Changes proposed by CCI to combination regulation reflect M&A trends, say experts
September, 20th 2018
The Competition Commission of India’s (CCI) proposed move to amend combination regulations has found favour with Competition Law experts, who felt that the changes are in tune with the present day landscape of high value mergers and acquisitions in the country.
The changes proposed to Combination Regulations, under the Competition Act include allowing of modifications to the combinations, withdrawal and refiling of merger notification, additional time and exemption for certain acquisitions from the requirement to file notice. This is the sixth amendment being undertaken since its release in 2011.
Dhruv Gupta, Partner, Lakshmikumaran & Sridharan Attorneys, said, “The proposed amendments seem to be a mixed bundle of changes. The amendment facilitates hassle-free notification of combinations and related procedures and also has widened the net for notification requirement.”
For instance, in the proposed amendment, parties are allowed to withdraw and refile merger notice without incurring additional expense. There is also provision for making modifications to combinations. Gupta said, “Presently the parties file a notice regarding a combination and the CCI may propose appropriate modifications to the combination which the parties can accept or reject.”
“Now, an option has been given to the parties to initiate a modification to the combination, before the CCI has even framed a prima facie opinion on the combination,” he added.
A combination can come into effect 210 days from the day on which notice has been given to the CCI. The proposed amendments clarify that specified periods are to be excluded when determining the 120-day period.
The combination regulations exempt certain acquisitions from the requirement to file notice such as acquisitions made solely as an investment and meeting the conditions specified under Schedule I. Gupta explained that the proposed amendments omits the ‘solely as an investment’ clause and questions the acquisition limit. Further, along with acquisitions within the vertical chain, the horizontal chain has also caught CCIs attention. “Now, all acquisitions ‘solely as investment’ but involving direct or indirect competitors with identical/similar trade or activities at any stage or level will have to be notified,” he added.
Rajashekhar Rao, a competition lawyer in New Delhi, said, these proposed changes are reflective of changing merger and acquisition landscape in India, which is seeing high value mergers in the recent times.
Recently, CCI approved Walmart-Flipkart deal worth $16 billion. According to a recent study, mergers and acquisitions are at an all time high with 2016 witnessing 409 deals with a value of $35.9 billion. According to Rao, the Regulator is keeping up with the changing times making regulations practical.