On November 28, 2019, CCI approved the transaction notified by Mitsubishi Heavy Industries Limited (‘MHI’) and Mitsubishi-Hitachi Metal Machinery Inc. (‘MHMM’) which consisted of the following inter-connected steps[1]:

i.      MHI (through MHMM) will acquire 49% equity shareholding in Primetals Technologies Limited (‘PT’), from Siemens Aktiengesellschaft (‘Seller’). PT is a joint venture between the Seller (49%) and MHMM (51%). Post the transaction, MHMM would hold 100% equity shareholding in PT with the Seller exiting this joint venture (‘Transaction 1’).

ii.      As an inter-connected step and prior to Transaction 1, MHMM, (which is owned by MHI (56%) Hitachi Limited (34%) and IHI Corporation (10%)) would issue new shares to MHI whereby MHI would increase its shareholding in MHMM to 77% from 56%. Additionally, as a part of this step, Hitachi’s shareholding in MHMM would reduce from 34% to 18% and IHI’s shareholding would reduce from 10% to around 5% (‘Transaction 2’). (collectively “Transactions”).

CCI noted that as a result of the Transactions, the Seller is exiting and MHI (through MHMM) is increasing its stake in PT. Accordingly, the horizontal overlaps prior to and subsequent to the transaction would continue to remain the same. Further, in terms of vertical linkages, CCI noted that MHI is involved in the manufacture and supply of ‘Industrial Pumps’ and ‘Induction Heaters’ which are required by PT in mechanical metal plant building.  In this regard, CCI observed that this vertical relationship is pre-existing and would not change post the Transactions. Additionally, CCI also noted that the market share of PT in the downstream market of mechanical level is not significant enough to raise any concerns of foreclosure. Based on the above, CCI approved the Transactions.

[1]  Combination Registration No. C-2019/10/700.