The Competition Commission of India (CCI) has introduced a do-it-yourself (DIY) notifiability check tool for companies to find out if they need to notify the body about acquisitions or amalgamations. The DIY tool asks users a series of questions about the transaction and guides them along the way.
Competition lawyers called the DIY tool a great initiative that made the merger control process more visible and accessible. “Once determined that a merger clearance is required, the tool suitably directs the user, helping the user broadly to understand the procedure that would need to be adopted to submit the actual filing,” Reeti Choudhary, a partner who focuses on competition law at J Sagar Associates, told India Business Law Journal.
The tool is aimed at letting companies find out on their own in the event their merger is non-notifiable thus freeing up the regulator’s time from assessing such combinations. The CCI must be informed when the value of the acquired/merged assets is more than ₹3.5 billion (US$50 million) or the target company’s turnover is more than ₹10 billion.
“This tool not only covers the relevant provisions of the [Competition Act, 2002] but also covers the exemptions provided under the Competition Commission of India (Procedure in Regard to the Transaction of Business Relating to Combinations) Regulations, 2011, and the notifications issued by the Ministry of Corporate Affairs,” said Sagardeep Rathi, an associate partner at Khaitan & Co who focuses on competition law.
Though the DIY tool was seen as interactive and helpful, there were areas of improvement that could be made. “While the DIY notifiability check tool provides ready answers to straightforward enterprise level transactions, the assessment of transactions involving groups and acquisition of control are slightly unclear,” said Ravisekhar Nair, a partner and co-head of the competition law and policy practice at Economic Laws Practice.
He added that the tool did not include guidance to isolate interconnected or individual transactions, leaving parties unaware about which transaction within their series of transactions would need to be notified.
“The analysis on notifiability may not always be straightforward and it may require application of precedents and other legal principles. Sometimes a situation which is not contemplated under the act or the regulations may also arise. In short, it is necessary that analysis on notifiability of a transaction under the act must be conducted by a legal expert,” added Rathi.
The CCI in 2017 had released the Competition Compliance Manual for Enterprises with the Competition Law Bar Association. The manual provided basic principles of competition law that impact a company’s relationship with customers, suppliers and other stakeholders.