NATIONAL INVESTMENT AND INFRASTRUCTURE FUND, Hindustan Ports Private Limited and Hindustan Infralog Private Limited — Combination C-2022/10/976

Notice under Section 6(2) of the Competition Act, 2002 jointly filed by National Investment and Infrastructure Fund, Hindustan Infralog Private Limited and Hindustan Ports Private Limited

CORAM: Ms. Sangeeta Verma Acting Chairperson

Mr. Bhagwant Singh Bishnoi Member

Order under Section 31(1) of the Competition Act, 2002

1. On 07.10.2022, the Competition Commission of India (Commission) received a notice under sub-section (2) of Section 6 of the Competition Act, 2002 (Act) from National Investment and Infrastructure Fund (NIIF/Acquirer), Hindustan Infralog Private Limited (HIPL), and Hindustan Ports Private Limited (HPPL).

2. The notice has been filed pursuant to the execution of the following documents on 29.06.2022: (i) Share Subscription Agreement (SSA) executed between NIIF, HPPL, and the current shareholders of HPPL; (ii) Shareholders Agreement (SHA) executed between NIIF, HPPL, and the current shareholders of HPPL, DP World and DP World Global Investments B.V.; and (iii) a Letter Agreement executed between DP World and NIIF to supplement the provisions relating to transfer of shares of HPPL provided in the SHA, (Hereinafter, NIIF, HIPL, and HPPL are collectively referred to as Parties).

Combination Registration No. C-2022/10/976

3. The proposed combination comprises the following two steps: (i) NIIF is proposing to subscribe up to 25% of the issued and paid-up share capital of HPPL (Proposed Acquisition); and (ii) After completion of the Proposed Acquisition, HIPL (a subsidiary of DP World in which NIIF already holds 35% shareholding) is proposed to be merged into HPPL, with the resultant HPPL entity as the Ultimate Entity. (Proposed Merger). Following the Proposed Merger, NIIF will hold 22-30% shareholding in the Ultimate Entity (Proposed Combination).

4. In terms of Regulation 14 of Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (Combination Regulations), the Commission, vide communication dated 27.10.2022, sought certain information(s)/clarification(s), inter alia, relating to the activities of the Parties; the response to the same was received on 16.11.2022. As the response received was incomplete in certain respects, therefore, in continuation to the letter dated 27.10.2022, another communication dated 23.11.2022 was sent. The response to the same was received on 01.12.2022. Further, additional information was received on 09.12.2022.

Description of the Parties

5. NIIF is a category II Alternative Investment Fund (AIF) registered with the Securities and Exchange Board of India (SEBI), acting through its investment manager, National Investment and Infrastructure Fund Limited (NIIFL). It was set up as a trust under the Indian Trusts Act, 1882. NIIF primarily focuses on investing in core infrastructure sectors such as transportation, energy, and digital. NIIF is sponsored and anchored by the GoI (holding 49% interest), while the remaining interest is held by other domestic and international investors. NIIF is a financial investor and is not engaged in the day-to-day management of its affiliates.

6. National Investment and Infrastructure Fund Trustee Limited (NIIFTL), the trustee of NIIF, is a public limited company incorporated in 2015. It is classified as a central government company as it is 100% held by the GoI. As the trustee of NIIF, NIIFTL is Combination Registration No. C-2022/10/976 responsible for appointing the investment manager of NIIF and has delegated its powers and duties to NIIFL, the investment manager of NIIF.

7. NIIFL is a collaborative investment platform for international and Indian investors, anchored by the GoI. The funds managed by NIIFL are invested across asset classes such as infrastructure, growth equity, and other diversified sectors in India, with the objective of generating returns for its investors from investments in commercially viable projects. NIIFL manages equity capital commitments across its three funds, viz., NIIF, NIIF Fund of Funds I (FoF), and NIIF-II (Strategic Opportunities Fund, i.e., SoF), each with its distinct investment strategy and investment objectives and each managed by respective investment teams. These funds are in the nature of blind pool vehicles that have raised commitments from various investors.

8. HPPL, a private company incorporated in India, is a wholly owned subsidiary of Dubai Ports World Limited (DP World) and is primarily engaged in the operation of container terminals of different terminals of the ports through its special purpose vehicles (SPV). It is also engaged in providing container freight station services (CFS) and container rails (for export import (EXIM) cargo) and related services in India. It is stated in the notice that HPPL operates in India through its subsidiaries, namely, (i) Chennai Container Terminal Private Limited (CCTPL); (ii) Nhava Sheva International Container Terminal Private Limited (NSICT); (iii) Nhava Sheva (India) Gateway Terminal Private Limited (NSIGT); (iv) India Gateway Terminal Private Limited (IGTPL); (v) Mundra International Container Terminal Private Limited (MICT); (vi) Container Rail Road Services Private Limited (CRRS); (vii) Bengal Port Private Limited (BPPL); and (viii) Eastern Gateway Terminals Private Limited (EGTPL) (CCTPL, NSICT, NSIGT, IGTPL, MICT, CRRS, BPPL, and EGTPL are together referred to as HPPL Subsidiaries).

9. HIPL is a private company and a subsidiary of DP World in which NIIF holds 35% shareholding. HIPL is directly engaged in providing the following services in India: Freight Forwarding Services (FFS), Empty Container Handling (ECH) (i.e., providing

Combination Registration No. C-2022/10/976 facilities to empty containers), and domestic rail operations (through its online platform “Cargoes”) (Online Operations). It is stated in the notice that HIPL operates in India through its subsidiaries, namely, (i) Continental Warehousing Corporation (Nhava Seva) Private Limited (CWCNSL); (ii) Continental Multimodal Terminals Private Limited (CMTPL); (iii) KRIBHCO Infrastructure Private Limited (KRIL); (iv) Delex Cargo India Private Limited (Delex); (v) Winter Logistics Private Limited (Winter Logistics); and (vi) Nhava Sheva Business Park Private Limited – Free Trade Warehousing Zone (NSBP) (CWCNSL, KRIL, CMTPL, Delex, Winter Logistics, and NSBP are together referred to as HIPL Subsidiaries).

10. DP World was founded in 2005 through the merger of Dubai Ports Authority and Dubai Ports International. It is indirectly owned by the Government of Dubai. Globally, DP World is involved in providing logistics solutions. In India, DP World is present in the ports, logistics, and maritime sector, directly and through various subsidiaries, including HIPL and HPPL and their subsidiaries.

Identification of Overlaps 11. In relation to identification of overlaps, it is stated that NIIF does not directly or indirectly (through its affiliates other than through HIPL) engage in any activities that HPPL and HPPL Subsidiaries are engaged in. NIIF is present in the ports and logistics sector only through HIPL, in which it holds 35% shareholding, the activities of which overlap with the activities of HPPL Subsidiaries.

Horizontal Overlaps 12. Based on the activities of HIPL and HPPL and their subsidiaries, the Parties have identified horizontal overlaps in the following products and/or services: (i) Container Rail Operations (CRO), (ii) Container Freight Station Services (CFS), and (iii) Free Trade Warehousing Zone (FTWZ). In relation to FTWZ, the Parties have submitted that the relevant HIPL and HPPL entities are yet to commence operations.

Combination Registration No. C-2022/10/976

Accordingly, the Parties have defined the relevant markets for the purposes of competition assessment of horizontal overlaps as provided in the ensuing paragraphs.

13. Container Rail Operations: The Parties have submitted that both HPPL (through CRRS) and HIPL (through CWCNSL, CMTPL, and KRIL) are present in the market for CRO. Further, it is stated that the market for CRO may be delineated at the pan- India level, as both CRRS and CWCNSL hold pan-India Category I licence (which permits them to operate pan-India) and carry goods across India. Accordingly, it is submitted that the relevant market for this horizontal overlap may be considered as ‘market for CRO in India’ (Horizontal Market 1).

14. Container Freight Station Services: The Parties have submitted that they are engaged in providing CFS services at only four ports in India (with a common presence only at the Chennai port). HIPL is present in the CFS market through CWCNSL, which operates four CFS facilities: (i) one near JN Port (Mumbai), (ii) one at Tuticorin (Tamil Nadu), and (iii) two at Chennai (Vallur and Red Hills, Tamil Nadu). Further, HPPL is present in the CFS market through MICT (Mundra, Gujarat) and CCTPL (Chennai, Tamil Nadu). It is submitted that, since CFS can only cater to ports adjacent to it, the relevant market for this horizontal overlap may be considered as the ‘market for CFS at Chennai port’ (Horizontal Market 2).

Vertical Relationships 15. Further, based on the activities of HIPL and HPPL and their subsidiaries, the Parties have identified the following existing and potential vertical relationships:

Existing Vertical Relationship 16. CRO/ICD: The Parties have submitted that there is only one existing vertical linkage between HIPL and HPPL by way of the CRO Agreements, pursuant to which, CRRS (subsidiary of HPPL) has appointed CWCNSL and CMTPL (subsidiary of HIPL) to operate container trains on routes between gateways ports and private freight terminals (PFTs)/inland container depots (ICDs) of CMTPL/CWCNSL/KRIL. Accordingly, the Combination Registration No. C-2022/10/976 ‘market for CRO’ and ‘market for ICD’ are identified at the upstream/downstream level to one another. As stated earlier, the Parties have submitted that the market for CRO is delineated at the pan-India level, as CRRS and CWCNSL both hold pan-India Category I licence. With respect to market for ICD, it is stated that HIPL is present in the ICD market in India through CWCNSL, CMTPL, and KRIL: (i) CWCNSL operates two ICDs, one each at Panipat and Ahmedabad, respectively; (ii) CMTPL operates one ICD cum PFT at Thimmapur (Hyderabad); (iii) KRIL operates one PFT cum ICD at Mohiuddinpur (Modinagar, Uttar Pradesh), one PFT cum ICD at Pali (Haryana) and one PFT at Hazira (Gujarat), and one PFT at Hindaun City (Rajasthan). The Parties have submitted that, whilst the ICDs are operational at the pan-India level, however, given that they cater to specific areas within a cluster, the market for ICDs could be further segmented into various clusters, namely, Hazira/Vadodara Cluster, Delhi NCR Cluster, Ahmedabad Cluster, and Hyderabad Cluster. Accordingly, the relevant markets for the purpose of the existing vertical relationship may be considered as: ‘market for CRO in India’ at the upstream/downstream level vertically linked with ‘market for ICD in India’, further segmented into ‘market for ICD in NCR’, ‘market for ICD in Ahmedabad’, and ‘market for ICD in Hyderabad’, at the upstream/downstream level (Existing Vertical Relationship).

Potential Vertical Relationship 17. CTS/CRO: The Parties have submitted that HIPL is present in the market for CRO in India through KRIL. Further, HPPL is engaged in providing Container Terminal Services (CTS) through HPPL Subsidiaries and operates container terminals at (i) JN Port (Mumbai), Maharashtra (through NSICT and NSIGT); (ii) Mundra, Gujarat (through MICT); (iii) Kochi, Kerala (through IGTPL); and (iv) Chennai, Tamil Nadu (through CCTPL). It is stated in the notice that the market for CTS can further be divided into different zones, typically South, West, and East zones based on the hinterland. Given that HPPL Subsidiaries (other than CRRS, EGTPL, and BPPL) are operating only at ports in the south and west coast of India, HPPL is stated to be present in the market for CTS in India, West zone, and South zone through HPPL Subsidiaries (other than CRRS, EGTPL, and BPPL). It is stated that, while there is no

Combination Registration No. C-2022/10/976 existing vertical linkage between HIPL (through KRIL) and HPPL Subsidiaries providing CTS, given that CRO service providers do provide services at container terminals, this may be considered a potential vertical linkage between HPPL Subsidiaries (other than CRRS EGTPL and BPPL) and HIPL (through KRIL). Accordingly, the relevant markets for the purpose of this potential vertical relationship may be considered as: ‘market for CRO in India’ at the upstream/downstream level vertically linked with the ‘market for CTS in India’(at broad level) further segmented into (i) ‘market for CTS in the West zone’ and (ii) ‘market for CTS in the South zone’ (at narrow level), at the upstream/downstream level (Potential Vertical Relationship 1).

18. CTS/CFS: The Parties have submitted that HPPL is present in the market for (i) CTS in India, (ii) CTS in the West zone and (iii) CTS in the South zone through the HPPL Subsidiaries (except CRRS, EGTPL, and BPPL), which operate container terminals at JN Port, Chennai port, Mundra port, and Cochin port. Further, HIPL operates CFS at JN Port, Tuticorin, and Chennai through CWCNSL. It is stated that, as such, there is no existing vertical linkage between HIPL and HPPL at the Chennai port and JN port. However, since CFS facilities are used along with container terminals, there may be a potential vertical linkage between HIPL and HPPL at JN Port and Chennai port. Accordingly, the relevant markets for the purpose of this potential vertical relationship may be considered as ‘market for CTS in India’(at broad level) further segmented into (i) ‘market for CTS in the West zone’ and (ii) ‘market for CTS in the South zone’ (at narrow level) at the upstream /downstream level, vertically linked with ‘market for CFS at the Chennai port’ and ‘market for CFS at the JN port’, at the upstream / downstream level, (Potential Vertical Relationship 2).

19. CTS/ICD: The Parties have submitted that HPPL is present in the market for (i) CTS in India, (ii) CTS in the West zone and (iii) CTS in the South zone through HPPL Subsidiaries (other than CRRS, EGTPL, and BPPL), and HIPL is present in the market for (i) ICD in India, (ii) ICD in NCR, (iii) ICD in Ahmedabad, and (iv) ICD in Hyderabad through CWCNSL, CMTPL, and KRIL. It is stated that, though there is no

Combination Registration No. C-2022/10/976 existing vertical linkage between the PFT/ICDs operated by HIPL and the container terminals operated by HPPL, PFT/ICD facilities may be used along with CTS by a customer to meet end to end solutions. Therefore, there may be a potential vertical linkage between HIPL and HPPL. Accordingly, the relevant markets may be considered as ‘market for CTS in India’(at broad level) further segmented into (i) ‘market for CTS in the West zone’ and (ii) ‘market for CTS in the South zone’ (at narrow level) at the upstream /downstream level, vertically linked with ‘market for ICD in India’, further segmented into ‘market for ICD in NCR’, ‘market for ICD in Ahmedabad’, and ‘market for ICD in Hyderabad’, at the upstream/downstream level, (Potential Vertical Relationship 3).

20. The Commission decided to assess the Proposed Combination in the segments identified by the Parties. However, exact delineation of the relevant market is left open as the material available on record does not suggest that the Proposed Combination is likely to cause any competition concern in India.

Assessment of the Proposed Combination 21. Based on the submissions of the Parties, it is noted that, in Horizontal Market 1, the individual market shares of both HIPL (through KRIL) and HPPL (through CRRS) are in the range of [0-5]% only, in terms of volume, and their combined market share is also not significant, being in the range of [5-10]% only. Further, there are other players present in the market, such as Container Corporation of India Limited (CONCOR), Adani Logistics Limited (ALL), Pristine Logistics and Infraproject Limited (Pristine), Gateway Rail Freight Limited (Gateway Rail) and Hind Terminals Private Limited (Hind Terminals). Similarly, in Horizontal Market-2, the individual market shares of HIPL (through CWCNSL) and HPPL (through CCTPL) are in the range of [5-10]% and [0-5]%, respectively, in terms of volume, and their combined market share is also not significant, being in the range of [5-10]% only. Further, there other players in the market, such as Central Warehousing Corporation (CWC), SICAL Logistics Limited (SICAL), Allcargo Logistics Limited (Allcargo), and Gateway Distriparks Limited (GDL), among others.

Combination Registration No. C-2022/10/976

22. With respect to the existing vertical relationship, it is noted that, while the market shares of HIPL in the market for (i) ICD in India, (ii) ICD in NCR, and (iii) ICD in Ahmedabad are in the range of [5-10]% only, in the market for ICD in Hyderabad, it is in the range of [25-30]% in terms of volume. However, the market share of HPPL (through CRRS) in the market for CRO in India at upstream/downstream level is minuscule, being in the range of [0-5]% in terms of volume. Further, there are other players in these markets, such as CONCOR, ALL, Pristine, Gateway Rail and Hind Terminals, amongst others, providing substitutable services in the market for CRO in India at the upstream/downstream level; and (i) CONCOR, GDL, ALL, Hind Terminals, and Distribution Logistics Infrastructure Private Limited in the market for ICD in India; (ii) CONCOR, Hasti Petro Chemical & Shipping Limited and Gateway Rail in the market for ICD in Ahmedabad; (iii) CONCOR, Gateway Rail, Hind Terminals, and ALL in the market for ICD in NCR; and (iv) CONCOR in the market for ICD in Hyderabad at the upstream/downstream level.

23. Based on the submissions of the Parties in relation to the Potential Vertical Relationships, it is noted that the market shares of HPPL in market for (i) CTS in India, (ii) CTS in the West zone, and (iii) CTS in the South zone are in the range of [20-25]%, [20-25]%, and [30-35]% in terms of volume at the upstream/downstream level. However, the market share of HIPL in (i) the market for CRO in India is only in the range of [0-5]%; (ii) the market for CFS in the Chennai port and CFS in JN port are only in the range of [5-10]% and [0-5]%, respectively; and (iii) the market for (a) ICD in India, (b) ICD in NCR and (c) ICD in Ahmedabad are in the range of [5-10]%, except in the market for ICD in Hyderabad, where it is in the range of [25-30]% at the upstream/downstream level. Further, it is noted that these markets comprise other players, such as Adani Ports and Special Economic Zones Limited (APSEZ), Port Singapore Authority (PSA), APM Terminals and JM Baxi group in the market for CTS (including narrower segments); CONCOR, ALL, Pristine, Gateway Rail, and Hind Terminals in the market for CRO; Central Warehousing Corporation, SICAL, Allcargo and Gateway Distriparks Limited, among others, in the market for CFS in the Combination Registration No. C-2022/10/976

Chennai port and CFS in JN port, CONCOR, GDL, ALL, Hind Terminals, and Distribution Logistics Infrastructure Private Limited in the market for ICD in India; CONCOR, Gateway Rail, Hind Terminals and ALL in the market for ICD in NCR; CONCOR, Hasti Petro Chemical & Shipping Limited, and Gateway Rail in the market for ICD in Ahmedabad; and CONCOR in the market for ICD in Hyderabad. Thus, based on the submissions of the Parties, the Proposed Transaction is not likely to cause any competition foreclosure concerns in any market.

24. Considering the material on record, including details provided in the notice given under Section 6(2) of the Act and assessment of the 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 any appreciable adverse effect on competition in India in any of the relevant market(s), and therefore, the Commission approves the same under Section 31(1) of the Act.

25. This order may stand revoked if, at any time, the information provided by the Parties is found to be incorrect.

26. The information provided by the Parties shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act.

27. The Secretary is directed to communicate to the Parties accordingly.