Controlling mergers and acquisitions

The long awaited merger regime under the Competition Act, 2002 came into effect from 1 June. With it, the act has been enforced in its entirety and the Competition Commission of India (CCI) is fully empowered to investigate anti-competitive agreements, abuse of dominant positions and mergers and acquisitions (M&A) having an appreciable adverse effect on competition in India.

Relevant notifications

On 4 March the central government issued four notifications. While one notified the coming into force of the provisions relating to M&As, another enhanced the assets and turnover based thresholds of the enterprises by 50%. M&As meeting the thresholds prescribed under the act will be combinations within the meaning of the act. Merging entities meeting the threshold will be required to notify the combination to the CCI. At the same time through a third notification, the government exempted a “group” exercising less than 50% of voting rights in other enterprise from section 5 of the act.

By a fourth notification, the government exempted transactions in which the target has assets of not more than ₹2,500 million or a turnover of not more than ₹7,500 million from notifying the combination to the CCI. While the notification clarified that this exemption is available only for five years, it was silent as to whether the thresholds were assets or turnover in India or worldwide. A corrigendum issued on 27 May clarified it was the former.

Suchitra Chitale, the managing partner of Chitale & Chitale Partners, heads the competition team of the firm, which advices and acts on the behalf of clients in Indian competition law matters. She has been in practice for more than 24 years.