COMPETITION TRIBUNAL OF SOUTH AFRICA
CASE NO: 28/LM/Mar07
In the matter between:
NA CO Ltd Acquiring firm
And
Nissan Diesel Motor Company Target firm
Panel : D Lewis (Presiding Member), Y Carrim (Tribunal Member) and
Norman Manoim (Tribunal Member)
Heard On : 16 May 2007
Decided on : 16 May 2007
Reasons Issued on : 30 May 2007
REASONS FOR DECISION
Approval
[1]. On the 16 May 2007 the Competition Tribunal issued a Merger Clearance Certificate
approving the merger between NA CO Ltd and Nissan Diesel Motor Company
unconditionally. The reasons appear below.
[2]. The primary acquiring firm is NA CO Ltd (“NA CO”). 1 NA CO is wholly owned by
Swedish truck maker Aktienbolaget Volvo (publ) (“AB Volvo”). AB Volvo is a foreign
corporation organized and existing under the laws of Sweden with its corporate
headquarters and principal place of business in Gotenburg, Sweden. 2
[3]. The target firm is Nissan Diesel Motor Company (“NDMC”), a company incorporated
in the laws of Japan. AB Volvo holds 18.98% of common shares in NDMC. 3
1 NA CO is a special purpose vehicle incorporated under the laws of Japan for the purposes of entering into this
transaction.
2 fn The following entities hold shares in AB Volvo; Renault SA 21.3%;Svenska Handelsbanken 6.5%;SEB
Fonder/ Trygg Forsakrin 5.5%;Violet Partners LP 5.3% and; Second APFund 5%. AB Volvo controls among
others Volvo South Africa.
3 No other shareholder controls more than 5% of the shares in NDMC. In South Africa the relevant NDMC’s
subsidiary for this transaction is Nissan Diesel South Africa (“NDSA”).
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TRANSACTION
[4]. In terms of the proposed transaction AB Volvo has made a public offer to acquire all
the issued and outstanding shares in NDMC. The transaction would give AB Volvo full
ownership of NDMC from the current 18.98% shares. The deal has an effect in South Africa
because NDMC holds 80% of the entire issued share capital of Nissan Diesel South Africa
(“NDSA”) with the balance of 20% being held by Mitsui & Co. Through the transaction, if
approved, AB Volvo will acquire indirect control of NDSA.
RATIONALE
[5]. AB Volvo considers the Japanese market to be strategically important and
recognises NDMC’s positive operational and financial development in recent years.
According to the parties NDMC has a solid position in Japan and the rest of Asia, where the
Volvo Group foresees substantial growth potential. The transaction would also help AB
Volvo to produce more environmentally friendly trucks by gaining access to the Japanese
company’s expertise in hybrid technology.
ACTIVITIES OF THE PARTIES
[6]. The acquiring firm is a special purpose vehicle specifically created for the purposes
of this transaction. AB Volvo is an international manufacturer of commercial vehicles,
construction equipment, drive systems for marine and industrial applications for aircraft
engines. Volvo South Africa is involved in the marketing and distribution of medium and
heavy commercial vehicles in South Africa.
[7]. The target firm, NDMC is involved in the manufacturing of sale of light, medium,
heavy commercial diesel vehicles, buses, bus chassis, specialpurpose vehicles and diesel
engines. NDSA is involved in the importation of trucks and components manufactured by
NDMC into South Africa.
RELEVANT MARKET
[8]. In its analysis the Commission found that the proposed transaction results in
horizontal overlap. According to the Commission the horizontal overlap in the activities of the
merging parties occurs in the market for sale and distribution of light, medium, heavy, extra
commercial vehicles and buses. The Commission identified five relevant markets affected by
this transaction namely: the market for the sale and distribution of light commercial vehicles;
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the market for the sale and distribution of medium commercial vehicles; the market for the
sale and distribution of heavy commercial vehicles; the market for the sale and distribution of
extraheavy commercial vehicles and the market for the sale and distribution of buses.
[9]. The Commission has defined the geographic market as national. We agree with the
Commission’s market definitions.
MARKET SHARES
[10]. The Commission calculated market shares in line with the five relevant product
markets it identified. The following tables contain market share data of each market
participant in the respective markets.
Estimated market shares in the market for sale and distribution of light commercial
vehicles in South Africa.
Market Participants Brand Names Estimated Market Shares
Toyota Toyota 23.6%
Nissan Diesel Nissan Diesel 17.7%
FMCSA Ford 16.3%
GMSA Opel 12.8%
GMSA Isuzu 11.9%
DaimlerChrysler Mitsubishi 4.9%
FMCSA Mazda 3.1%
Tata Tata 2.8%
Volkswagen VW 2.3%
Mahindra Mahindra 1.2%
DaimlerChrysler Mercedes Benz 0.5%
Chana Chana 0.3%
Renault Renault 0.3%
FMCSA Land Rover 0.1%
Total 100%
Merging Parties combined market shares 18%
3
PreMerger HHI 1500
PostMerger HHI 1526
Change in HHI 26
Source: Competition Commission
[11]. As can be seen in Table 1 above the merging parties’ combined postmerger market
share is relatively low at 18%, we are therefore agree with the Commission that the
increments in market shares and changes in HHI are insignificant.
Table 2: Estimated market shares in the market for the sale and distribution of
medium commercial vehicles in South Africa
Market Participants Brand Names Estimated Market Shares
Toyota Toyota 20.1%
Tata Tata 18.3%
DaimlerChrysler Mercedes Benz 12.8%
Nissan Diesel Nissan 11.6%
GMSA Isuzu 10.5%
Iveco Iveco 5.9%
DaimlerChrysler Fuso 4.4%
Volkswagen VW 4.3%
FMCSA Ford 4.0%
Nissan South Africa 4 Nissan 3.0%
GAZ GAZ 2.4%
Peugeot Peugeot 1.7%
GMSA Opel 0.5%
FASA Fiat 0.3%
Tyco Trucks Renault 0.0%
Total 99.8%
4 According to the merging parties Nissan South Africa is a subsidiary of Nissan Motor
Company (“NMCL”) which is an entirely separate entity to Nissan Diesel South Africa
(“NDSA”) which is a subsidiary of Nissan Diesel Motor Company (“NDMC”).
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Merging Parties Combined Market Share 11.6%
Source: Competition Commission
[12]. According to the Commission in this market the merging parties combined post
merger market shares remain unchanged at 11.6%. The Commission found that there are
other major competitors such as Toyota and Tata, having an estimated 20.1% and 18.3%
market shares respectively. We agree with the Commission’s conclusion that in this market
the proposed transaction is unlikely to raise any serious competition concerns.
Table 3: Estimated Market Shares in the market for the sale and distribution of heavy
commercial vehicles in South Africa
Market Participants Brand Names Estimated Market Shares
Toyota Toyota 22.5%
Nissan Nissan 20.3%
Tata Tata 17.5%
GMSA Isuzu 17.4%
GMSA Isuzu 10.5%
DaimlerChrysler Mercedes Benz 11.4%
MAN MAN 4.2%
DaimlerChrysler Fuso 5.4%
Iveco Iveco 1.2%
Volvo Volvo 0.1%
Total 100%
Merging Parties Combined Market Share 11.6%
PreMerger HHI 1625
PostMerger HHI 1641
Change in HHI 16
Source: Competition Commission
[13]. The Commission investigation shows, as can be seen from table 3, that the merging
parties will have a combined post merger market share of 20.4% with an increment of 0.1%.
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We therefore agree with the Commission that in this market as well, the proposed
transaction is unlikely to raise any serious competition concerns as the market share
increments and changes to the HHI are insignificant.
Table 4: Estimated market shares in the market for the sale and distribution of extra
heavy commercial vehicles in South Africa
Market Participants Brand Names Estimated Market Shares
DaimlerChrysler Mercedes Benz 19.8%
MAN MAN 16.5%
Nissan Diesel Nissan 10.0%
Tyco Trucks International 9.1%
Tata Tata 8.1%
DaimlerChrysler Freightliner 7.6%
Volvo Volvo 7.4%
Scania Scania 5.4%
Tyco Trucks DAF 3.8%
Toyota Toyota 3.7%
GMSA Isuzu 2.6%
Iveco Iveco 2.4%
BMC BMC 0.1%
Volvo Mack 0.1%
Total 99.9%
Merging Parties Combined Market share 17.5%
PreMerger HHI 1060
Post Merger HHI 1090
Change in HHI 30
Source: Competition Commission
[14]. In this market the Commission’s investigation revealed that the merging parties
combined post merger market share is 17.5% and the market is moderately concentrated
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with pre merger HHI of 1060 as a post merger HHI of 1090 resulting in a change in HHI of
30.
Table 5: Estimated market share in the market for the sale and distribution of buses in
South Africa
Market Participants Brand Names Estimated Market Shares
MAN MAN 35.2%
DaimlerChrysler Mercedes Benz 28.4%
Scania Scania 17.0%
Volvo Volvo 13.4%
Tyco Trucks DAF 3.3%
Iveco Iveco 1.0%
BMC BMC 0.7%
Volkswagen Volkswagen 0.6%
Nissan Diesel Nissan 0.5%
ERF ERF 0.0%
Total 100%
Merging Parties’ Combined Market Share 13.9%
Source: Competition Commission
[15]. The Commission found that in this market the merging parties will have a low market
share of 13.9% with an insignificant increment of 0.5%. We therefore agree with the
Commission that the proposed transaction is unlikely to raise any serious completion
concerns.
COMPETITION ANALYSIS
[16]. An examination of the transaction by the Commission showed that although there is
a horizontal overlap in the activities of the merging firms, the proposed transaction is unlikely
to raise serious competition concerns. The Commission’s investigation revealed that in the
markets for sale and distribution of light, medium, heavy, extra commercial vehicles and
buses the combined firm would continue to face a number of strong, effective competitors
notably Toyota, Tata, DaimlerChrysler, MAN and others throughout the country. Therefore
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the Commission concluded that the transaction would not significantly impede effective
competition.
Public Interest Issues
[17]. There are no public interest issues.
Conclusion
[18]. Based on the above, we find that the transaction will not result in a substantial
lessening or prevention of competition in the identified markets and is accordingly approved
unconditionally.
___________________ 30 May 2007
Y Carrim Date
Tribunal Member
N Manoim and D Lewis concurring.
Tribunal Researcher : J Ngobeni
For the merging parties : Veronica Cadman (Bowman Gilfillan)
For the Commission : Leornard Lamola and HB Senekal (Mergers and Acquisitions
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