COMPETITION COMMISSION OF INDIA

(Combination Registration No. C-2015/05/273)

Fair Competition
For Greater Good

29.07.2015
Notice u/s 6 (2) of the Competition Act, 2002 given by:

Nokia Corporation (Nokia or Acquirer)

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

CORAM:

Mr. S.L. Bunker

Member

Mr. Sudhir Mital

Member
Mr. Augustine Peter
Member
Mr. U.C. Nahta
Member
Mr. M.S. Sahoo
Member

Legal Representatives: M/s AZB & Partners

1. On 15.05.2015, the Competition Commission of India (hereinafter referred to as the

Commission) received a notice under sub-section (2) of Section 6 of the Competition Act,
2002 (Act) given by Nokia. The said notice was given to the Commission pursuant to
execution of a Binding Memorandum of Understanding between Nokia and Alcatel-Lucent S.A.
(Alcatel) on 15.04.2015 (MOU) (hereinafter Nokia and Alcatel are collectively referred to
as the Parties). The proposed combination has been filed under Section 5(a) of the Act and
contemplates acquisition of sole control by Nokia of Alcatel through public exchange offers in
France and United States of America.

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2. The Parties are involved in the provisioning of telecommunication infrastructure equipment.

Telecommunication infrastructure equipment can be classified in various segments or subsegments based on characteristics and intended use. It was noted that the Parties had not provided
details of their operations at the narrowest segment level. Further, it was noted from the
submissions of the Parties that telecommunication infrastructure equipment is generally sold
through a bidding process. However, the bidding data which is required for the competition
assessment in such cases was not provided by the Parties. Therefore, in terms of Regulation 14 of
Competition Commission of India (Procedure in regard to the transaction of business relating to
combinations) Regulations, 2011 (hereinafter referred to as Combination Regulations), vide
letter dated 27.05.2015, the Parties were required to provide certain information/document(s)
including inter-alia, information in respect of their operations for each sub-segment of
telecommunication infrastructure equipment as well as bidding data, latest by 03.06.2015. The
Parties submitted the reply on 11.06.2015 after seeking an extension of 8 days. However, it was
noticed

that

the

response

filed

on

11.06.2015

was

incomplete

and

there

were

inconsistencies/omissions in the bidding data, therefore, another letter in terms of Regulation 14

in continuation of the previous letter dated 27.05.2015 was issued on 12.06.2015 directing the
Parties to file response by 19.06.2015. The Parties filed part response on 03.07.2015 after seeking
a total extension for 14 days and final response on 15.07.2015.

3. Nokia is a multinational company headquartered in Finland, and is present globally through its

various subsidiaries/associate companies. As stated in the notice, globally, Nokia is organized

into three business units, i.e., Nokia Networks, HERE, and Nokia Technologies. Nokia Networks
provides both hardware and software components for mobile and wireless networks and it also
provides services to plan, implement, run and upgrade mobile operators' networks. HERE is
active in the location intelligence industry and Nokia Technologies engages in R&D and
develops and licenses technologies.

4. Alcatel is a public company incorporated as a Socit Anonyme under the laws of France and is

listed on Euronext and the New York Stock Exchange. Globally, Alcatel's business is primarily
organized in two operating units, viz., Access and Core Networking. Access unit includes (i)

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(Combination Registration No. C-2015/05/273)

Fair Competition
For Greater Good

Wireless, (ii) Fixed Access, (iii)Managed Services, and (iv) Licensing; and Core Networking unit
includes (i) Internet Protocol (IP) Routing,(ii) IP Transport; and (iii) IP Platform.

5. The Commission noted that the proposed combination relates to the telecommunication

infrastructure equipment sector. The telecommunication equipment sector at the broader level
may be classified into mobile infrastructure and fixed infrastructure. As regards the activities of
Parties, the Commission noted that while Alcatel operates in both the fixed and mobile
infrastructure segments, Nokia operates only in the mobile infrastructure segment and
accordingly overlaps are restricted to the mobile infrastructure segment at the broadest level.

6. Mobile networks are used to connect end-user devices such as smartphones to other end-user

devices and/or internet and private networks and to transfer voice and data between devices and
servers. There are two principal components of mobile networks, viz., Radio Access Network
(RAN) and Core Network (CN). RAN performs the radio functions of the mobile network,
i.e. connects the mobile phone device to the network. CN manages information flows within the
mobile network, providing call control and security functions such as location updating and
authentication. The CN communicates with servers and packet data networks in the outside world
such as the Internet or private corporate networks.

7. Mobile infrastructure equipment can be further grouped into technology generations, with each

subsequent generation increasing both transmission capacity and technological capability.

Network technology has evolved in response to the demand for increasingly data-intensive
applications on wireless networks. Later generations of technology offer higher data transmission
speed (i.e., throughput), greater spectral efficiency and capacity, and lower latency. Equipment
generations can be generally classified into 2/2.5G, 3G, 4G, and 5G systems, with 5G in the early
development phase.

8. Apart from RAN and CN Equipment, the mobile infrastructure segment also includes

provisioning of Managed Services and System Integration Services. Managed services allow an
operator to outsource certain tasks, including network-related technical activities, to the service
provider. Managed services may include (i) technical management of parts of the network; (ii)
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Fair Competition
For Greater Good

Transfer, which includes the construction of a network for an operator, followed by a period of
network operation by the service provider, and finally an optional handover to the operator.
System integration services include professional services to ensure that the customer's mobile
infrastructure products are smoothly and effectively integrated into a single network.

9. On examination of the areas of operation of the Parties, the Commission noted that their activities

particularly in India, are largely complementary in nature. While Nokia is present in the mobile
infrastructure segment, Alcatels India operations mainly relate to fixed line services, with some
operations in the mobile infrastructure segment. There are overlaps within the mobile
infrastructure segment. However, in view of the fact that the proposed combination is unlikely to
cause an appreciable adverse effect on competition (AAEC) in any of the above-mentioned
segments, the Commission decided to leave the exact delineation of relevant market open.
10. The Commission noted that Nokias market share in the overall RAN segment in India would be

in the range of 45 to 50 percent and Alcatels market share would be in the range of 0 to 5
percent while for overall CN equipment1, the same would be in the range of 25 to 30 percent for
Nokia and 0 to 5 percent for Alcatel.

11. The Commission also examined their market shares in each of the overlapping sub-segments of

RAN and CN Equipment which were identified as (i) RAN Equipment for 2-2.5G (GSM); (ii)
CN Equipment for Evolved Packet Core (4G/LTE); (iii) CN Equipment for Carrier IP Telephony;
(iv) Operations Support Software; (v) Managed Services; and System Integration Services. As
regards RAN Equipment for 2-2.5G (GSM), the Commission noted that while Nokia is a market
leader in this segment in India with market share in the range of 55 to 60 percent, however,
Alcatels market share ranges from 0 to 5 percent. In the segment of CN Equipment for Evolved
Packet Core (4G/LTE), Nokias market share is estimated to be in the range of 25 to 30 percent,
while Alcatels market share ranges from 0 to 5 percent. In the segment of CN Equipment for
Carrier IP Telephony, Nokias market share is estimated to be in the range of 20 to 25 percent,
while Alcatels market share ranges from 5 to 10 percent. In the Operations Support Software
segment, the Commission considered the sales revenue details submitted by the Parties and noted
1

The market share in overall CN segment includes the market share in sub-segments of traditional packet core,
evolved packet core, and carrier IP telephony (both fixed and wireless) and does not include the sub-segment of
Operation Support Software.

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that Alcatels sales revenue in this segment is insignificant. As regards the segment of Managed
Services, the Commission noted that Nokias market share in this segment is in the range of 20 to
25 percent, while Alcatels market share ranges from 10 to 15 percent. In System Integration
Services, Nokias market share is estimated to be in the range of 5 to 10 percent, while Alcatels
market share ranges from 0 to 5 percent. Based on market share analysis, the Commission noted
that in most of the segments the incremental market shares are not substantial enough to cause
AAEC.

12. The Commission also noted that the market for telecom infrastructure equipment is a bidding

market and it is important to consider bidding data to be able to assess issues such as
competitiveness of the market, countervailing buyer power, and whether the combination would
have the impact of elimination of a close competitor. As regards competitiveness, in such a
market, the market shares arrived at on the basis of sales may not be reflective of the true state of
competition. The Commission, therefore, examined the bidding information provided by the
Parties for the period 2012-2015. The Commission noted that there were no instances in which
the Parties were the only bidders and there was, invariably, at least one bidder other than the
Parties. In fact, most of the bids saw participation of a number of other competitors such as
Ericsson, Huawei, and ZTE which have operations in all the segments forming part of RAN
Equipment, CN Equipment and Managed Services and System Integration Services, indicating
the competitive nature of the market. As regards countervailing buyer power, the Commission
noted that that the customers of mobile infrastructure equipment are large telecommunication
players and due to, inter-alia, the presence of at least three major competitors of the Parties, they
would enjoy countervailing buyer power. In this regard, the Commission noted that there were
several instances of post bid negotiations with the successful bidder, which is also indicative of
buyer power. Further, the Commission also noted that Nokia and Alcatel do not appear to be
close competitors in India considering the number of overlapping tenders participated by them.

13. Considering the facts on record and the details provided in the notice given under sub-section (2)

of section 6 of the Act and assessment of the proposed combination on the basis of factors stated
in sub-section (4) of section 20 of the Act, the Commission is of the opinion that the proposed
combination is not likely to have an appreciable adverse effect on competition in India in any of

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COMPETITION COMMISSION OF INDIA

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Fair Competition
For Greater Good

the relevant market(s) and therefore, the Commission hereby approves the same under subsection (1) of section 31 of the Act.

14. This order shall stand revoked if, at any time, the information provided by the parties is found to

be incorrect.

15. The Secretary is directed to communicate to the Acquirer accordingly.

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