It has finally been announced that the combination regulations
under the Competition Act, 2002 shall come into force on June 1,
2011. It has also been indicated that the latest version of the
regulations governing combinations, which contain detailed
provisions relating to various aspects of mergers and acquisitions,
will be released on May 1, 2011. Following this announcement there
has been a persistent request from the industry sources and the
legal fraternity alike, calling for deferment of the June 1, 2011
as the date on which combination regulations come into force. This
is to present the stakeholders with sufficient time to digest the
implications of the new regulations that are to be released and get
geared to effectively comply with the requirements of the new
Though the Competition Act was enacted in 2003, it is only in
2011 that the provisions pertaining to regulation of combinations
are being made effective. Mergers, acquisitions, private equity
investments and other like transactions which cross the thresholds
of assets and turnover prescribed under the Act will require prior
approval of the Competition Commission of India. There are a number
of factors that led to the delay in implementation of these
provisions and there are some concerns emanating out of certain
ambiguities which still persist. In order to simplify the procedure
and take on board the views of the industry, the Commission had
invited comments and suggestions from various stakeholders.
Further, to facilitate dialogue and discussions, the Commission is
holding consultative meetings in major cities with various
stakeholders who include the apex industry bodies and leading law
firms dealing with competition law related matters.
So what are the concerns and apprehensions that have remained a
constant source of anxiety among the various stakeholders? One of
the major grievances of all interested parties has always been the
outer limit of, as long as 210 days that the Commission may take to
finally approve a combination. Though the Commission has expressed
that it will endeavor for an expedited disposal in most cases, the
statutory timeframe cannot be ignored. Harmonization of the time
taken by the Commission for granting an approval and the statutory
timeframe for compliances, for instance under the SEBI takeover
code in case of acquisition of shares of a public listed company,
remains an area to be addressed.
The possibility of multiple regulatory compliances in areas
where there exist statutory regulators, like the RBI which regulate
mergers of banks and the IRDA which oversees mergers of insurance
companies is a source of some discontentment. Serious concerns have
been raised regarding the need to approach the Commission for even
routine business activities like buying of stock-in-trade,
acquisition of shares/voting rights in small numbers or issue of
Another view expressed, particularly among lawyers, is the need
to ensure that notices are required to be filed with the Commission
only for transactions with a local nexus. The Act and the draft
regulations currently put up on the website of the Commission are
silent on this aspect. There have also been suggestions to include
transaction thresholds ie only transactions exceeding a prescribed
threshold requiring prior approval of the Commission, thus
obviating the need to approach the Commission for any and every
transaction where the assets and turnover test prescribed under the
Act is met.
Maintaining confidentiality of information filed is another
major concern of the stakeholders. With the sort of corporate
rivalry that India has witnessed in the recent past, the provisions
of the Act may be misused by competitors to file frivolous
complaints to hamper the growth of competitors by creating
impediments in the successful consummation of transactions.
It can only be hoped that some of these areas of concerns will
be addressed and anxieties put to rest with the release of the
regulations governing combinations on May 1. Whether the effective
date of June 1 will be deferred to enable corporates to gear up,
mobilize and put in order effective systems internally is left to
be seen. The objects of implementing the current anti-trust regime
are indeed laudable but the lack of clarity may lead to uncertain
results, rendering the law which is in its nascent stage
susceptible to public interest litigation. The fact that the
Commission has time and again expressed that promotion of
competition, keeping in mind the growth of Indian industry is its
paramount object is indeed reassuring.
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In the wake of liberalization and privatization that was triggered in India in early nineties, a realization gathered momentum that the existing Monopolistic and Restrictive Trade Practices Act, 1969 was not equipped adequately enough to tackle the competition aspect of the Indian economy.
The Legal Metrology Act, 2009 was passed by the Indian Parliament in order to repeal and replace The Standards of Weights and Measures Act, 1976 and the Standards of Weights and Measures (Enforcement) Act, 1985.
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