NA CO Ltd and Nissan Diesel Motor Company (28/LM/Mar07) [2007] ZACT 38; [2007] 2 CPLR 365 (CT) (30 May 2007)

70 Reportability
Competition Law

Brief Summary

Competition Law — Merger Approval — NA CO Ltd acquiring Nissan Diesel Motor Company — Merger resulting in horizontal overlap in the market for sale and distribution of commercial vehicles — Competition Tribunal finding that the merger would not substantially lessen or prevent competition in the identified markets — Merger approved unconditionally.

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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