The Competition Commission of India (CCI) is planning a revamp of the disclosure requirements when entities seek approval for merger deals to make the process less burdensome, people aware of deliberations have told ET.
At present, disclosures are made under Form-II if the market share of the post-merger entity exceeds 15%. The form has about 30 queries that seek voluminous details about the deal and post-merger market and the business environment.
In the case of less significant deals, Form-I, or short form, is filed that seeks basic information of mergers and queries are lesser and generic.
The regulator is looking if this threshold of 15% market share can be raised, and the outdated queries such as the economics of the segment, data on research and development, and quantitative efficiencies of the company can be dropped or modified in line with international best practices.
Globally, competition laws focus on queries that are relevant for merging firms and are deal focussed.
“In combination, companies are reluctant to file Form-II as it’s complicated, confusing, and not so user-friendly. The exercise is quite cumbersome,” an official, privy to the plan, told ET.
“Keeping in mind the challenges, CCI’s team is working to make the regime simpler but much-focused on the merger information. So, that will give a clearer picture of the company’s focus and intent and fast-track the entire process,” the official added.
The disclosure under Form-II is mainly to ensure that the merger is not anti-competition, the official said.
Other than market share, Form-II has to be also filed if CCI is not satisfied with the ‘combination’ disclosure or suspects misrepresentation of facts when it’s reviewing the application.
In competition law parlance, mergers and acquisitions are generally referred to as combinations.
The move comes close on the heels of the CCI suspending the Amazon-Future deal for non-disclosure of information. Industry bodies have reached out to the competition watchdog to seek clarity on disclosures to ensure M&A transactions do not face such issues.
Another person familiar with the matter said Amazon had disclosed its transaction details in Form-I since it was neither a competitor of Future group nor capturing the market of the said segment. Amazon has now been asked to make disclosures in Form-II.
“The regulator promotes ease of doing business and aims to make the service hassle-free. But at the same time, if complaints are being raised after years of deals being approved, it has to be re-examined,” another person said.
Experts, too, believe that Form-II needs a review.
“Limiting the scope of information in Form-II would help the CCI focus its resources on the potential competitive concerns a transaction may raise, by avoiding the need to receive and review voluminous information that may be, at most, peripheral to any competitive issue that a transaction may raise,” said Vaibhav Choukse, partner-competition law at JSA
Earlier, the CCI had reworked Form-I but Form-II was left unchanged.
An international study showed that since the inception of the merger control regime in India, the CCI has reviewed approximately 850 transactions. It has imposed remedies in only 22 cases (3% of all cases) while only eight cases (1% of all cases) have moved into a detailed Phase II investigation.
The data also showed that only a small percentage of transactions merit serious investigation.
TWEAKING DISCLOSURES
- CCI looking to modify disclosures on market share
- Cos need to fill CCI’s Form II, if market share exceeds 15%
- Disclosures under Form II are voluminous and exhaustive
- Comprises about 30 queries, which are excessive and irrelevant
- Plans to make it deal-focussed; remove outdated information
- Weighing to increase the threshold of 15%
