The merger control regime in India has completed 10 years of its enforcement. While as compared to the decades of enforcement by Anti-Trust Agencies in other jurisdictions this might appear nascent, for the Competition Commission of India (CCI) and its stakeholders this is a milestone to commemorate in large part thanks to all that has been accomplished. While the antitrust provisions were enacted in 2009, the regulation of combinations took effect on 1st June 2011, amidst the concerns of varied stakeholders primarily revolving round the time delay for approval of transactions. But a quick and transparent assessment has eliminated the time and price overruns, thus making India’s merger control regime one of the foremost lauded enforcement regimes within the sector of competition law across the globe.
The Competition Act, 2002 prohibits anti-competitive agreements, abuse of dominant position by enterprises and regulates combinations (mergers, acquisitions and amalgamations), which causes or are likely to cause any appreciable adverse effect on competition within India. The preamble of the Act underlines promoting and sustaining competition and protecting the interests of the consumers. Keeping these at the guts of merger enforcement, CCI has decided over 800 combination cases till date. 22 of the mixture cases were approved with modifications addressing the likely market distortions or increasing concentration of market power.
During the last decade, Government and CCI are constantly reviewing its mergers and acquisitions guidelines and procedures taking under consideration the expansion of Indian economy, advancements within the business environment and changing need of the stakeholders. CCI has endeavoured to create a robust jurisprudence by expanding the depth of its merger assessment while keeping an eye fixed on the time taken to make a decision the cases. It has also been successful in building a strong culture of competition compliance. To achieve this, various amendments to the Act and regulations framed thereunder are undertaken from time to time. These amendments are aimed to realize an easier, clearer and business-friendly environment.
IMPACT ON INDIAN ECONOMY
Back in 2011, the govt introduced a small-target exemption under which transactions involving smaller companies below a particular asset or turnover threshold were discharged from the requirement to notify the transaction to CCI for prior approval. This exemption presumes that these smaller target companies being acquired won’t have a big impact on market concentration. It strikes a balance between the regulation of mergers and compliance burden on enterprises. The threshold was further revised in 2016 to incorporate more companies under its ambit. While the CCI’s Combination Regulations had a built-in system to exempt certain notifiable transactions mentioned in Schedule I, an extra explanation was added in 2016 to Item I of Schedule to resolve the cloud of ambiguity just in case of minority acquisitions not resulting in control. This benefited a number of investors who, solely for the aim of investment, acquire but 10 percent shares accompanied with rights that are exercisable by ordinary shareholders only.
In the initial period of enforcement, parties to the mixture were required to file the notice within 30 days from the date of execution of a binding document leading to violations in various instances. This requirement was subsequently removed in 2017 giving parties the pliability in determining their compliance schedule while bearing in mind the standstill obligations. The merger regime in India, being a non-adversarial one, introduced in 2018 the admitting of parties to a mixture to supply voluntary remedies to deal with the clear concerns arising from a proposed transaction. This was a welcome change that has facilitated timely resolution and early approval of an otherwise anti-competitive merger.
Also in 2018, an amendment was made to facilitate the parties to withdraw their notice just in case of serious information gaps and refile it later with a provision of adjusting the filing fees. While this amendment doesn’t impose any financial liability on the parties, it eliminates the danger of invalidation of a filing, thus making the method less onerous. In 2019, CCI introduced the green channel route, exemplifying a replacement approach in filing cases during a mandatory and suspensory regime. Building further on the trust-based filing approach, CCI introduced an automatic route for approval of combinations just in case of no overlaps, be it horizontal, vertical or complementary, between the businesses of the parties. Such transactions can now be consummated immediately upon filing thereby greatly enhancing the convenience of doing business. The filing is supplemented by a non-binding pre-filing consultation meeting and revised guidance notes. The success of green channel filing is often gauged by the very fact that since its introduction over 30 filings are made under this route.
CCI has demonstrated strong competition assessment capabilities in cases of worldwide consolidations, corporate insolvency and domestic combinations. As India continues to be a preferred nation for strategic investments and M&A, CCI will continue to aim to strike the right balance when dealing with issues such as strategic investments by a special genre of international funds, increasing presence of common ownership in competing firms and dynamism exhibited by the new age market/ digital markets. To give parties a blank check while executing transactions, in 2020 CCI dispensed with the need to supply details of non-compete clauses in contracts. While reducing the knowledge burden on the parties, it also makes them liable for self-assessing and ensuring that the agreements are competition compliant.
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