Abu Dhabi Ports Company PJSC — Combination C-2023/10/1057

COMPETITION COMMISSION OF INDIA 29th November 2023 Notice under Section 6(2) of the Competition Act, 2002 given by Abu Dhabi Ports Company PJSC 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 3rd October 2023, the Competition Commission of India (Commission) received a notice (Notice) under Section 6(2) of the Competition Act, 2002 (Act), given by Abu Dhabi Ports Company PJSC (Acquirer). The Notice was given pursuant to the execution of the Share Purchase Agreement between Mr. M. G. Maghami and others (collectively, Sellers) and the Acquirer on 2nd November 2022.

2. The Commission, vide its communications dated 19th October 2023 and 2nd November 2023, issued under Regulation 14(3) of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (Combination Regulations), required the Acquirer to remove defects from the Notice and furnish certain information relevant for assessment of the proposed combination. The Acquirer furnished its responses, vide submissions dated 31st October 2023, 1st November 2023 and 8th November 2023. The Acquirer also made submissions dated 21st November 2023 and 24th November 2023.

3. The proposed combination envisages an acquisition up to 71% of the share capital of Delanord Investments Limited (Target) [Proposed Combination] as under:

- acquisition of 51% equity shareholding by the Acquirer in the Target; and - an option to acquire a further 20% equity shareholding by the Acquirer in the Target pursuant to exercise of a call option. The Acquirer may only exercise the call option by serving a call exercise notice on the specified shareholder during the period beginning on the date of issuance of 2025 Financial Statements1 and ending on 31st December 2026 (both dates inclusive) subject to certain condition related to certain financial parameter.

4. The Acquirer, listed on the Abu Dhabi Securities Exchange, is a trade, logistics and transport enabler. The Acquirer is, either directly or indirectly, engaged in the (i) operation of ports and terminals, (ii) provision of short-sea vessel operation services, (iii) provision of non-vessel operating common carrier (NVOCC) services, and (iv) provision of freight forwarding services. The Acquirer’s largest shareholder is Abu Dhabi Developmental Holding Company PJSC (ADQ) which owns 75.42% of its shares. ADQ in turn is directly wholly owned by the Government of Abu Dhabi. ADQ is a strategic investment vehicle of the Government of Abu Dhabi. The Acquirer Group competes with entities owned or controlled by the Government of Dubai.

5. The Acquirer conducts its business activities in India indirectly through the subsidiaries viz. Safeen Feeders Company Sole Proprietorship LLC (Safeen), Alligator Shipping Container Line LLC (Alligator) and Noatum Holdings S.L.U. (Noatum). Safeen is engaged in the provision of short-sea vessel operation services and currently operates through two routes connecting the UAE with the wider Gulf

1 The audited consolidated balance sheet as at the end of, and audited consolidated profit and loss account form the financial year ending on 31 December 2025 of the Target.

region and the Indian subcontinent (India, Pakistan, Bangladesh, Sri Lanka, and Maldives) [ISC Region]. Alligator is a global shipping and logistics service provider which operates as an NVOCC and has a presence, inter alia, in the Middle East, East Asia, and the ISC Region. Noatum is a provider of global integrated logistics solutions covering end-to-end supply chains. It is engaged in the provision of freight forwarding services, inter alia, in India, Korea, Vietnam, and China.

6. It has also been submitted that the Acquirer has a certain shareholding in Aramex PJSC (Aramex), a UAE-incorporated logistics firm that also provides sea freight forwarding services in India. Furthermore, in 2022, the Acquirer acquired Transmar International Shipping Company (Transmar), a provider of short-sea vessel operation services, which is headquartered in Egypt, serving routes in the Middle East, covering both the Red Sea and the Persian Gulf (calling at ports in Egypt, Sudan, Djibouti, the UAE, Saudi Arabia, and Jordan). Transmar does not provide its services in the ISC Region. The Acquirer Group has set up a joint venture NVOCC with Aramex.

7. The Target, belonging to the GFS Group, directly and through its controlled entities, is primarily engaged in the provision of: (i) short-sea vessel operation services, covering the Middle East, ISC Region, and Southeast Asia; (ii) support functions such as ship ownership and ship management; (iii) transport logistics services as an NVOCC; and (iv) a small amount of inland transportation services in East Africa.

8. The Target has a presence in India through three India-incorporated entities namely, Sima Marine (India) Private Limited (Sima Marine), Mahi Marine Private Limited (Mahi Marine), and Cordelia Container Shipping Line Private Limited (Cordelia). Additionally, the Target is also present in India through two foreign-incorporated entities, namely, Global Feeder Shipping PTE (GFS PTE) and Global Feeder Shipping LLC (GFS LLC). Sima Marine along with GFS LLC, and GFS PTE are engaged in the provision of short-sea vessel operation services for containerized cargo in the ISC Region. Cordelia is present in the provision of NVOCC services for containerized cargo in the ISC Region. Mahi Marine is engaged in the provision of technical vessel management services to companies belonging to the GFS Group.

9. It has been submitted that the activities of the Acquirer Group and the Target exhibit horizontal overlaps in the following segments: (i) provision of short-sea vessel operation services for containerized cargo, and (ii) provision of NVOCC services for containerized cargo.

10. It has been submitted that the activities of the Acquirer Group and the Target exhibit the following vertical interfaces:

(i) Vertical Overlap 1: provision of short sea vessel operation services for containerized cargo by the Acquirer Group and provision of NVOCC services for containerized cargo by the Target;

(ii) Vertical Overlap 2: provision of short sea vessel operation services for containerized cargo by the Target and provision of NVOCC services for containerized cargo by the Acquirer Group;

(iii) Vertical Overlap 3: provision of short sea vessel operation services for containerized cargo by the Target and provision of sea freight forwarding services for containerized cargo in India by the Acquirer Group;

(iv) Vertical Overlap 4: provision of NVOCC services for containerized cargo by the Target and provision of sea freight forwarding services for containerized cargo by the Acquirer Group; and (v) Vertical Overlap 5: provision of container terminal services in the Middle East by the Acquirer Group and provision of NVOCC services for containerized cargo and provision of short-sea vessel operation services for containerized cargo by the Target.

11. With respect to geographical markets, the Acquirer has submitted that the Commission may consider the ISC Region as geographic delineation for the short-sea vessel operation services and NVOCC services. However, the Acquirer has also submitted the market-facing details for: (i) overlapping port clusters; (ii) overlapping port-pairs; and (iii) four trade lanes viz. India to the Middle East and vice versa, and India to the South East Asia and vice versa

12. The Commission vide its order dated 2nd June 2021, in Combination Registration No. C-2021/04/829, has observed as under:

Gross aggregation of all the ports of Gulf or India, as the case may be, in a single market may not reflect true market dynamics. This is because of several factors, some of which are as follows. Considering the vast length of the coastline of India on east and west, it is difficult to assume that all the ports of India are substitutable with one another and thus form part of the same relevant market. Further, unloading of a cargo at a port other than preferred destination may require additional surface transportation which may be significantly higher than marine freight. Moreover, cargo may also require crossing of boundaries of countries, which may involve time, additional taxes and duties or in certain cases may not be even practically feasible. Thus, as mentioned above, inclusion of all ports in a single market may not be appropriate. Where two or more ports have common hinterland, cluster of those ports may form part of the same relevant geographic market. Further, certain trade routes with a high density of service providers may experience downward pricing pressure. Thus, all port pairs may not exhibit homogeneous competition dynamics and may not be part of same relevant geographic market. Port pairs with distinct competition dynamics may warrant a narrower market delineation. In such cases specific port pair may be a considered a relevant geographic market in itself.

13. The above order of the Commission observes that gross aggregation of all the ports in a particular region, as the case may be, in a single market may not reflect true market dynamics. Cluster of ports having a common hinterland may form part of the same relevant geographic market and port-pairs with distinct competition dynamics may warrant a narrower market delineation. However, the Proposed Combination is not likely to raise any competition concern irrespective of whether the relevant geographic market is defined at the level of clusters of ports or port-pairs. Therefore, the precise delineation of the relevant market is left open.

14. Based on the combined market shares of the parties, incremental market shares, and volume handled, with regard to horizontal overlaps for: (i) provision of short-sea vessel operation services for containerized cargo, and (ii) provision of NVOCC services for containerized cargo, the Commission observed that the Proposed Combination is not likely to raise competition concern. Similarly, the Vertical Overlap 1 to 4, are not likely to raise any competition concerns.

15. It has been further submitted that the Acquirer Group operates ten ports and terminals in the United Arab Emirates (UAE) viz., (i) Al Sila Port, (ii) Delma Port, (iii) Mugharraq Port, (iv) Al Mirfa Port, (v) Zayed Port, (vi) Free Port, (vii) Musaffah Port, (viii) Shahama Port, (ix) Khalifa Port, and (x) Fujairah Terminals. Apart from Khalifa Port and Fujairah Terminals, none of the ports and terminals operated by the Acquirer in the UAE handle containerized cargo. Further, the Target has not provided any short-sea services or NVOCC services in the past which have a nexus with Fujairah Terminal.

16. With regard to Vertical Overlap 5, it has been submitted that the Target’s throughput at Khalifa Port in CY 2022 was negligible (TEUs in four digits) in comparison to the total container throughput capacity of Khalifa Port (i.e., ~8.5 million TEU) in CY 2022. Further, the port has a large unutilised capacity. In CY 2022, the capacity utilisation at Khalifa Port was a mere ~50%. Given the limited throughput of the Target group at Khalifa port, this vertical interface is not likely not raise any competition concerns.

17. Considering the material on record, including the details provided in the Notice and the assessment of the Proposed Combination based on factors stated in Section 20(4) of the Act, the Commission is of the opinion that the Proposed Combination is not likely to have any appreciable adverse effect on competition in India in any of the relevant market(s), and therefore, the Commission hereby approves the Proposed Combination in terms of Section 31(1) of the Act.

18. This order may be revoked if, at any time, the information provided by the Acquirer is found to be incorrect.

19. It is made clear that nothing contained in this order shall be deemed to be confidential as the same has been used for the purposes of the Act in terms of the provisions contained in Section 57 of the Act.

20. The Secretary is directed to communicate this order to the Acquirer.