On 4 March 2016, the Ministry of Corporate Affairs, Government
of India (MCA) has made significant amendments to the Indian merger
control thresholds, altering the jurisdictional scope of the
Competition Commission of India (CCI).
This newsflash examines the changes and their impact.
Small Target Exemption
On 4 March 2011, the MCA had notified the small target exemption
(also known as the de minimis exemption) exempting
transactions from merger control approval requirements if,
the value of assets of the target
enterprise in India was not more than INR 2.5 billion (USD 37.6
million/EUR 34 million approx.); or
the turnover of such enterprise in
India was not more than INR 7.5 billion (USD 112.8 million/EUR 102
This notification was valid for a period of 5 years and expired
on 3 March 2016.
On 4 March 2016, the MCA extended the small target exemption for
a further period of 5 years (i.e., until 3 March 2021);
and increased the financial thresholds so that
there is no requirement to seek CCI approval where the target
assets not more than INR 3.5 billion
(USD 52.53 million/EUR 47.74 million approx.) in India; or
turnover of not more than INR 10
billion (USD 150.07 million/EUR 136.62 million approx.) in
While this is definitely a welcome step, the small target
exemption continues to only apply to transactions structured as
acquisitions of shares, voting rights, control or assets and,
does not apply to transactions structured as mergers or
Increased Jurisdictional Thresholds
In another extremely significant move, the MCA has increased the
financial thresholds for determining the CCI's jurisdiction
under the Competition Act, 2002 (as amended) (Competition Act) by a
100%. Previously, on 4 March 2011, the MCA had
increased the thresholds mentioned in Section 5 of the Competition
Act by 50%.
This step is in line with the aim of the Central Government to
increase the ease of doing business in India. The revised
thresholds applicable from 4 March 2016 are listed in this document.
There is a divergent opinion among
practitioners as to whether the financial thresholds as
provided in the Competition Act have been increased or, whether it
is the financial thresholds applicable immediately prior to this
notification (i.e., the post- 2011 thresholds) that have been
increased. It is our definitive view that the
thresholds listed in this document are indeed the correct and
appropriate thresholds. The 4 March 2016 notification of the MCA
clearly uses the financial thresholds listed in the Competition Act
as the basis of the increased value.
Definition of "group"
The MCA has continued to exempt the "group" exercising
less than 50% of voting rights in another enterprise from the
provisions of Section 5 of the Act until 3 March 2021. The scope of
this last exemption of course, remains as unclear as it was since
it was first notified in 2011.
The content of this document do not necessarily reflect the
views/position of Khaitan & Co but remain solely those of the
author(s). For any further queries or follow up please contact
Khaitan & Co at firstname.lastname@example.org
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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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