Proposed Joint Venture between Nippon Yusen Kabushiki Kaisha Ltd. and Mitsui O.S.K. Lines Ltd. and Kawasaki Kisen Kaisha, Ltd.

Notifying Parties

Proposed Joint Venture between Nippon Yusen Kabushiki Kaisha Ltd. and Mitsui O.S.K. Lines Ltd. and Kawasaki Kisen Kaisha, Ltd.

Notifying Date

1 February 2017

Summary of Transaction

(i)       The names of the merger parties: 

• Nippon Yusen Kabushiki Kaisha (NYK) Ltd. (“NYK”);

• Mitsui O.S.K. Lines Ltd. (“MOL”); and

• Kawasaki Kisen Kaisha, Ltd. (“KL”). 
  (collectively, the “Parties”).
   

(ii)      A description of the transaction: 

This joint notification by KL, MOL and NYK (the “Parties”) relates to the creation of a joint venture (the “Transaction”) through which KL, MOL and NYK intend to merge their container liner shipping business and container terminal services business outside Japan.
 

(iii)     A description of the business activities of the merger parties worldwide and in Singapore; 

KL is the ultimate parent company of 341 subsidiaries and affiliates involved in marine transportation, shipping agency, ship management, harbour transportation and warehousing, logistics, land transportation, container repairing, travel business terminal operation, freight consolidation, and land transportation worldwide. MOL is the ultimate parent company of 438 subsidiaries involved in bulkships, containerships, ferry and domestic transport, and various other businesses such as real estate, tugboats, cruise ships and trading worldwide. NYK is the ultimate parent company of 34 subsidiaries involved in liner shipping, air cargo transportation, logistics, bulk shipping, real estate, cruise ships, and trading worldwide.

The direct business activities for KL in Singapore include containership services, dry bulk carrier, car carrier, LNG carrier, tankers, energy development services, heavy lifters and logistics. The direct business activities for MOL in Singapore include dry bulker transport, tanker transport, LNG carriers, crude oil and LNG offshore production, car carriers, containerships, logistics, cruise, ferries and coastal liners, and other services. The direct business activities for NYK in Singapore include liner trade, car transport, dry bulk transport, liquid transport (crude oil, clean petroleum product, chemicals and LPG) and liquid transport (LNG). 
 

(iv)      a description of the overlapping goods or services, including brand names; 

The only overlapping service of the Parties which will be contributed to the joint venture in Singapore is container liner shipping services. 
 

(v)       a description of substitute goods or services;

The substitute service to the Parties’ overlapping container liner shipping services are container liner shipping services provided by other container liner shipping service providers. Transhipment may also be considered a substitute for direct transport in certain circumstances, for example, in the case of non-time sensitive cargo, or where the total transit time is not significantly different between transhipment and direct services.

‎(v)        the applicant’s views on:

a.      definition of the relevant market(s);

b.      the way in which competition functions in this market;

c.       barriers to entry and countervailing buyer power; and

d.      the competitive effects of the merger (non-coordinated, coordinated and/or vertical effects, as relevant).

(a)    The relevant market for the purpose of this notification is the market for container liner shipping services for the overlapping liner shipping trade routes of NYK, MOL and KL between broadly defined geographic regions involving East Asia, which is the region relevant to Singapore. 

(b)   Competitors compete globally on a range of factors which end-customers take into consideration in their choice of container liner shipping providers. Such factors include the price of the container liner shipping services, i.e. freight rates, service quality, customer service, creditworthiness, availability, reputation and track record of the container liner shipping service provider, service capacity and space allocation, and quality of the container. 

(c)    The barriers to entry and expansion in the container liner shipping market are not prohibitive, as competitors or potential competitors are easily able to offer new services or expand their current services by adding new ships, new routes, or new ports of call, by entering into slot chartering or swapping agreements. 

There is significant spare capacity in the container vessel chartering market globally and there are many container ships owned by competitors which are not deployed and idle. Accordingly, competitors are able to easily expand the scope and frequency of their services, if there is demand. 

The key customers of liner shipping services are large multinational corporations who are well-informed, are likely to be able to exercise countervailing buyer power on liner shipping providers and by credibly threatening to switch to alternative providers of liner shipping services. 

(d)   Non-coordinated and coordinated effects will not arise in the relevant market affecting Singapore for reasons including but not limited to the numerous competitors in the container liner shipping business, the range of factors on which competitors compete and barriers to entry and expansion not being prohibitive. 

There are no vertical relationships between the container liner shipping business of the Parties to be merged before, and after, the Transaction, with respect to Singapore.

Decision

The proposed merger, if carried into effect, will not infringe the Section 54 prohibition.

Decision Date

14 March 2017.

Read Media Release.

Read the Grounds of Decision. 

The validity period of the Grounds of Decision has been extended to 1 April 2018.