The Yokohama Rubber Company Limited, Japan. — Combination C-2016/04/390
- Case No.C-2016/04/390
Ratio decidendi
The rule this decision rests on
A combination notified under section 6(2) is approved under section 31(1) where, having assessed it against the factors in section 20(4), the Commission finds it is not likely to have an appreciable adverse effect on competition in India. Where the parties' individual shares in the overlapping narrow segment are negligible, the segment is held by several large competitors, and there is no vertical relationship between the parties in India, a horizontal overlap in that segment does not by itself support such a finding of adverse effect. An approval under section 31(1) is conditional on the accuracy of the information furnished by the acquirer. If that information is found to be incorrect, the approval stands revoked.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Notice under Section 6 (2) of the Competition Act, 2002 given by the Yokohama Rubber Co. Ltd. CORAM:
Devender Kumar Sikri Chairperson
Augustine Peter Member
U.C. Nahta Member
M.S. Sahoo Member
G.P. Mittal Member
Legal Representative: M/s Cyril Amarchand Mangaldas
Order under Section 31(1) of the Competition Act, 2002
1. On 22nd April 2016, the Competition Commission of India (“Commission”) received a notice given by the Yokohama Rubber Co. Ltd. (“YRC” / “Acquirer”) under sub-section (2) of Section 6 of the Competition Act, 2002 (“Act”). The notice was filed pursuant to the execution of a Stock Purchase Agreement dated 25th March 2016 entered into between, inter alios, YRC and Alliance Tyre Group B.V. (“ATG”).
2. The proposed combination relates to the acquisition of the entire shareholding of ATG by the Acquirer from KKR AT Dutch B.V., International Finance Corporation and certain other
COMPETITION COMMISSION OF INDIA
For Greater Good shareholders. As a result of the proposed combination, ATG will become a wholly-owned subsidiary of YRC.
3. YRC is a company incorporated in Japan and belongs to the Yokohama Rubber Company Limited group. YRC is stated to be a global manufacturer of tyres and other products with presence in over 150 countries. It has been stated in the notice that apart from tyres, YRC is engaged in manufacturing of industrial rubber products such as high-pressure hoses, sealants, adhesives, aircraft fixtures & components and golf equipment. YRC is present in India through a wholly-owned subsidiary, Yokohama India Private Limited (“YIPL”), a company incorporated under Companies Act, 1956. YIPL manufactures and sells passenger car tyres and tyres for special utility vehicles and also sells tyres for trucks and buses as well as off highway tyres (“OHT”)1. As per notice, OHT are imported by YIPL from YRC for sale in India.
4. ATG is a company incorporated in Netherlands and is engaged in manufacture and sale of OHT with presence in over 120 countries. ATG is stated to be engaged in the development, manufacture and sale of OHT. ATG is present in India through its subsidiary, namely, ATC Tyres Pvt. Ltd. (“ATC”). ATC develops, manufactures and sells OHT. ATG has two manufacturing facilities in India situated at Tirunelveli, Tamil Nadu and Dahej, Gujarat. As stated in the notice, ATG sells only OHT in India through ATC.
5. The Commission observed that there is a horizontal overlap between the YRC and ATG in the overall tyre market in India and in a narrower segment of tyres i.e., OHTs. As stated in the notice, the sales of YRC in the OHT segment in India in the year 2014-15 were negligible. Thus, YRC’s presence in India was insignificant in terms of market share in the segment for OHT. Further, the Commission observed that even ATG has negligible presence in India. Furthermore, it is observed that the OHT segment in the tyre industry is characterised by the presence of large competitors such as Balkrishna Industries Ltd. (5-15% market share), MRF Limited (25-30% market share), Goodyear Tyre Limited (10-20% market share) and Ceat Limited (7-17% market share). As stated in the notice, there is no vertical relationship between the YRC and ATG in India.
1 OHT are used in agricultural, forestry and industrial equipment.
COMPETITION COMMISSION OF INDIA
For Greater Good
6. Considering the facts on record and the details provided in the notice given under sub-section (2) of section 6 of the Act and 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 the proposed combination is not likely to have an appreciable adverse effect on competition in India and therefore, the Commission hereby approves the same under sub-section (1) of section 31 of the Act.
7. This order shall stand revoked if, at any time, the information provided by the Acquirer is found to be incorrect.
8. The Secretary is directed to communicate to the Acquirer accordingly.
This page reproduces a public judgment and a summary of it. It is research material, not legal advice, and it is no substitute for advice from an advocate on your own facts.
Research this judgment with Miss Lucy
Ask what it holds, what has followed it, and what it means for your matter — in plain English, with the citations.
Try Miss Lucy free