟ brand. Therefore, the parties are engaged in similar business. However, there are certain specificities of the Proposed Combination which need to be considered before going into the assessment of the Proposed Combination for any impact on market dynamics. 10. Apparently, the Proposed Combination relates to the Rebalancing of the existing cross- shareholdings between Renault and Nissan, and changes in certain shareholding and governance structure in RNAIPL and RNTBCI (the JV Transaction) between parties inter-se. Such Rebalancing is aimed at enabling the parties to freely exercise their respective voting rights in a proportionate manner, more importantly to allow Nissan to exercise voting rights associated with its shareholding in Renault which are currently suspended because of the operation of the French Commercial Code. Renault will reduce its shareholding in Nissan from 43.4 percent to 15 percent by transferring 28.4 percent of its Nissan shares into a trust estate administered by a trustee governed by French law, where the vote exercised by the Trustee on behalf of the Trust will not count since the Trustee‟s votes will cancel each other out, subject to limited exceptions. Renault would continue to fully benefit from the economic rights from the entrusted shares until such shares are sold. 11. Further, through the proposed JV Transaction, the shareholding pattern of the parties in two of their joint ventures will undergo a change. Currently, Renault SaS through Renault Group BV, owns 66.67 percent of the total issued share capital and Nissan, through Nissan International Holding B.V. („NIH‟), its wholly owned subsidiary, owns 33.33 percent of the total issued share capital in RNTBCI. Renault and Nissan are contemplating a change in the shareholding of RNTBCI, pursuant to which 51 percent of the total issued share capital will be owned by Renault SaS and 49 percent of the Combination Registration No. C-2023/09/1053 Page 5 of 6 total issued share capital will be owned by Nissan through NIH. As regards RNAIPL, currently, Nissan owns 70 percent of the total issued share capital through itself and Nissan Overseas Investments B.V., („NOI‟) which is its wholly owned subsidiary, and Renault SaS owns 30 percent of the total issued share capital through Renault Group BV. Pursuant to the JV Transaction, 51 percent of the total issued share capital will be owned by Nissan through NOI and 49 percent of the total issued share capital will be owned by Renault SaS. 12. Thus, essentially, the parties, through the Proposed Combination, are aiming towards rebalancing control they had in each other prior to the Proposed Combination. 13. Given the aforesaid backdrop, the Commission observes that as a result of Rebalancing, NFC/Nissan will merely recover the exercisable voting rights attached to its current Renault shares, the exercise of which is currently suspended by the effect of applicable French laws. Further, the levels of concentration in the market, which the parties held prior to the proposed combination, remain unchanged as the parties do not acquire any incremental market share pursuant to the proposed combination. Thus, there is no foreseeable impact on market concentration and competition dynamics. The Proposed Combination is not expected to result in any changed ability/incentive of the parties which could potentially cause any adverse effect on competition in any of the plausible markets in which the parties may be said to be operating. 14. The Commission, thus, decides to leave precise delineation of relevant market open, as the Proposed Combination is not likely to raise any competition concern, irrespective of how the relevant market is defined. 15. With regard to the vertical and complementary relationships, it has been submitted that the two of the joint ventures (RNAIPL and RNTBCI) owned by the parties provide products and services to NMIPL as well as RIPL on a captive basis. These joint ventures have no market facing presence and solely exist as captive suppliers to the parties. Therefore, no competition concern arises from these relationships either. Combination Registration No. C-2023/09/1053 Page 6 of 6 16. Considering the material on record, including the details provided in the notice given under sub-section (2) of Section 6 of the Act, and the assessment of the Proposed Combination on the basis of factors stated in sub-section (4) of Section 20 of the Act, the Commission is of the opinion that Proposed Combination is not likely to have an appreciable adverse effect on competition in India. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act 17. This order may be revoked if, at any time, the information provided by the Parties is found to be incorrect. 18. The information provided by the Parties shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act. 19. The Secretary is directed to communicate to the Parties accordingly.