Comparative Guides
Welcome to Mondaq Comparative Guides - your comparative global Q&A guide.
Our Comparative Guides provide an overview of some of the key points of law and practice and allow you to compare regulatory environments and laws across multiple jurisdictions.
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Results: 4 Answers
Merger Control
1.
Legal and enforcement framework
1.1
Which legislative and regulatory provisions govern merger control in your jurisdiction?
 
India
The substantive aspects of the Indian merger control regime are set out under the Competition Act, 2002 (specifically, Sections 5, 6, 20, 29 and 31). The procedural aspects are largely covered under the Competition Commission of India (Procedure in Regard to the Transaction of Business Relating to Combinations) Regulations, 2011 (the ‘Combination Regulations’).

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
1.2
Do any special regimes apply in specific sectors (eg, national security, essential public services)?
 
India
No special rules or regimes apply in specific sectors. However, the government of India issues notifications from time to time, to exempt transactions involving parties in the following sectors from the notification requirement:

  • public sector enterprises in the oil and gas sectors;
  • nationalised banks; and
  • regional rural banks.
For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
1.3
Which body is responsible for enforcing the merger control regime? What powers does it have?
 
India
Notifiable transactions are reviewed and regulated by the Competition Commission of India (CCI), a quasi-judicial body set up under the Competition Act, 2002 . The CCI has the following powers:

  • the power to approve transactions (Section 31(1));
  • the power to disapprove/block transactions (Section 31(2));
  • the power to impose modifications/conditions (ie, remedies) to a transaction (Section 31(1));
  • the power to impose penalties for failure to comply with its orders (Section 42);
  • the power to impose penalties for failure to comply with its directions (Section 43);
  • the power to impose penalties for failure to notify a transaction (Section 43A); and
  • the power to impose penalties for furnishing false or incomplete information on a transaction (Sections 44 and 45).
For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
2.
Definitions and scope of application
2.1
What types of transactions are subject to the merger control regime?
 
India
A direct or indirect acquisition of assets, control, shares or voting rights of an enterprise, or a merger or amalgamation of enterprises, which exceeds the financial thresholds prescribed under Section 5 of the Competition Act is defined as a ‘combination’ and must be notified to the Competition Commission of India (CCI) for its prior approval.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
2.2
How is ‘control’ defined in the applicable laws and regulations?
 
India
The term ‘control’ is defined under Explanation (a) to Section 5 of the Competition Act to include the control by one or more enterprises, either jointly or singly, of the affairs or the management of another enterprise or group. In its decisional practice, the CCI has held that the “ability to exercise decisive influence over the management or affairs” of a target enterprise constitutes ‘control’. The CCI has held that such decisive influence over an enterprise “implies control over the strategic commercial operations of the enterprise”. Having the ability to veto or cause a deadlock in respect of certain “strategic commercial operations” has been found sufficient to constitute negative control. Therefore, the CCI considers the ability to veto any or all of the following items as amounting to control:

  • business plans;
  • annual operating plan (including the annual budget plan);
  • commencement of a new line of activity;
  • discontinuation of an existing line of activity or business;
  • appointment of key managerial personnel and their compensation; and
  • alteration of charter documents.

The CCI, through amendments to the Combination Regulations, has clarified the scope of what constitutes a ‘financial investment’. This has de facto become the new threshold of control. The definition of what constitutes a ‘financial investment’ or qualifies a transaction as ‘solely for investment’ is set out in question 2.3

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
2.3
Is the acquisition of minority interests covered by the merger control regime, and if so, in what circumstances?
 
India
The acquisition of a minority shareholding which exceeds the financial thresholds must be notified to the CCI. However, Schedule I, Item 1 of the Combination Regulations exempts acquisitions of less than 25% of the shares or voting rights of an enterprise made solely as an investment or in the ordinary course of business, provided that the acquisition does not lead to a change in control. As mentioned above, the CCI has amended this Item 1 exemption to clarify that the term ‘solely as an investment’ means any acquisition of less than 10% of the total share or voting rights of a target, where the acquirer has:

  • the ability to exercise only such rights as are exercisable by ordinary shareholders;
  • no board representation and no right or intention to nominate a director of the target; and
  • no intention to participate in the affairs or management of the target.
For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
2.4
Are joint ventures covered by the merger control regime, and if so, in what circumstances?
 
India
There is no explicit guidance in the Competition Act or the Combination Regulations relating to joint ventures. A joint venture can be formed either by way of an acquisition (of assets, shares, voting rights or control) or by way of a merger or amalgamation, and will be treated as such under the Competition Act for the purposes of notification.

Further, a greenfield joint venture (ie, involving no transfer of assets to the joint venture from its parent entities) is not notifiable; whereas brownfield joint ventures may require notification, if the financial thresholds are met. The CCI has clarified that if one or more enterprises transfer their assets to a joint venture, the formation of the joint venture will be treated as a notifiable transaction, provided that the financial thresholds are met.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
2.5
Are foreign-to-foreign transactions covered by the merger control regime, and if so, in what circumstances?
 
India
Yes. Foreign-to-foreign transactions are regulated by the CCI, subject to the financial thresholds being met. The CCI, in Titan International/Titan Europe (C-2013/02/109), clarified that foreign-to-foreign transactions resulting in an indirect acquisition of shares of a company in India must be notified to the CCI.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
2.6
What are the jurisdictional thresholds that trigger the obligation to notify? How are these thresholds calculated?
 
India
If any one of the following financial thresholds (set out below) is met, the transaction must be notified to the CCI:

  • The acquirer and the target jointly have either:
    • assets of over INR 20 billion in India; or
    • turnover of over INR 60 billion in India.
  • The acquirer and the target jointly have globally (ie, in India or outside India, in aggregate):
    • assets of over $1 billion, including at least INR 10 billion in India; or
    • turnover of over $3 billion including at least INR 30 billion in India; or
  • The acquirer’s group and the target jointly have:
    • assets of over INR 80 billion in India; or
    • turnover of over INR 240 billion in India; or
  • The acquirer’s group and the target jointly have globally (ie, in India or outside India, in aggregate):
    • assets of over $4 billion, including at least INR 10 billion in India; or
    • turnover of over $12 billion, including at least INR 30 billion in India.
For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
2.7
Are any types of transactions exempt from the merger control regime?
 
India
Two exemptions are provided under the Indian rules, as follows.

Target exemption: A transaction is exempt from the notification requirement if the target has:

  • assets in India of not more than INR 3.5 billion; or
  • turnover in India of not more than INR 10 billion.

This exemption is available until 26 March 2022.

In case of acquisition of a division/asset/business of the seller, the Indian assets and turnover attributable to such division/asset/business alone will be taken into account for the purpose of the target exemption (and not the value of assets and turnover of the seller’s entire enterprise, as was previously the case). However, in the case of an acquisition of shares, voting rights or control, the assets and turnover of the entire target enterprise in India will be considered.

Exemptions under Schedule I: Schedule I of the Combination Regulations lists certain categories of combinations which need not normally be notified to the CCI, as they are not ordinarily likely to cause an appreciable adverse effect on competition in the relevant market in India. In practice, this is generally understood to mean that no notification is required for such transactions. These include the following:

  • an acquisition of less than 25% of the shares or voting rights of an enterprise made solely as an investment or in the ordinary course of business, not leading to a change in control. There is limited guidance on the meaning of ‘ordinary course of business’. As stated above, an amendment to the Combination Regulations in 2016 clarified that the term ‘solely as an investment’ means an acquisition of less than 10% of the total shares or voting rights of an enterprise, if the acquisition does not confer:
    • any special rights (other than those exercised by an ordinary shareholder);
    • a board seat (or the right or intention to appoint a board seat); or
    • the intention to participate in the affairs and management of the target.

Interestingly, the CCI has found that acquisitions that give rise to horizontal overlaps or vertical relationships between an acquirer and the target may raise competition concerns and cannot be regarded as ‘solely as an investment’ or ‘in the ordinary course of business’. Consequently, the application of this Item 1 exemption has been significantly diluted, as the number of notifiable transactions would increase. The CCI interprets the definition of ‘solely as an investment’ very strictly, which further limits the scope of the Item 1 exemption;

  • an acquisition of any additional shares or voting rights where the acquirer or its group already holds 25% or more (but less than 50%) of the shares or voting rights, as long as such acquisition does not result in the acquirer holding 50% or more of the shares or voting rights, and does not result in the acquisition of sole or joint control of the target (ie, as long as it does not result in a change in the quality of control);
  • an acquisition of shares or voting rights where the acquirer already has 50% or more of the shares or voting rights in the target (except where the transaction results in the transfer from joint control to sole control);
  • an acquisition of assets not directly related to the business activity of the acquirer or solely as an investment or in the ordinary course of business, not leading to control, except where the assets being acquired represent substantial business operations in a particular location or for a particular product or service of the target, irrespective of whether such assets are organised as a separate legal entity. The CCI, in Reliance Jio/Reliance Communications (C-2017/06/516), has held that the acquisition of telecommunications spectrum between competitors will be considered as a strategic acquisition and is not in the ordinary course of business or solely for investment purposes. Therefore, Reliance Jio’s acquisition of spectrum from competitor Reliance Communications could not avail of this exemption;
  • amended or renewed tender offers already filed with the CCI by the party making the offer;
  • an acquisition of stock in trade, raw materials, stores and spares or other similar current assets in the ordinary course of business;
  • an acquisition of shares or voting rights pursuant to a bonus issue, stock split, consolidation of face value of shares, buy-back of shares or subscription to rights issues of shares (except where the transaction results in the acquisition of control);
  • an acquisition of shares or voting rights by a securities underwriter or registered broker of a stock exchange in the ordinary course of business;
  • an intra-group acquisition of shares, voting rights or assets by one person or enterprise of another person or enterprise in the same group, except where the target is jointly controlled by enterprises that are not part of the same group;
  • an intra-group merger, where either one of the enterprises has more than 50% shares or voting rights of the other enterprise, or more than 50% shares or voting rights in each of the enterprises are held by enterprises within the same group. However, this exemption does not apply to intra-group mergers or amalgamations where there is a change from joint control to sole control; or
  • an acquisition of shares, control, voting rights or assets by a purchaser approved by the CCI in a divestment order.

The Combination Regulations have been worded in a manner such that the above are not absolute exemptions (ie, even where a transaction falls within the above categories, the CCI may direct parties to notify if it causes or is likely to cause an appreciable adverse effect in competition in any relevant market in India). In any event, the applicability of the above exemptions must be assessed on a case-by-case basis.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
3.
Notification
3.1
Is notification voluntary or mandatory? If mandatory, are there any exceptions where notification is not required?
 
India
A combination must be mandatorily notified to the Competition Commission of India (CCI), subject to the applicability of the target exemption and the Schedule I exemptions (see question 2.7).

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
3.2
Is there an opportunity or requirement to discuss a planned transaction with the authority, informally and in confidence, in advance of formal notification?
 
India
The Competition Act does not explicitly provide for an opportunity to discuss a transaction with the CCI prior to notification. However, in accordance with international best practices, an informal pre-filing consultation with officers of the CCI is possible. Such pre-filing consultations are intended to assist the parties in submitting a complete and accurate notification, which will expedite the merger clearance process. However, the views expressed by the CCI officers during such consultations are informal and are not binding on the CCI.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
3.3
Who is responsible for filing the notification?
 
India
In case of an acquisition, the acquirer is responsible for filing the notification. In case of a merger or amalgamation, the notification must be filed jointly by the merging or amalgamating parties; this is also usually the practice in the case of joint ventures.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
3.4
Are there any filing fees, and if so, what are they?
 
India
A transaction must be notified to the CCI in the prescribed form. The Combination Regulations provide for three types of forms:

  • Form I (short form);
  • Form II (long form); and
  • Form III (intimation form).

The filing fees are INR 1.5 million for Form I and INR 5 million for Form II. Form III, used to notify acquisitions by certain financial institutions, is a mere intimation and thus no filing fee is chargeable.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
3.5
What information must be provided in the notification? What supporting documents must be provided?
 
India
The notifying parties are required to provide information on their business activities worldwide and in India, along with an analysis of relevant market definitions and the impact of the transaction on competition in the relevant market(s) in India.

In the case of an acquisition, the binding agreement for acquisition must be submitted. In the case of a merger or amalgamation, the board resolutions of both parties approving the transaction must be submitted.

In terms of supporting documents, the parties are required to submit copies of their annual reports/financial statements and presentations prepared by or for the management or board. In addition, certain procedural documents - such as a letter authorising the legal representatives and the parties’ declaration of the accuracy of information and documentation submitted - must be filed. This is an indicative list of documents and may vary on a case-to-case basis.

The CCI, through its Notes to Form I, has clarified the quantum and scope of information and documents to be submitted in a Form I notification. Where a notification does not conform to the requirements of the Notes to Form I, the parties incur the risk of invalidation.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
3.6
Is there a deadline for filing the notification?
 
India
There is no deadline to notify the CCI of a transaction. However, parties are prevented from closing a transaction (both globally and in India) without CCI approval.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
3.7
Can a transaction be notified prior to signing a definitive agreement?
 
India
No. A transaction cannot be notified prior to signing of definitive agreements or passing of the board resolutions approving the transaction.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
3.8
Are the parties required to delay closing of the transaction until clearance is granted?
 
India
The Competition Act imposes a standstill obligation such that a transaction cannot be closed until either CCI approval has been received or a period of 210 calendar days has passed since filing of the notification. The CCI, through its decisional practice, has clarified that the standstill obligation applies to both local and global closing. In Baxter/Baxalta (C-2015/07/297), the CCI held that a global transaction cannot be closed without its approval. In this case, notwithstanding the existence of a local separation agreement, the CCI clarified that where a global transaction meets the financial thresholds under Section 5 of the Competition Act, the parties must notify the global transaction to the CCI (and not merely the India separation/India transaction), and cannot close the global transaction without its approval.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
3.9
Will the notification be publicly announced by the authority? If so, how will commercially sensitive information be protected?
 
India
Yes. Upon filing of a notification, the CCI publishes a short (less than 500 words) non-confidential summary of the transaction on its website. This summary is submitted by the parties along with the notification.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
4.
Review process
4.1
What is the review process and what is the timetable for that process?
 
India
The Competition Commission of India (CCI) has 30 working days from the date of notification to form its prima facie opinion on whether the transaction is likely to cause an appreciable adverse effect on competition in the relevant market in India (ie, Phase I). This does not include the time taken by the parties to respond to the CCI’s request for information or to provide additional information as directed by the CCI. The CCI is empowered to stop the clock for an additional 15 working days during Phase I to seek comments from third parties. During this phase, the parties can propose modifications to a transaction to address any potential competition concerns. Where the parties propose modifications, an additional 15 working days are available to the CCI to form its prima facie opinion.

If the CCI forms a prima facie opinion that the transaction is likely to cause an appreciable adverse effect on competition, the CCI will issue a notice under Section 29(1) of the Competition Act directing the parties to show cause as to why a detailed investigation (ie, Phase II) should not be conducted. Under the Competition Act, the parties must respond to such notice within 30 calendar days. If the response submitted by the parties is not found to be satisfactory, the CCI will initiate a detailed Phase II investigation.

If the CCI does not pass a final order within 210 calendar days of the date of notification, the transaction is deemed to be approved. However, there is some ambiguity regarding the manner of calculating this 210-calendar-day period - particularly as regards whether ‘clock-stops’ during the review process are excluded. Through amendments to the Combination Regulations in 2018, the CCI has clarified that the period of 210 calendar days is extendable based on the number of times a request for information is issued or additional information is sought by the CCI and the time taken by parties to respond to such requests (ie, clock-stops are excluded in calculating this period of 210 calendar days).

In practice, the CCI has cleared almost all transactions in Phase I. Further, there has been no instance of a transaction being blocked by the CCI to date; however, in several cases the CCI has granted clearance subject to conditions (structural, behavioural or both), including in Sun/Ranbaxy, Holcim/Lafarge, PVR/DUL, Abbott/St Jude, ChemChina/Syngenta, Dow/DuPont, FMC/DuPont, Agrium/Potash Corp, Bayer/Monsanto, Linde/Praxair and Schneider/L&T.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
4.2
Are there any formal or informal ways of accelerating the timetable for review? Can the authority suspend the timetable for review?
 
India
The Competition Act does not provide for any formal or informal mechanisms to expedite the review process. However, the parties can offer modifications (behavioural and/or structural) in Phase I or Phase II to address potential competition concerns, in order to expedite the clearance process. The review clock stops when the CCI issues a request for information or requires additional information from the parties; this period is excluded from the 210-calendar-day period.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
4.3
Is there a simplified review process? If so, in what circumstances will it apply?
 
India
Neither the Competition Act nor the Combination Regulations provide for a simplified review process.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
4.4
To what extent will the authority cooperate with its counterparts in other jurisdictions during the review process?
 
India
The CCI is known to cooperate and consult with other competition authorities during its review process, in particular to align on remedies adopted. It is understood that the CCI has cooperated with other antitrust authorities in global transactions assessed in Phase II in India.

It is generally understood that the CCI will not, without seeking a waiver from the parties, share any commercially sensitive or confidential information with other competition authorities.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
4.5
What information-gathering powers does the authority have during the review process?
 
India
The CCI has diverse powers to gather information to facilitate its review process.

In Phase I, the CCI has the power to issue requests for information to the parties if the information provided is incomplete or if additional information is required. The CCI is also empowered to reach out to third parties (competitors, suppliers and customers) to obtain information to complete its assessment.

In Phase II, the CCI will direct the parties to publish details of the proposed transaction on the parties’ websites and the CCI’s website, and in national editions of four leading daily newspapers, including at least two business newspapers. The intention behind publication is to invite comments and objections from stakeholders and the public at large. Upon receiving comments or objections from the general public, the CCI has the power to invite specific persons or members of the public likely to be affected by the proposed transaction to submit their written objections.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
4.6
Is there an opportunity for third parties to participate in the review process?
 
India
Yes. The CCI has the power to reach out to third parties (competitors, suppliers and customers) to obtain information concerning a transaction. Other third parties may also, on their own motion, submit information about a transaction being reviewed by the CCI.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
4.7
In cross-border transactions, is a local carve-out possible to avoid delaying closing while the review is ongoing?
 
India
In Baxter/Baxalta (C-2015/07/297), the CCI clarified that a local carve-out in order to expedite globe closing is not possible. Therefore, parties cannot close a cross-border transaction without CCI approval.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
4.8
What substantive test will the authority apply in reviewing the transaction? Does this test vary depending on sector?
 
India
The CCI is required to consider all of the following factors, listed in Section 20(4) of the Competition Act, to assess whether a transaction is likely to cause an appreciable adverse effect on competition in the relevant market in India:

  • actual and potential level of competition through imports in the market;
  • extent of barriers to entry into the market;
  • level of combination in the market;
  • degree of countervailing power in the market;
  • likelihood that the combination will result in the parties to the combination being able to significantly and sustainably increase prices or profit margins;
  • extent of effective competition likely to sustain in the market;
  • extent to which substitutes are available or arc likely to be available in the market;
  • market share, in the relevant market, of the persons or enterprise in a combination, both individually and combined;
  • likelihood that the combination will result in the removal of a vigorous and effective competitor or competitors in the market;
  • nature and extent of vertical integration in the market;
  • possibility of a failing business;
  • nature and extent of innovation;
  • relative advantage, by way of contribution to economic development, that any combination will or is likely to create; and
  • whether the benefits of the combination outweigh the adverse impact of the combination, if any.

The above factors are applicable to transactions across all sectors.

Under Regulation 34 of the Combination Regulations, the CCI is also empowered to consult any other agency or statutory authority in relation to a transaction under review.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
4.9
Does a different substantive test apply to joint ventures?
 
India
No. In general, joint ventures are treated as acquisitions (of shares, assets, control or voting rights, as the case may be). Therefore, there is no difference in the substantive test applied.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
4.10
What theories of harm will the authority consider when reviewing the transaction? Will the authority consider any non-competition related issues (eg, labour or social issues)?
 
India
The factors set out under Section 20(4) of the Competition Act (see question 4.8) form the basis of all theories of harm. Notably, Section 20(4)(m) and Section 20(4)(n) of the Competition Act set out public interest considerations that the CCI may take into account in its review of a transaction.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
5.
Remedies
5.1
Can the parties negotiate remedies to address any competition concerns identified? If so, what types of remedies may be accepted?
 
India
Yes. The parties can voluntarily propose remedies at any time before the Competition Commission of India (CCI) expresses its prima facie opinion about the transaction (ie, prior to initiating a Phase II review). The parties can also propose structural and/or behavioural remedies in their response to a show-cause notice issued by the CCI.

Once a Phase II investigation has commenced, the CCI - typically in discussion with the parties - will issue a proposal for modification setting out the scope, manner and conditions of its proposed remedies. Once the CCI has issued its proposal, the parties can suggest amendments by way of a counterproposal. If the counterproposal is accepted by the CCI, the transaction will be approved. However, if the CCI rejects the parties’ counterproposal, the parties are given 30 calendar days to accept the CCI’s initial proposal. If the parties fail to accept this proposal, the transaction is deemed to cause an appreciable adverse effect on competition and is considered void. However, to date, the CCI has not blocked any transaction on account of the parties’ failure to accept its proposal.

While the parties can propose behavioural and/or structural remedies, the CCI has thus far preferred structural remedies or a combination of both, while approving transactions in Phase II. Most recently, in Schneider/L&T (C-2018/05/573), the CCI cleared its first-ever Phase II transaction solely on the basis of behavioural remedies.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
5.2
What are the procedural steps for negotiating and submitting remedies? Can remedies be proposed at any time throughout the review process?
 
India
Please see question 5.1.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
5.3
To what extent have remedies been imposed in foreign-to-foreign transactions?
 
India
The CCI has imposed structural and behavioural remedies, or a combination of both, in many foreign-to-foreign transactions, including Holcim/Lafarge, ChemChina/Syngenta, Dow/DuPont, FMC/DuPont, Agrium/Potash Corp, Bayer/Monsanto and Linde/Praxair. The CCI does not have a bright-line formula to determine the extent of remedies that are acceptable. The CCI has imposed structural remedies ranging from the divestment of a few assets of one party (Dow/Dupont) or both parties (Linde/Praxair) and the divestment of structural links (Agrium/Potash Corp) to a clean sweep of the Indian entity (Holcim/Lafarge).

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
6.
Appeal
6.1
Can the parties appeal the authority’s decision? If so, which decisions of the authority can be appealed (eg, all decisions or just the final decision) and what sort of appeal will the reviewing court or tribunal conduct (eg, will it be limited to errors of law or will it conduct a full review of all facts and evidence)?
 
India
Yes. The parties to a transaction can appeal orders or directions passed by the Competition Commission of India (CCI). The appellate authority is the National Company Law Appellate Tribunal (NCLAT).

The parties can appeal:

  • the CCI’s proposal for modification, setting out remedies;
  • the CCI’s decision to reject the parties’ counterproposal of remedies;
  • the CCI’s final decision blocking a transaction; and
  • CCI orders imposing penalties for gun jumping or failure to notify a transaction.

All orders passed by NCLAT can be appealed to the Supreme Court.

However, directions or communications issued by the CCI pertaining to its procedural review of a transaction - such as a notice under Section 29(1) of the Competition Act initiating a Phase II investigation, a direction to publish details of a transaction or inviting comments from the public on a transaction - cannot be appealed.

An appeal to NCLAT can involve questions of law and questions of fact, whereas an appeal to the Supreme Court is limited to questions of law.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
6.2
Can third parties appeal the authority’s decision, and if so, in what circumstances?
 
India
Yes. Under the Competition Act, any person aggrieved by a decision of the CCI can appeal to NCLAT. In Jitender Bhargava v CCI (Appeal 44/2013), the Competition Appellate Tribunal (COMPAT, the erstwhile competition appellate authority, which has since been replaced by NCLAT) clarified that an appellant must have locus in relation to the proposed transaction in order to challenge the CCI’s approval order. The appellant, a former executive director of Air India (the Indian state airway), had challenged the decision approving the transaction between Etihad and Jet Airways. COMPAT held that the appellant had no locus to challenge the decision, as he was a former airline employee (not currently associated with Air India) and therefore could not be ‘aggrieved’ by the decision.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
7.
Penalties and sanctions
7.1
If notification is mandatory, what sanctions may be imposed for failure to notify? In practice, does the relevant authority frequently impose sanctions for failure to notify?
 
India
Under Section 43(A) of the Competition Act, failure to notify a transaction or parts thereof may incur a fine of up to 1% of the worldwide turnover or asset value of the transaction, whichever is higher. The fine is imposed on the party responsible for filing. However, in practice, the Competition Commission of India (CCI) has generally imposed penalties ranging from INR 5 million to INR 10 million.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
7.2
If there is a suspensory obligation, what sanctions may be imposed if the transaction closes while the review is ongoing?
 
India
There is a suspensory obligation and any violation of the same amounts to gun jumping. Though there is no specific provision relating to gun jumping under the Competition Act or the Combination Regulations, in practice, the CCI treats gun jumping as failure to notify a transaction or part thereof, or as a delay in notification under Section 43(A) of the Competition Act. The penalty under Section 43(A) may extend to 1% of the worldwide turnover or assets of the transaction, but the CCI typically imposes penalties ranging from INR 5 million to INR 10 million.

The CCI has found that pre-payment of consideration, irrespective of the nature of the payment (eg, by escrow, refundable) amounts to part-consummation of a transaction. The CCI has observed that such pre-payment may lead to a reduction of independence or competition between the parties prior to the CCI’s approval.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
7.3
How is compliance with conditions of approval and sanctions monitored? What sanctions may be imposed for failure to comply?
 
India
Where the CCI grants conditional approval (ie, imposes behavioural or structural remedies) to a transaction, it can appoint an independent monitoring agency to oversee the parties’ compliance with the terms and conditions of the approval order. Failure to comply with the CCI’s order can result in the imposition of penalties under Section 43 of the Competition Act. The penalties under Section 43 of the Competition Act can extend to INR 0.1 million for each day of non-compliance up to a maximum of INR 10 million.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
8.
Trends and predictions
8.1
How would you describe the current merger control landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?
 
India
The merger control regime in India is relatively nascent compared to those of other mature jurisdictions, as it came into effect on 1 June 2011. In the past eight years, the Competition Commission of India (CCI) has had to deal with complex merger control matters, which has added to its steep learning curve. The CCI has expedited the review of transactions concerning bankruptcy and insolvency proceedings, so that the strict timelines envisaged under India’s insolvency laws are complied with.

In terms of recent trends, the CCI, through case law and amendments to the Combination Regulations, has set out a test for ‘strategic acquisitions’ or ‘acquisitions not solely for investment’ which has lowered the threshold for ‘control’ to ‘material influence’. This dilution of its earlier definition of ‘control’ could trigger a requirement to notify transactions which confer no competitively relevant influence.

Further, between 2014 and 2016, the CCI initiated a number of suo motu inquiries into transactions which were not notified, resulting in the imposition of fines. The CCI has recently recommenced this practice of inquiring into such transactions and this is likely to be the trend moving forward.

The government of India has set up a Competition Law Review Committee to review and propose amendments to the Competition Act, rules and regulations. It is expected that the government will shortly amend the Competition Act based on the committee’s suggested reforms.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates
9.
Tips and traps
9.1
What are your top tips for smooth merger clearance and what potential sticking points would you highlight?
 
India
‘Less is more’ approach may not work: The Competition Commission of India (CCI), through its Notes to Form I, has clarified the extent of information to be submitted as part of a Form I notification. Therefore, it is advisable to submit a complete notification with all relevant information, to limit the number of follow-on ‘clock stops’. This will reduce the risk of invalidation of the notification.

Pre-filing consultation on notifications: In complex Form I or Form II notifications, it is useful to engage with the officers of the CCI ahead of filing. The parties should consider submitting a draft or near-complete notification, which will give the case team additional time to obtain clarifications. This is likely to expedite the review process. The guidance provided by the officers of the CCI is informal; however, in practice, discussions and submissions during such consultations are kept confidential by the CCI.

For more information about this answer please contact: P. Ram Kumar from Talwar Thakore & Associates