On April 30, 2024, the CCI approved the acquisition of 15.43% shareholding by Sanyo Special Steel Co. Ltd. (‘Sanyo/Acquirer’) in Sanyo Special Steel Manufacturing India Private Limited (‘SSMI/Target’) from Mitsui & Co. Ltd. (‘Mitsui’). ^[1]

Description of Transaction and Parties

On March 14, 2024, a Notice was filed before the CCI by the Acquirer pursuant to the execution of (i) share purchase agreement, entered into between Sanyo and Mitsui (‘SPA’); and (ii) shareholders’ agreement entered into between Sanyo, Mitsui, and SSMI (‘SHA’).

The Proposed Combination involved additional acquisition of 15.43% shareholding in SSMI from Mitsui by Sanyo (‘Proposed Combination’).

Acquirer: Sanyo is a Japan-based company that manufactures and sells steel products globally. It is engaged in manufacturing and marketing of various special steel products including bearing steel, engineering steel, stainless-steel, heat-resistant steel, and tool steel. Further, on a global scale, it also manufactures metal powder, and is engaged in manufacturing and marketing of metal powders and powder metallurgy products as well as manufacture of formed and fabricated materials. It has manufacturing hubs in Europe and India, and has offices in Thailand, Mexico, and China.

Sanyo is part of the Nippon Steel Corporation Group (‘NSC’) (‘Acquirer Group’) where NSC holds 53.10% shareholding in Sanyo. It has been submitted that the Acquirer Group is engaged in, inter alia, the production of steel products in 15 countries with the largest number of mills in its home country i.e., Japan. NSC is engaged in the business of manufacturing tubes and pipes, automotive cold rolled steel sheets, crankshafts, and auto-parts in India. NSC also imports and sells products such as wires, steel sheets, welding materials, rolls and iron casting products, stainless steel etc.

Target: SSMI was a joint venture company which was incorporated in September 2012 between Mahindra & Mahindra Limited (‘Mahindra’), Acquirer/Sanyo and Mitsui. In 2013, the shareholding of the Target was such that Mahindra held 51%, Sanyo held 29% and Mitsui held 20% of the issued share capital of the Target. In March 2018, Sanyo acquired an additional 22% shareholding from Mahindra, along with a capital increase in February 2019. Subsequently, in April 2023, a share purchase agreement was executed under which Sanyo purchased Mahindra’s 22.81% remaining shareholding in the Target. Pursuant to this, Sanyo held 80% and Mitsui held 20% shares in the Target. In July 2023, there was another capital increase by which Sanyo’s shareholding increased to 84.57% and Mitsui’s shareholding reduced to 15.43% in the Target. Presently, SSMI/Target is a subsidiary of Sanyo.

SSMI is engaged in the market for manufacture of forged products (round bars), hot rolled products (round bars, round corner square bars, rectangle bars) and cast products (bottom poured ingots). The steel manufactured by SSMI is used for various applications in industries like automobile, bearing, engineering, oil gas & mining, railways etc.

Overlaps and Assessment by CCI 

Horizontal Overlaps: The Acquirer Group (through Sanyo and NSC) exhibits a horizontal overlap with SSMI in the market for manufacture and sale of steel bars in India (‘Horizontal Market’).

Vertical Overlaps: SSMI’s manufacturing and sale of steel ingots in India (upstream market) and Acquirer Group’s (through Sanyo and NSC) manufacture and sale of steel bars in India (downstream market) results in a vertical linkage (‘Vertical Market’).

Assessment: Based on the submission of Sanyo, the CCI noted that the combined market share as well as the incremental market share of the Acquirer Group (through Sanyo and NSC) and SSMI in the Horizontal Market, on the basis of the volume of steel sold domestically, is less than 1%. Moreover, the presence of other well-established players in the Horizontal Market such as JSW Steel Limited, Steel Authority of India Limited etc., will continue to impose competitive constrains on the parties to the Proposed Combination.

With regard to the Vertical Market, the CCI noted that the market share of SSMI in the upstream market and the Acquirer Group in the downstream market, is less than 1%.

The CCI concluded that the Proposed Combination is unlikely to result in an appreciable adverse effect on competition in India. Therefore, in the absence of any competition concerns, the CCI approved the Proposed Combination.

[1] Sanyo Special Steel Co. Ltd./Sanyo Special Steel Manufacturing India Private Limited (Combination Registration No. C-2024/03/1122).