Answer ... If the Competition Commission of India (CCI) has serious concerns about a proposed transaction, the parties can propose remedies as early as during the Phase I review period – that is, during the 30-working-day statutory period available to the CCI for forming its prima facie opinion (30 calendar days under the 2023 amendment act, whenever the amended timeline comes into force (see question 1.1)). Thus, the parties may enter into negotiations on possible remedies well before the expiry of the prima facie or overall deadline for approval of the transaction from the date of filing of the notification (ie, 210 days under the Competition Act and 150 days under the 2023 amendment act, whenever the amended timelines come into force). This is because where the CCI comes to a prima facie view that a proposed transaction will lead to an appreciable adverse effect on competition (AAEC) in the relevant market, it will likely consider a conditional approval, with certain remedies being accepted by the parties.

The CCI usually considers and accepts:

• structural remedies – for example, divestment of assets, company resources and equity shareholdings;
• behavioural remedies – for example:
• • the inclusion of non-exclusive licensing arrangements;
  • the inclusion of information control arrangements between the parties;
  • the appointment of independent directors to the board; and/or
  • the withdrawal of a party’s presence from a relevant market; and
• hybrid remedies.

Such remedies may be accepted with or without time limitations.

While the CCI has publicly stated in earlier Phase II cases that it prefers structural remedies to behavioural remedies, its approach has evolved over the years and the nature of the remedies acceptable to the CCI will ultimately depend on the specific facts of each case.

Answer ... Remedies at the stage of the show-cause notice: Upon review of the merger notification, the CCI may arrive at an opinion that there is likely to be an AAEC on competition in the relevant market(s). In such a scenario, a show-cause notice (SCN) is issued to the parties asking them to explain why a detailed Phase II investigation to assess the proposed transaction’s effects on competition in the relevant market(s) should not be conducted. The parties must address the CCI’s concerns in response to the SCN, which could include voluntarily offering behavioural or structural remedies/commitments. If the CCI is satisfied with the response (including any remedy proposal), it may approve the transaction. However, if the CCI’s concerns persist, it will commence a Phase II investigation (please see question 1.3 for a detailed overview of the Phase II investigation).

Remedies during the Phase II investigation: Upon the commencement of the Phase II investigation, the parties may offer remedies to assuage the CCI’s concerns. If remedies were already offered in response to the SCN, parties should offer improved remedies with additional behavioural/structural commitments.

Where the parties do not offer remedies on their own, the CCI may propose appropriate remedies on its own – in which case the parties will be required to accept the remedies within 30 working days or propose modifications to the CCI’s proposal. If the CCI accepts the modifications, the combination will be approved subject to the parties giving effect to the agreed remedies.

However, if the CCI does not accept the modifications suggested by the parties, it will return the proposed remedies to the parties, which will be required to accept the CCI’s proposal within an additional 30 working days – failing which the proposed transaction will be deemed to cause an AAEC in the relevant market. In such case, the CCI may pass an order directing that the proposed transaction not take effect. The CCI may also impose penalties on the parties if they do not comply with its order (please see question 7.3 for the penalties and sanctions that the CCI can impose for contravention of its orders).

The parties can therefore offer remedies to assuage the CCI’s concerns:

• during the prima facie stage;
• at the time of responding to a SCN; or
• upon commencement of the Phase II investigation.

The remedies that are ultimately accepted by the CCI will depend on the specific facts of each case.

Answer ... The CCI has imposed (and parties have accepted) both behavioural and structural remedies in at least 10 foreign-to-foreign transactions (where the transaction had an Indian nexus or the parties were present in India, thus meeting the jurisdictional thresholds) that were notified to it. The remedies included:

• the divestment of assets, business resources (eg, IP rights, customer lists, inventory) and equity shareholdings;
• the execution of non-exclusive licensing arrangements;
• the sharing of data;
• the establishment of information control arrangements between the parties;
• the appointment of independent directors to the board;
• the withdrawal of a party’s presence from a relevant market; and
• white labelling.