Nippon Steel gets Approval from CCI for its Acquisition of Sanyo Steel

According to the latest reports, competition watchdog CCI (Competition Commission of India) has approved Japan-based Nippon Steel & Sumitomo Metal Corporation's acquisition of 51% shareholding in Sanyo Steel. Besides, the regulator has approved the transfer of 100% shareholding in Ovako to Sanyo Steel.

In August 2018, Nippon Steel had announced its decision to increase its share in Sanyo Special Steel from 14.5% to 51% in order to make Sanyo Steel its wholly-owned subsidiary. However, CCI approval was required because deals beyond a certain threshold are supposed to get clearance from the Competition Commission of India (CCI).

CCI is a statutory body of the government of India responsible for enforcing The Competition Act, 2002 throughout India and to prevent activities that may have adverse effect on competition in India. It was established on 14 October 2003 but became fully functional in May 2009.

According to CCI, although Nippon Steel is headquartered in Tokyo, Japan, the company manufactures and sells tubes, pipes, and auto parts in India and its presence in the manufacture of these products are limited in India.

Sanyo manufactures special steel and in India, it has a presence through its two subsidiaries namely, Sanyo Special Steel India and Mahindra Sanyo Special Steel Pvt Ltd. Mahindra Sanyo is a joint venture between Sanyo (51%) Mahindra and Mahindra (29%) and Mitsui and Co Ltd (20%). Thus, CCI approval was required as both the companies have businesses in India and that their partnership shall not have any adverse impact in the country’s domestic steel market.

Nippon Steel has acquired Sanyo Steel in order to strengthen its special steel business. Along with this in June 2018, Nippon Steel has also acquired Sweden’s Ovako in order to strengthen and expand its global business and further strengthen its technology, product quality, and product development capability for special steel while securing a base of manufacture and sales in Europe as Sanyo Steel is headquartered in Sweden. This acquisition has given Nippon Steel a sales network in Europe besides adding 780,000 tonnes of annual output to the Japanese company’s (Nippon Steel) roughly 45 MnT.

source: SteelMint