The Competition Commission of India (CCI) is currently soliciting public feedback on the implementation of its overhauled merger approval framework, which received legislative approval earlier this year. Aimed at streamlining the approval process, the updated system expands the types of transactions requiring CCI review. The modifications are designed to enhance the business environment in India. Here, Mint explores the significance of the forthcoming ‘CCI (Combinations) Regulations 2023.’
What does CCI’s public consultation seek to achieve?
Prior to rolling out the updated merger rules, the CCI is engaging with stakeholders to gauge their views, given the significant impact these changes will have on regulatory compliance and the overall business atmosphere in India. Earlier legislative amendments to the Competition Act were aimed at facilitating easier business operations and closing a loophole that allowed high-value transactions to bypass CCI review, simply because they didn’t meet the traditional asset and turnover criteria. Under the revised framework, any transaction valued over ₹2,000 crore will be subject to CCI’s merger regulations, regardless of whether they meet the conventional thresholds. The purpose of this public consultation is to ensure a smooth implementation process for the newly enacted regime. Stakeholders have until 25 September to submit their perspectives.
What is the revised time frame of approving mergers?
The amended provisions propose to reduce the overall timeline for the assessment of combinations from 210 to 150 days. Also, as per the amended law, CCI has to frame a prima facie opinion of the transaction within 30 days of receiving a reference. The amended law also introduces changes in the process of proposing modifications to the transaction.
Why was a revamp of the CCI’s merger approval regime necessary?
Competition Act is a modern, sophisticated law. However, the changes in the economy since the Competition Act was passed in 2002, especially the growth of the digital economy warranted a re-look at the provisions.
What are the key points in the draft regulations proposed by CCI?
CCI has provided details of how it will regulate mergers and acquisitions based on deal value. The amended law says that mergers and acquisitions where the value of a transaction exceeds ₹2000 crore and the enterprises being acquired have substantial business operations in India need to be notified to CCI for its approval. The draft combination regulations bring more clarity on how substantial business operations’ would be examined.CCI has also sought public comments on operational aspects of the new combination approval regime including the form of notice for the proposed combination, exercise of rights in case of open offer and acquisitions on stock exchanges, procedures for filing a notice and scrutiny of the notice. Also, any party planning to execute an acquisition, merger or amalgamation can seek a pre-filing consultation with the CCI about whether the proposed transaction qualifies as a combination requiring CCI approval. CCI’s guidance, however, is not binding on the Commission. Experts describe the proposed regulations as progressive.