What legislation applies to the control of mergers?

The Competition Act, 2002 and the Competition Commission of India (Procedure in Regard to the Transaction of Business Relating to Combinations) Regulations, 2011 are the two key merger control statutes. The central government is also empowered to issue notifications granting exemptions from time to time.

What is the relevant authority?

The Competition Commission of India is the primary authority responsible for enforcing merger control rules under the Competition Act. Its decisions may be appealed to the National Company Law Appellate Tribunal (NCLAT). NCLAT’s decisions may be appealed to the Supreme Court of India, which is the final appellate authority under the Competition Act.

Transactions caught and thresholds

Under what circumstances is a transaction caught by the legislation?

A ‘combination’ is defined as either a merger or an acquisition of shares, assets or control which exceeds the financial thresholds, in terms of both assets and turnover, set out in the Competition Act.

Transactions that do not meet these thresholds do not constitute a combination and need not be reviewed by the commission.

Under the Competition Act, parties to mergers or acquisitions of assets, shares or control that exceed these thresholds must file a formal notification in the prescribed form with the commission and wait until approval has been granted before closing the deal. This rule applies to all transactions, with the sole exception of acquisitions by certain financial institutions pursuant to a covenant in a loan or investment agreement. In such cases, notification should be made post-closing and the commission’s approval is not required.

Inter-connected transactions Where a transaction is structured as a series of interconnected steps, each of these steps is considered as part of a single composite transaction. If any one of these steps meets the thresholds, pre-merger notification is mandatory before any part of the transaction can be implemented.

The Competition Commission of India (Procedure in Regard to the Transaction of Business Relating to Combinations) Regulations, 2011 further provide that certain transactions are unlikely to have an appreciable adverse effect on competition and as such are not ordinarily notifiable (listed in the section on notification process below).

Do thresholds apply to determine when a transaction is caught by the legislation?

The commission has jurisdiction to review and investigate a transaction if it meets the prescribed thresholds as provided below.

Jurisdictional thresholds Transactions are caught by the merger control legislation if the enterprises involved in the transaction meet the thresholds set out below.