Answer ... The parties may be fined if the proposed transaction is implemented without or prior to the approval of the Competition Commission of India (CCI). The CCI can impose a penalty of up to 1% of the combined assets or turnover of the parties, whichever is the higher. Up until 2021, the CCI imposed only nominal penalties of between INR 0.1 million and INR 50 million. Since 2016, the CCI has imposed penalties for failure to notify/gun jumping in more than 40 cases. Under the 2023 amendment act (see question 1.1), 1% of the ‘total value’ of the proposed transaction must additionally be considered in order to arrive at the highest possible penalty that can be imposed on the parties. This amendment is not in force as of the time of writing.

Notably, in December 2021, the CCI issued an unprecedented gun-jumping order in Amazon/Future Group (C-2019/09/688), which highlighted the CCI’s extensive powers to impose penalties. Through this order, the CCI suspended the approval that it had issued to Amazon for its acquisition of 49% of the share capital of a Future Group entity, Future Coupons Private Limited. The CCI asked Amazon to obtain fresh approval and imposed its highest-ever monetary penalty – INR 2 billion – for failure to notify the full details/rationale and all interconnected transactions/commercial arrangements in relation to Amazon’s intention to indirectly achieve a strategic alignment with Future Group’s retail entity, Future Retail Limited.

Answer ... Notifiable transactions cannot be consummated (fully or partially) before the CCI has issued its approval. Interconnected transactions must also remain in abeyance until the CCI has approved the transaction. The parties will be subject to proceedings and potential penalties under Section 43A of the Competition Act if the transaction is closed (fully or partially) prior to approval by the CCI.

The CCI can also impose penalties on the parties if the transaction is consummated (fully or partially) before the CCI’s approval has been received. The maximum penalty for failure to notify the CCI is 1% of the combined assets or turnover of the combining parties, whichever is higher.

Further, under the 2023 amendment act, 1% of the total value of the proposed transaction must also be considered in order to arrive at the highest possible penalty that can be imposed on the parties. This amendment is not in force as of the time of writing. (Please see questions 7.1 and 7.3 for the penalties and sanctions that can be imposed by the CCI on the parties.)

Answer ... Where the parties offer behavioural/structural remedies in relation to a proposed transaction, they will have to submit a compliance report to the CCI. The CCI, at its discretion, usually appoints an independent third party (eg, a professional monitoring trustee, accounting firm, management consultancy or any professional organisation) to monitor the parties’ compliance with the remedies. The parties to the transaction must pay the fees charged by such third parties for monitoring compliance.

If the CCI has proposed remedies in relation to a proposed transaction but the parties fail to accept such remedies within 30 working days (extendable to a total of 60 working days under some conditions), or within such timeframe as may be prescribed by the CCI, the CCI can direct that the proposed transaction not be given effect. To this end, the CCI can establish a scheme to ensure implementation of its order.

If the parties have agreed to comply with remedies but fail to do so within the stipulated timeframe or under the agreed conditions, the transaction will be deemed to have an appreciable adverse effect on competition in the market. The CCI may also impose penalties of up to INR 100,000 for each day of non-compliance with the terms and conditions of the remedies agreed by the parties. Such penalties may extend to a total of INR 100 million. Parties that fail to pay any penalties imposed by the CCI may also be liable to:

• imprisonment for up to three years; and
• an additional fine of up to INR 250 million.