Allowed

Dixon Technologies (India) Limited

CCI18 Jul 2024C-2024/04/1137

Case brief

AI extract

What is this about?

Regarding a proposed share acquisition, the Competition Commission of India assessed horizontal and vertical overlaps in the mobile phone electronics manufacturing services (EMS) market. Finding the combined market share low and no likely adverse effect on competition, the Commission approved the proposed combination.

What did the court decide?

Approval of the Proposed Combination under Section 31(1) of the Competition Act, 2002.

Dixon Technologies (India) Limited — Company and Corporate | CCI (2024)

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COMPETITION COMMISSION OF INDIA

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Combination Registration No. C-2024/04/1137

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18^th July 2024

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Notice under Section 6(2) of the Competition Act, 2002 given by Dixon Technologies (India) Limited

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CORAM:

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Ms. Ravneet Kaur Chairperson

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Mr. Anil Agrawal Member

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Mr. Deepak Anurag Member

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Order under Section 31(1) of the Competition Act, 2002

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On 18^th April 2024, the Competition Commission of India (‘ Commission ’) received a notice (‘ Notice ’) under sub-section (2) of Section 6 of the Competition Act, 2002 (‘ Act ’) given by Dixon Technologies (India) Limited (‘ Acquirer ’/ ‘ DTIL ’). The Notice was filed pursuant to the execution of the Share Purchase Agreement dated 8^th April 2024 executed amongst Acquirer, Ismartu India Private Limited (‘ IIPL ’/ ‘ Target ’), Ismartu In Pte. Limited (‘ Ismartu Singapore ’/ ‘ Seller 1 ’), 5A Advisors LLP (‘ 5A Advisors ’/ ‘ Seller 2 ’), and Transsion Technology Limited (‘ Transsion Technology ’/ ‘ Seller 3 ’) (‘ SPA ’) and the Shareholders’ Agreement dated 8^th April 2024 executed amongst Acquirer, Target, Seller 1 and Seller 2 (‘ SHA ’) [Hereinafter, Acquirer and Target are collectively referred to as the ‘ Parties ’].

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Page 1 of 4

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Combination Registration No. C-2024/04/1137

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The Proposed Combination envisages the acquisition of up to 56% of the share capital of the Target by the Acquirer in two tranches.

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In terms of Regulation 14 of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011, vide letters dated 26^th April 2024, 15^th May 2024, and 31^st May 2024 certain information and clarifications were sought from the Acquirer. The Acquirer submitted the responses dated 7^th May 2024, 24^th May 2024, 7^th June 2024, and 19^th June 2024. The Acquirer also submitted certain voluntary clarifications dated 18^th June 2024.

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The Acquirer is a listed company involved in the business of providing Electronics Manufacturing Services (‘ EMS ’) for communication devices like mobile phones as well as other devices such as laptops. Additionally, it also provides EMS, inter alia, for lighting solutions, television, washing machines, security systems, wearables and hearables, printed circuit board for air conditioners, telecom & networking products, settop boxes, etc. The Acquirer along with its subsidiaries and affiliates constitute the ‘ Acquirer Group ’. DTIL is the holding company for the Acquirer Group and operates its business in India through its eleven subsidiaries and joint ventures. The Acquirer operates under the ‘Dixon’ brand in India.

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The Target, a private company, is an Indian subsidiary of Ismartu Singapore. The Target is involved in the business of providing EMS, in relation to the manufacturing mobile phones, Printed Circuit Board Assembly (‘ PCBA ’), and LCD Module display (‘ LCM ’) for mobile phones. The Target is engaged in production, assembly, testing, procurement, failure analysis, etc. within the EMS segment. Target manufactures products for certain brands such as Tecno, Itel, and Infinix under brand authorization.

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It is further submitted that the ultimate holding entity of Ismartu Singapore, Transsion Technology and Target, is Shenzhen Transsion Holdings Co. Ltd. (‘ Shenzhen Transsion ’). Shenzhen Transsion is a company listed on the Shanghai Stock Exchange and having its corporate office in Shenzhen, China. Thus, Target is a part of the Shenzhen Transsion Holdings Co. Ltd.’s group (‘ Transsion Group ’). Apart from Target, the

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Page 2 of 4

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Combination Registration No. C-2024/04/1137

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Transsion Group is present in India through S Mobile Devices Private Limited and G Mobile Devices Private Limited, which are engaged in the wholesale trading of mobile phones, TV, laptops, accessories, etc.

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Based on the business activities of Acquirer Group and Target, the Commission noted that the Parties exhibit horizontal overlap in the broad market for the provision of EMS for communication in India and the narrower segment of mobile phones and tablets within the market of EMS for communications. The segment of mobile phones may further be sub-segmented into smartphones and feature phones.

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Further, the Parties exhibit the following existing vertical overlaps:

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(a) manufacturing of PCBAs for mobile phones ( upstream ) by Target and EMS for communication for mobile phones ( downstream ) by Acquirer; and

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(b) manufacturing of LCM for mobile phones ( upstream ) by Target and EMS for communication for mobile phones ( downstream ) by Acquirer.

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The Commission decided to leave the delineation of the relevant market open, as it was observed that the Proposed Combination is not likely to cause appreciable adverse effect on competition in any of the plausible relevant market(s) in India.

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Based on the submissions of the Acquirer, the Commission noted that the combined market share of the Parties, in terms of value, in the market for the provision of EMS for communications, mobile phone segment (within EMS for communications), smartphone sub-segment and tablet segment (within EMS for communications) is in the range of [05]% and for feature phone sub-segment is in the range of [5-10]%. Further, there are other players engaged in EMS for communications such as Foxconn, Bharat FIH, Jabil, Flextronics and Optiemus.

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With regards to the vertical overlaps, based on the submissions of the Acquirer, the Commission noted that the market share of Target, in terms of value, in the manufacturing of PCBAs and LCMs for mobile phones ( upstream ) and of the Acquirer in the segment for mobile phones ( downstream ) are in the range of [0-5]%. Based on the

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Page 3 of 4

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Combination Registration No. C-2024/04/1137

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foregoing, it appears that the Proposed Combination is not likely to foreclose competition.

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Considering the material on record, including the details provided in the Notice and the assessment of the Proposed Combination based on the factors stated in Section 20(4) of the Act, the Commission is of the opinion that the Proposed Combination is not likely to have appreciable adverse effect on competition in India. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act.

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This order may be revoked if, at any time, the information provided by the Acquirer is found to be incorrect.

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The information provided by the Acquirer shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act.

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The Secretary is directed to communicate to the Acquirer accordingly.

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Dixon Technologies (India) Limited

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Dixon Technologies (India) Limited

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