Jan 07, 2020

India: Merger Control (4th Edition)

1.     Overview

The Indian merger control regime came into effect on 1 June 2011 with the notification of Sections 5 and 6 of the Competition Act, 2002 (Competition Act). The regime is governed by the Competition Act, notifications issued by the Ministry of Corporate Affairs, Government of India (“MCA“) and the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations 2011 as amended up to 15 August 2019 (“Combination Regulations“). Under the Indian merger control regime, a ‘combination’ (i.e., an acquisition, merger or amalgamation) must be notified to and approved by the Indian competition authority, the Competition Commission of India (“CCI“), if it breaches the prescribed asset and turnover thresholds and does not qualify for any statutory exemptions. The requirement to notify the CCI is mandatory and such combinations are subject to a ‘standstill’ or suspensory obligation, until approved by the CCI within the prescribed timelines.

The CCI must issue a prima facie opinion on whether the transaction is likely to cause an ‘appreciable adverse effect on competition’ (“AAEC“) within the relevant market in India within 30 working days from the date of notification. If the CCI finds that the transaction is unlikely to cause an AAEC, it will approve the transaction. Where the CCI has not passed any orders within a period of 210 days (i.e. such days as are calculable for the purposes of the Combination Regulations), the combination shall be deemed to be approved.

Where the CCI is of the opinion that a combination causes or is likely to cause an AAEC within the relevant market in India, it has the power to direct that the combination shall not take place. By 1 September 2019, the CCI had cleared approximately 610 combinations, with a vast majority within the 30-working-day Phase I period. To date, the CCI has cleared eight combinations subject to remedies after a detailed Phase II investigation and has not blocked a single combination.

In this chapter, we provide a brief overview of the recent trends in Indian merger control, including key amendments to the Combination Regulations. We then outline the circumstances under which parties to a transaction are required to notify the CCI, and the factors considered by the CCI when determining whether a combination is likely to cause an AAEC.

2.     Is mandatory notification compulsory or voluntary?

The requirement to file a notice with the CCI is mandatory as long as the prescribed jurisdictional thresholds are breached and no statutory exemption is applicable. As such, the suspensory regime (i.e., requirement to receive CCI’s approval prior to closing) applies. Accordingly, any breach of these requirements leads to penalties for ‘gun-jumping’ under the provisions of the Competition Act. The CCI is empowered to impose a penalty of up to 1% of the total turnover or value of assets of the combination, whichever is higher, for ‘gun-jumping’.

3.     Is there a prohibition on completion or closing prior to clearance by the relevant authority? Are there possibilities for derogation or carve out?

The regime is suspensory in nature and a combination cannot be implemented until the CCI has granted its approval. There are no carve outs for closing a notifiable transaction prior to approval from the CCI.

4.     What are the conditions of the test for control?

Under the Competition Act, ‘control’ is defined to include ‘controlling the affairs or management by (i) one or more enterprises, either jointly or singly, over another enterprise or group, (ii) one or more groups, either jointly or singly, over another group or enterprise’. There is no ‘bright line’ test prescribed by the Competition Act or the CCI to define control. The CCI has examined the scope of ‘control’ in several cases and a brief over view is briefly set out below:

i. A bundle of  affirmative rights including in relation to approval of business plan, commencement of a new line of business, discontinuing any existing line of business, approval of budget and any other strategic business decision is being viewed as amounting to control (Century Tokyo Leasing Corporation/Tata Capital Financial Services Limited [1]).

ii. Right to recommend candidates for senior management constitutes as ability to participate in the managerial affairs (Jet/Etihad[2]).

iii. To ascertain control, an enterprise must show that it has the ability to exercise ‘decisive influence’ either by way of positive or negative control rights. (Piramal Enterprises Limited/ Shriram Transport Finance Company/Shriram Capital Limited/ Shriram City Union Finance Limited[3]).

iv. Control includes ‘material influence’ in addition to de facto and de jure control. The ability to manage the affairs of the other enterprise may be inferred from special rights/ veto rights, status and expertise of an enterprise or a person. (Ultratech JAL[4])

5.     What are the conditions on minority interest in your jurisdiction?

The Combination Regulations exempt acquirers from notifying an acquisition if the acquisition (i) does not entitle the acquirer to hold twenty five per cent (25%) or more of the total shares or voting rights of the target company; (ii) is made “solely as an investment” or in the “ordinary course of business”; and (iii) does not lead to acquisition of control over the target company.

In interpretation of the terms “solely as an investment” and “ordinary course of business”, the CCI’s decisions hold that the Item 1 Exemption does not apply to transactions where there are overlaps between the activities of the target and the acquirer (directly and indirectly).

An acquisition of less than ten per cent of the total shares or voting rights of an enterprise shall be treated as “solely as an investment”, provided that the following conditions are met:

i. The acquirer has ability to exercise only such rights that are exercisable by the ordinary shareholders of the enterprise whose shares or voting rights are being acquired to the extent of their respective shareholding;

ii. The acquirer must not be a member of the board of directors of the enterprise whose shares or voting rights are being acquired and does not have a right or intention to nominate a director on the board of directors of the enterprise whose shares or voting rights are being acquired and does not intend to participate in the affairs or management of the enterprise whose shares or voting rights are being acquired.

The test for control for applicability of Item 1 Exemption is the same as mentioned in Q.4 above.

6.     What are the jurisdictional thresholds (turnover, assets, market share and/or local presence)?

The jurisdictional thresholds for notification comprise two broad sets of tests:

i. Parties test – Parties (buyer and target (excluding seller)/ or merging parties) have:

· combined domestic assets exceeding INR20 billion (about USD284.66 million); or

· combined domestic turnover exceeding INR60 billion (about USD853.97 million); or

· combined worldwide assets exceeding USD1 billion, including domestic assets of at least INR10 billion (about USD142.33 million); or

· combined worldwide turnover exceeding USD3 billion, including domestic turnover of at least INR30 billion (about USD426.99 million).

ii. Group test – Group (buyer’s group and target (excluding seller) or group to which the merged entity will belong) has:

· combined domestic assets exceeding INR80 billion (about USD1.13 billion); or

· combined domestic turnover exceeding INR240 billion (about USD3.4 billion); or

· combined worldwide assets exceeding USD4 billion, including domestic assets of at least INR10 billion; or

· combined worldwide turnover exceeding USD12 billion, including domestic turnover of at least INR30 billion.

While examining whether the parties test is satisfied, the value of assets and turnover of the immediate parties, including their subsidiaries to the transaction must be taken into account.

While examining whether the group test is satisfied, the ultimate parent/holding company of the acquirer/the entity surviving after the merger must be identified. On identification, its consolidated value of assets and turnover must be taken into account. Reliance on the relevant accounting principles on consolidation of value of assets and turnover is generally useful.

Further, transactions where the target enterprise either (i) holds assets of less than INR 3.5 billion in India; or (ii) generates turnover of less than INR 10 billion in India, are currently exempt from the mandatory pre-notification requirement (“De Minimis Exemption“).

7.     How are turnover, assets and/or market shares valued or determined for the purposes of jurisdictional thresholds?

The relevant accounting principles on consolidation of value of assets and turnover can be relied on for determining the turnover and assets of a company.

The value of assets is the book value of total gross assets (e.g. fixed assets, investments, current assets and deferred tax assets), deducting any depreciation, as shown in the audited books of account of the enterprise in the financial year immediately preceding the financial year in which the proposed transaction falls. The turnover includes the value of sale of goods or services i.e., revenue from operations, excluding indirect taxes.

8.     Is there a particular exchange rate required to be used for turnover thresholds and asset values?

The rate of conversion of foreign exchange currency into Indian Rupees or US Dollars is based on the average spot rate of the last six months quoted by Financial Benchmarks India Ltd. (“FBIL“) from the date calculated with reference to the ‘trigger event’ leading to the filing of a notification.

9.     Do merger control rules apply to joint ventures (both new joint ventures and acquisitions of joint control over an existing business?

Joint ventures (“JVs“) are not specifically dealt with under the Competition Act from a merger control perspective. If there is a purely greenfield JV, the value of assets and turnover of the JV are unlikely to the meet the de minimis thresholds as described above. That said, for setting up or acquisition of a brownfield JV where the parents of the JV contribute assets, business divisions, contracts, intellectual property, etc. to the JV, , the transaction would be notifiable in case the de minimis thresholds are exceeded and the jurisdictional thresholds are breached.

10.  In relation to “foreign-to-foreign” mergers, do the jurisdictional thresholds vary?

The thresholds for regulating “foreign – to – foreign” mergers are the same as provided in question 6 above.

11.  For voluntary filing regimes (only), are there any factors not related to competition that might influence the decision as to whether or not notify?

Not applicable.

12.  What is the substantive test applied by the relevant authority to assess whether or not to clear the merger, or to clear it subject to remedies?

The CCI is required to consider all or any of the following factors to determine whether the combination being considered is likely to cause an AAEC:

i. actual and potential level of competition through imports in the market;

ii.  extent of barriers to entry into the market;

iii. level of combination in the market;

iv.  degree of countervailing power in the market;

v. likelihood that the combination would result in the parties to the combination being able to significantly and sustainably increase prices or profit margins;

vi. extent of effective competition likely to sustain in a market;

vii. extent to which substitutes are available or are likely to be available in the market;

viii. market share, in the relevant market, of the persons or enterprise in a combination, individually and as a combination;

ix. likelihood that the combination would result in the removal of a vigorous and effective competitor or competitors in the market;

x. nature and extent of vertical integration in the market;

xi. possibility of a failing business;

xii. nature and extent of innovation;

xiii. relative advantage, by way of the contribution to the economic development, by any combination having or likely to have an AAEC; and

xiv. whether the benefits of the combination outweigh the adverse impact of the combination, if any.

13.  Are non-competitive factors relevant?

The CCI (usually) only considers factors having a direct effect on competition in a relevant market (factors listed in response to question 12 above) in its competitive analysis of a combination.

14.  Are there different tests that apply to particular sectors?

The Competition Act broadly applies to all industries and does not provide separate tests for any particular industry in relation to merger control. However, certain sector specific exemptions from the mandatory notification requirement are available:

i. Any share subscription or financing facility or any acquisition, by a public financial institution, foreign institutional investor, bank or venture capital fund, pursuant to any covenant of a loan agreement or investment agreement is not notifiable. However, the parties to such transactions, within seven days from the date of the acquisition, are required to file the details of the acquisition including the details of control, the circumstances for exercise of such control and the consequences of default arising out of such loan agreement or investment agreement, as the case may be.

ii. 10 August 2017, the Government of India issued a notification (under section 45 of the Banking Regulation Act 1949) exempting certain regional rural banks (governed by the Regional Rural Banks Act 1976) from the merger control provisions for five years (that is, until 10 August 2022).

iii. On 30 August 2017, the exemption from the merger control provisions was also extended to all mergers and acquisitions involving nationalized banks, under the Banking Companies (Acquisition and Transfer of Undertakings) Act 1970 and the Banking Companies (Acquisition and Transfer of Undertakings) Act 1980, for ten years (that is, until 30 August 2027).

iv. On 22 November 2017, all mergers and acquisitions involving Central Public Sector Enterprises operating in the oil and gas sectors under the Petroleum Act 1934 have been exempted from the merger control provisions for five years (that is, until 22 November 2022).

15.  Are ancillary restraints covered by the authority’s clearance decision?

Ancillary restraints/restrictive provisions such as non-compete covenants are typically addressed during the review of the transaction by the CCI. The CCI will only clear a transaction if such restraints are justified or have been removed or amended in a case where such restraints are not justifiable. Where a non-compete restriction is justified as per the parameters set out in the CCI’s guidance on non-compete restrictions, the CCI’s decision approving the combination is deemed to cover the non-compete restriction.

16.  For mandatory filing regimes, is there a statutory deadline for notification of the transaction?

The Competition Act and the relevant regulations governing combinations in India were amended to do away with a statutory deadline for notification. The parties to a combination can notify the transaction to the CCI any time after execution of binding transaction documents. However, no notifiable transaction can be implemented/ closed prior to approval from the CCI.

17.  What is the earliest time or stage in the transaction at which a notification can be made?

A notification can be made to the CCI upon execution of binding transaction documents in case of any acquisition or board resolutions approving the merger, in case of a merger or amalgamation.

18.  What is the basic timetable for the authority’s review?

The investigation into mergers and acquisitions by the CCI is in two phases:

Phase I – The CCI must issue a prima facie opinion on whether the transaction is likely to cause an AAEC within the relevant market in India within 30 working days from the date of notification. If the CCI finds that the transaction is unlikely to cause an AAEC, it will approve the transaction. The 30-day review period is referred to as Phase I.

The 30-day review period excludes the time taken by:

i. The parties to provide additional information required by the CCI.

ii. The CCI to ask third parties for their views on the transaction

iii. Further, the review clock will stop if the CCI invalidates a notice for being substantially incomplete. The CCI can require the parties to file afresh resulting in resetting the review clock.

Phase II – If the CCI forms a prima facie opinion that the merger or acquisition is likely to cause an AAEC within the relevant market in India, the CCI can extend its review period until the full 210 calendar day statutory period (the Phase II review period) for an in-depth investigation.

A Phase II investigation involves the following steps:

i. The CCI issues a show cause notice to the parties asking for an explanation as to why an investigation in to the combination (merger or acquisition) should not be conducted. The parties are given 30 calendar days to reply to this notice. After considering the parties’ response, the CCI can pass an order formally commencing the Phase II investigation process.

ii. After the CCI issues an order directing an in-depth investigation, the parties must publish non-confidential details of the transaction in four leading national daily newspapers and their own websites within ten working days of the CCI’s decision to investigate further. Third parties, including competitors, suppliers, customers and other market stakeholders are then invited to provide their views on the likely impact of the transaction within the relevant market within 15 working days of publication. Thereafter, within 15 working days from the expiry of the period, the parties can respond to these comments.

iii. After considering the response of the parties, the CCI passes an order within a period of 45 working days either:

· approving the transaction;

· disapproving the transaction; or

· proposing modifications to the transaction.

Where the CCI proposes modifications to the transaction, the review timeline is extended by up to 60 working days for discussion on remedies. This extension is excluded from the 210-day review period.

19.  Under what circumstances the basic timetable may be extended, reset or frozen?

As explained in the response to question 18, the CCI timelines to review a combination may get extended if the combination is being investigated under a Phase II review. The CCI review timelines of a combination may also get reset if a notification gets invalidated by the CCI on the grounds of lack of complete information provided by the parties in relation to the combination or lack of conformity of the notice with the Combination Regulations.

20.  Are there any circumstances in which the review timetable can be shortened?

In a recent amendment to the Combination Regulations by way of a gazette notification dated August 13, 2019, the introduction of a ‘Green Channel’ regime (“Green Channel“) has allowed notifiable transactions that don’t involve any form of ‘overlaps’ in the activities of the parties (vertical, horizontal or ‘complementary’) to be deemed approved on receiving an acknowledgment on filing. The parties to such transactions will no longer have to wait for CCI’s approval before giving effect to them.

A notification filed under Green Channel needs to be notified in an amended short Form I along with a declaration that attests to (a) the lack of overlaps between transacting parties and (b) the proposed transaction not causing an AAEC.

However, the following factors have to be taken into account before filing a notification under Green Channel –

· Absence of overlaps will have to be confirmed, not only among transacting parties, but also their respective groups and any entity in which parties, directly or indirectly, hold shares and/or exercise control;

· A transaction qualifies for Green Channel only where parties don’t overlap in ‘any plausible relevant market(s)’, including narrowly defined relevant markets;

· The parties to the combination must not have any horizontal overlaps (i.e., they must not produce or provide similar or identical or substitutable products or services), vertical overlaps (i.e., they must not be engaged in commercial activities at different levels of production chain);  and complementary businesses (i.e., they must not be engaged in any complementary activities).

21.  Which party is responsible for submitting the filing? Who is responsible for filing in cases of acquisitions of joint control and the creation of new joint ventures?

In an acquisition or creation of JVs, the acquirer(s)/ parent companies of the JV must file the notification. In a merger or amalgamation, it is the joint responsibility of all the parties to the merger to file the notification.

22.  What information is required in the filing form?

The requirement of substantive information depends on the choice of form, i.e. Form I (short form) or Form II (long form), which depends on the extent of overlaps and the combined market shares of the parties in the relevant market(s).

The parties to a combination may choose to file the notification in Form II if combined market shares exceed 15% (horizontally) or 25% (in vertical markets). In case the combined market shares are less than 15% (horizontally) and 25% (in vertical markets), the parties may notify the transaction to the CCI in Form I.

A typical Form I requires the following information (non-exhaustive list): (1) description of the transaction; (2) corporate and financial information of the parties; and (3) market facing information, including (a) overlapping products and/or services of the parties; (b) market size and market shares of the parties; (c) market shares of top 5 competitors, and (d) details of top 5 suppliers and customers of the parties.

Form II, on the other hand, requires additional information over a typical Form I, including additional corporate information from the parties and certain additional market facing information like characteristics/ end use of the overlapping products/ services, presence of specialized producers, in-house consumption, government procurement policies, licensing/ registration requirements etc. Form II also requires the parties to provide estimates of concentration levels (Herfindahl-Hirschman Index), entrants/ exits in the market, demand conditions, information on imports and exports, etc.

23.  Which supporting documents, if any, must be filed with the authority?

The following supporting documents are required to be filed along/post a notification:

i. Ancillary Documents – Company authorization letter to be signed by an authorized signatory of the acquirer; Declaration signed by an authorized signatory of the acquirer attesting to the fact that all details contained in the notice are true and bona fide to the best of the authorized signatory’s knowledge and belief, and that all estimates are identified as such and are its best estimates based on the underlying facts; Authorization letter in favor of the filing counsel representing the acquirer; Auditor’s certificate and certificate of authenticity for unaudited financials (if audited financial statements are not ready) for the financial year preceding the date of transaction; Demand draft of INR 15,00,000/- (about USD 21,000) for notification in Form I and of INR 50,00,000/- (about USD 70,000) for notification in Form II.  Confidentiality affidavit certifying that the information/documents over which confidentiality is being claimed is not available in the public domain.

ii. Formal Documents – Board resolution from the parties approving the transaction; All transaction documents; and financial statements of the parties for the financial year preceding the date of transaction.

24.  Is there a filing fee? If so, please specify the amount in local currency.

The fees for filing a notice for a combination to the CCI is INR 1.5 million (about USD21000) for Form I and INR 5 million (about USD 70000) for Form II. In case of an acquisition, the acquirer must pay the filing fees. In a merger/amalgamation, it is the joint responsibility of all the parties to pay the filing fees.

25.  Is there a public announcement that a notification has been filed?

The parties to a transaction are required to submit a 1000 word, non-confidential summary of the combination alongside the merger notification which is published on the CCI’s website as soon as the notification is filed.

The summary must contain:

i. The names of the parties;

ii. Nature and purpose of the combination;

iii. The product(s), services and businesses;

iv.  The markets in which the parties to the combination operate.

This summary is ideally uploaded on the date of the filing of the notification. The CCI also indicates whether the transaction is notified in Form I or Form II, and the status of review (that is, whether pending or approved) on its website.

26.  Does the authority seek or invite the views of third parties?

Where the CCI deems it necessary, it may call for information from any other enterprise while inquiring as to whether a combination has caused or is likely to cause an AAEC in India. In an event where an acquisition or a merger is being reviewed under a Phase II investigation by the CCI, the parties are directed to publish non-confidential details of the transaction in four leading national daily newspapers and their own websites within ten working days of the CCI’s decision to investigate the transaction further. Third parties are then invited to provide their views on the likely impact of the transaction within the relevant market within 15 days of publication.

27.  What information may be published by the authority or made available to third parties?

Where an acquisition or a merger is being reviewed under a Phase II investigation by the CCI, the CCI directs the parties to the combination to publish the details of the combination in a Form IV within ten working days of the date of such direction. The details required to be published under Form IV include:

i. Details of the structure of the transaction

ii. Details of the combination in the form of the summary explained in question 25 –

· Details of the business activities of the parties;

· Rationale, objectives and the impact of the combination;

· Information about the market(s) in which the parties to the combination overlap – relevant market definition and the list of overlapping products;

· Information with reference to factors considered by the CCI for a competitive assessment of the relevant market and impact of the combination on the relevant market. This includes factors such as level of combination in the market, extent of barriers to entry into the market, extent of effective competition in the market; availability of substitutes, aggregation of market shares of the parties to the combination, removal of competitors, existence of vertical linkage etc.

· Expected time-frame for completion of various stages of the combination

28.  Does the authority cooperate with antitrust authorities in other jurisdictions?

The CCI has entered into several bilateral/multilateral international cooperation agreements with other competition regulators, such as the European Commission, the Competition Bureau Canada, the Australian Competition and Consumer Commission, the US Federal Trade Commission (“FTC“) and regulators of the BRICS nations. The CCI reaches out to other competition authorities during the review process and regularly seeks waivers from parties to share information with other authorities in large global transactions.

29.  What kind of remedies is acceptable to the authority? How often behavioral remedies are accepted in comparison with major merger control jurisdictions, such as the EU or US?

The CCI can propose both behavioral and structural remedies where it is of the opinion that the combination has, or is likely to have, an AAEC, but can be eliminated through suitable modifications to the transaction. However, the CCI in most of the cases has preferred structural remedies. That said, in June 2019, the CCI in the combination between Larsen & Toubro Ltd. (L&T), Schneider Electric India Pvt. Ltd. and MacRitchie Investments Pte. Ltd. (“L&T – Schneider decision“) issued a decision involving purely behavioral remedies. Prior this decision, the CCI has passed behavioral remedies only in a combination with divestments. In PVR Limited’s (“PVR“) acquisition of DLF Utilities Ltd. (“DUL“), even though PVR offered behavioral commitments, the CCI imposed structural as well as behavioral commitments on PVR, including: (i) commitments not to expand PVR’s presence in the concerned relevant markets; (ii) commitment not to enter into co-operation arrangement with DUL; and (iii) commitment to reduce the non-compete period covering only the concerned relevant markets. In ChinaChem’s acquisition of Syngenta AG, the CCI accepted a hold separate obligation offered by the parties with respect to their entities in India along with divestment of certain products.

30.  What procedure applies in the event that remedies are required in order to secure clearance?

As per the Combination Regulations, notifying parties could offer remedies up-front in Phase I before the CCI passes an order in Phase I. If the parties offer such remedies upfront, the CCI has an additional period of time, not exceeding 15 days, to evaluate the remedies and accept them. The 15-day period does not count toward the overall 210-day period.

If the parties choose not to offer remedies in Phase I, and the CCI decides to initiate a detailed Phase II investigation, the next opportunity to offer remedies will be at a later stage in Phase II itself. In this stage, the remedies are formally proposed “by” the CCI for acceptance by the parties (even if informally offered by the parties themselves). If the parties choose to accept the remedies, the merger is cleared at that stage. If not, the parties have another 30 working days to submit a counter-proposal. This 30-day period does not count toward the overall 210-day period. If the CCI accepts the revised proposal, then the decision is issued at that point, else the parties have another 30 working days (again, not counting toward the overall 210-day period) to accept the original remedies proposed by the CCI in the first instance.

31.  What are the penalties for failure to notify, late notification and breaches of a prohibition on closing?

Various types of penalties prescribed under the Competition Act on individuals and companies are as follows:

i. If the parties fail to notify a notifiable transaction, or implement the transaction without approval (‘gun-jumping’), the CCI can impose a penalty of up to 1% of the total turnover or value of assets of the proposed combination, whichever is higher.

If the parties fail to pay the above penalty, the Chief Metropolitan Magistrate in Delhi can impose fines of up to INR 250 million (about USD 3.5 million) and/or imprisonment of up to three years.

32.  What are the penalties for incomplete or misleading information in the notification or in response to the authority’s questions?

Where the parties make material false statements or omit to disclose material facts in the notification, penalties between INR 5 million to INR 10 million (about USD 70,000 to USD 140,000) can be imposed.

33.  Can the authority’s decision be appealed to a court? In particular, can third parties who are not involved in the transaction appeal the decision?

As a general rule, decisions of the CCI which conclusively determine the rights and obligations of the parties, can be contested before the appellate tribunal.

The CCI’s final decisions with respect to a combination can be appealed before the National Company Law Appellate Tribunal (“NCLAT“) either by the notifying party(ies) or by any third party which can demonstrate that it has been harmed by any direction, decision or order of the CCI.

In an appeal filed in the case of the CCI’s order in Jet/Etihad[5], the erstwhile appellate tribunal (i.e., the Competition Appellate Tribunal) dismissed the appeal ruling that the complainant was not an ‘aggrieved party ‘within the meaning of the Competition Act and hence had no locus standi to challenge the order of the CCI.

A similar appeal filed by a third party against the approval of the merger of Royal Dutch Shell Plc and BG Group Plc, alleging that the parties had not submitted complete information on the relevant markets involved in the combination and failure on CCI’s part to follow the procedure in relation to issuance of a show cause notice, was recently dismissed by the NCLAT on the grounds that (i) the complainant failed to prove that the combination resulted in any AAEC; and (ii) the appeal was not ‘maintainable’ on account of not being under any of the ‘appealable provisions’ under the Competition Act.

Further, appeals against any decision or order of the NCLAT can be filed before the Supreme Court of India.

34.  What are the recent trends in the approach of the relevant authority to enforcement, procedure and substantive assessment?

A major development with respect to the CCI’s approach towards enforcement, procedure and substantive assessment has been an amendment to the Combination Regulations by way of a gazette notification dated August 13, 2019. The amendments include:

i. Introduction of a ‘Green Channel’ regime (as explained in response to question 20 above)

ii. Certain amendments to Form I including:

· Limiting the provision of market-facing details (e.g., parties’ market shares, details of top competitors etc.) only in situations where transacting parties/groups have overlapping businesses.

· Disclosure of complementary commercial activities.

· Providing an estimate of the extent of foreign investment, if any, on account of the transaction.

· Providing market share details for three years (as opposed to the earlier requirement of one year) for transaction involving overlaps, along with the additional requirement of explaining the market structure and details of recent entry and exit into the market.

35.  Are there any future developments or planned reforms of the merger control regime in your jurisdiction?

The Competition Law Review Committee formed in October 2018 with a view to reviewing the Competition Act has passed its report to the MCA which contains multiple recommendations with respect to the antitrust aspect of the Competition Act as well as recommendations with respect to governance and administrative functioning of the CCI and the NCLAT. The notable recommendations in relation to the merger control regime include –

i. Eligibility of insolvency resolution proceedings under the Insolvency and Bankruptcy Code for the Green Channel regime;

ii. Enabling provisions to prescribe necessary thresholds, inter alia, deal-value threshold for merger notifications.

iii. Power to allow derogation from stand-still obligations – this allows the parties to a combination (in certain circumstances) to operationalize a combination while they are awaiting approval from the CCI. An example is that of a hostile takeover where the acquirer(s) shall be allowed to purchase securities, provided they surrender all beneficial rights (of dividend and voting) attached to such securities until CCI approves the proposed combination

These recommendations are not binding on the MCA and it cannot be confirmed if these recommendations will be implemented in the Combination Regulations.

Aditi Gopalakrishnan, Partner
Gaurav Bansal, Senior Associate
Rahul Shukla, Associate
Karan Sood, Associate


[1]  C-2012/09/78
[2] C-2013/05/122
[3] C-2015/02/249
[4] C-2015/02/246
[5] C-2013/05/122


  • Associates:

    Gaurav Bansal




These are the views and opinions of the author(s) and do not necessarily reflect the views of the Firm. This article is intended for general information only and does not constitute legal or other advice and you acknowledge that there is no relationship (implied, legal or fiduciary) between you and the author/AZB. AZB does not claim that the article's content or information is accurate, correct or complete, and disclaims all liability for any loss or damage caused through error or omission.