Further amendment of Combination Regulations

1. The Competition Commission of India has further amended the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 ("Combination Regulations").

2. The changes have been made to Schedule 1 of the Combination Regulations (being the transactions for which filings need not normally be made) and are highlighted as follows:

(a) Addition of Para 1(A) - No filing required in case of acquisitions of additional shares/ voting rights of an enterprise, not resulting in gross acquisition of more than 5% of the shares/voting rights in a financial year; where before or after such acquisition, the acquirer (along with its group) already holds 25% shares/voting rights of such enterprise, but does not hold 50% or more.

Provided that such acquisition does not result in the acquisition of sole or joint control of such target.

This amendment is along the line of the concept of 'creeping acquisition' under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations 1997.

The CCI has not given any guidance on the meaning of 'gross acquisition'.

(b) Intra-group acquisitions: Para 8 has been modified to exclude from the enterprises which are jointly controlled by enterprises that are not part of the same group.

Now where the target is jointly controlled by enterprises not belonging to the same group, the transaction will not be able to avail of the intra-group exemption.

(c) Intra-group mergers: Para 8A has been deleted, and has been addressed in Para 9 -

No notice is required to be filed in case of merger/amalgamation of two enterprises where (i) one of the enterprises holds more than 50% shares / voting rights of the other enterprise; and (ii) where more than 50% shares / voting rights in each of such enterprises are held by enterprise(s) within the same group.

Provided that the transaction does not result in the transfer from joint to sole control.

This amendment has been added to presumably lessen compliance requirements from the earlier requirement of filing in all mergers/amalgamations except where the two enterprises are wholly-owned within the same group.

(d) Para 5 and the extant Para 9 have been consolidated and the ambit expanded to include "other similar current assets in the ordinary course of business".

This article was first published on 11th April 2013

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