The Competition Commission of India ("CCI") recently received its first combination for the acquisition of the Essel Mutual Fund, under sub-section (2) of Section 6 of the Competition Act, 2002 ("the Act") Act read with regulations 5 and 5A of the Competition Commission of India (Procedure in regard to the transaction of Business relating to Combinations) Regulation, 2011, ("Regulations"). Regulation 5A is a new regulation that has been inserted in the Regulations by enacting the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Amendment Regulations, 2019 ("Amendment") with effect from the 15th of August, 2019. Regulation 5A provides for a "green channel" for obtaining an approval from the CCI ("Green Channel Route") in relation to specified transactions which may constitute a combination.

Prior to the Amendment, the stand in relation to any sanction under the Act was that prior to the execution of any combination, permission is to be sought from the CCI stating that the proposed combination does not cause an adverse impact on competition and post which the parties may execute the proposed combination. In terms of a Press Release dated 19th August, 2019 the CCI has reiterated that the Green Channel Route is predominantly aimed to sustain and promote a speedy, transparent and accountable review of combination cases, strike a balance between facilitation and enforcement functions, create a culture of compliance, and support economic growth.

With the advent of the Amendment, the CCI has eased regulatory red-tape by allowing the parties to a combination to execute the combination through the Green Channel Route where the parties are given a provisional approval to the combination, subject to the CCI analyzing the combination. The Amendment has listed out various criteria in relation to the combinations that would be eligible to apply through the Green Channel Route in terms of Schedule III of the Amendment. The eligibility conditions mandate that the parties to a combination, being the acquirer and the target company and/or their respective group companies do not have any overlaps, horizontal, vertical or complementary, i.e:

a) do not produce/provide similar or identical or substitutable product(s) or service(s);

b) are not engaged in any activity relating to production, supply, distribution, storage, sale and service or trade in product(s) or provision of service(s) which are at different stage or level of production chain; and

c) are not engaged in any activity relating to production, supply, distribution, storage, sale and service or trade in product(s) or provision of service(s) which are complementary to each other.

Further the Amendment provides that the acquirer and the target company need to file a declaration in relation to the Green Channel Route inter alia declaring that the nature of the combination being entered into is within the scope of Schedule III and is not likely to cause an adverse effect on competition and that all statements made under the declaration are true and correct.

Upon filing such a declaration, the transaction is deemed to be approved by the CCI subject to the veracity of the statements in the declaration. In the event the information is found to be incorrect or the CCI finds that the transaction does not fall within Schedule III, the approval deemed given under Section 5A shall be void ab initio.

Additionally, in terms of the Amendment, the CCI gives the parties to the transaction an opportunity of being heard, prior to declaring the transaction void. In case the concerned party is aggrieved by the decision of the CCI, in terms of Section 53 B of the Act, the aggrieved party may file an appeal to an appellant tribunal.

The Amendment does not specify any time period within which the CCI will intimate whether the transaction is void. Also, in addition to the approval being void, the CCI could also at its discretion impose a fine of Rupees Fifty Lakh which may extent to Rupees One Crore in terms of the provisions of Section 44 and Section 45 of the Act which deal with the consequences of any misstatement and or misrepresentation of any material information in relation to the combination by any person. Additionally, in terms of Section 48 of the Act, a penalty may also be imposed on the individuals being the directors and/or promoters of the acquirer and/or the target company, in the event of any contravention of the provisions of the Act. Thus, while the Amendment definitely eases the procedural requirement of obtaining prior approval, applicants must be certain that their transaction falls within the scope of the Amendment.

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