Answer ... 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.
Answer ... 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.
Answer ... Neither the Competition Act nor the Combination Regulations provide for a simplified review process.
Answer ... 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.
Answer ... 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.
Answer ... 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.
Answer ... 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.
Answer ... 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.
Answer ... 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.
Answer ... 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.