The Deal Is Signed, But Can It Close? Managing Gun-Jumping Risk In Indian M&A

For most transactions, signing is the moment of celebration. For a deal that requires the approval of the Competition Commission of India ("CCI"), it is the start of a waiting period in which the parties are legally bound to each other but cannot yet act as one. Every step taken between signing and approval, whether a board appointment, a joint customer meeting or a request to see the target's pricing, carries the risk that the CCI will treat the deal as having been implemented early.

The short answer to the question in the title is that a notifiable deal can close only after the CCI has approved it or the statutory waiting period has expired, and that the risk of "gun-jumping" lies less in formally completing the deal early than in the many smaller steps that can amount to partial implementation. These include giving the buyer control over the target before closing, integrating the two businesses, sharing competitively sensitive information and imposing restrictions on the target that go beyond protecting its value. Each of these risks can be managed through careful drafting and disciplined conduct during the interim period.

This article explains India's suspensory merger control regime, reviews how the Supreme Court and the CCI have enforced it, identifies the less obvious sources of gun-jumping risk, and sets out how transaction documents, clean-team protocols, interim covenants and closing conditions can be used to manage them. It is written for dealmakers, in-house counsel and advisers working on transactions in India.

India's Suspensory Regime in Brief

India's merger control regime is mandatory and suspensory. A combination that crosses the thresholds in Section 5 of the Competition Act, 2002 must be notified to the CCI, and under Section 6 it cannot come into effect, in whole or in part, until the CCI approves it or the prescribed period expires. Following the Competition (Amendment) Act, 2023 and the Combination Regulations, 2024, the key features are:

1. The CCI must form a prima facie opinion within 30 calendar days of a complete notice, and the overall period for a decision is 150 days, subject to clock-stops, after which the combination is deemed approved.
2. Deal value threshold. Since September 2024, a transaction valued at more than ₹2,000 crore must be notified where the target has substantial business operations in India, even if the asset and turnover thresholds are not met, and the de minimis target exemption does not apply to it.
3. Under Section 43A, failure to notify can attract a penalty of up to one per cent of the total turnover or assets, or of the value of the transaction, whichever is higher.
4. Open market purchases. Section 6A allows acquisitions on a stock exchange to be completed before approval, provided the notice is filed within 30 days of the first acquisition and the acquirer does not exercise ownership or beneficial rights, other than economic benefits, until approval.

In practice, review is often quicker than the statutory maximum. Data reported by S&R Associates for the period to December 2025 show average review times of about 49 days for a Form I notice and about 82 days for a Form II notice. Even so, the parties must plan for a period of uncertainty between signing and closing.

What the Courts Have Made Clear

The Supreme Court's 2018 decisions in Competition Commission of India v. Thomas Cook (India) Ltd. and SCM Soilfert Ltd. v. Competition Commission of India remain the foundation of Indian gun-jumping law.

In Thomas Cook, the acquirers bought shares on the market shortly before filing a notice for a composite scheme of demerger and amalgamation. The Court upheld a penalty of ₹1 crore, holding that the market purchases were interconnected with the rest of the transaction and could not be treated as independent acquisitions that escaped notification. In SCM Soilfert, the Court upheld a penalty of ₹2 crore and held that an acquisition was consummated even though the shares were held in escrow and the acquirer had not exercised the voting rights attached to them. In both cases, the Court held that a penalty under Section 43A is civil in nature and does not require proof of bad faith.

More recent CCI orders show that enforcement continues, although penalties have generally been modest. They include penalties for failing to notify interconnected transactions, for moving from joint to sole control without notification, and for wrongly relying on exemptions, with the CCI rejecting arguments that commercial urgency or the needs of a distressed target justified early completion.

The Supreme Court's judgment of 27 May 2026 setting aside the CCI's ₹202 crore penalty on Amazon in the Future Coupons matter should not be misread. The Court held that the CCI and the National Company Law Appellate Tribunal had exceeded their powers by effectively reopening an approved transaction after the limitation period, and that findings of misstatement required specific reasons. It did not relax the obligation to notify, or the prohibition on implementing a combination before approval.

The Less Obvious Sources of Gun-Jumping Risk

Few parties deliberately complete a notifiable deal before approval. The risk usually arises from steps which seem routine but which, taken together, give the buyer influence over the target before it is entitled to it.

Premature transfer of control. Appointing the buyer's nominees to the target's board, giving the buyer veto or consent rights over the target's ordinary business decisions, or allowing it to direct management before approval may amount to partial implementation. Payment of the consideration, or a substantial part of it, before approval can also be treated as partial consummation. The SCM Soilfert decision shows that voluntarily refraining from exercising rights does not necessarily avoid the problem where the acquisition itself has been completed.

Integration of business operations. Planning for integration is legitimate and necessary. Implementing it is not. Joint sales or marketing, combined customer communications, the transfer of employees, the merger of IT systems, the alignment of prices or the coordination of supply arrangements before approval can all suggest that the parties are already operating as a single business.

Exchange of competitively sensitive information. Due diligence requires information to flow from target to buyer, but where the parties are competitors, sharing current pricing, customer-specific terms, margins, capacity plans or strategy can amount to gun-jumping and may also raise separate concerns under the prohibition on anti-competitive agreements. The risk is greatest if the deal does not proceed, as the buyer will then hold sensitive information about a competitor.

Restrictions imposed on the target. Buyers naturally want to protect the value of what they are buying, and interim covenants preventing the target from selling major assets or taking on unusual debt are generally acceptable. However, covenants that require the buyer's consent for ordinary decisions, such as pricing, individual customer contracts, routine hiring or day-to-day supplier negotiations, may give the buyer control over the target's competitive conduct before approval. The European Commission's 2018 fine of EUR 124.5 million on Altice, later reduced on appeal, for exercising such influence over PT Portugal before clearance is a frequently cited illustration of how far regulators will go in this area.

Managing the Risk Through the Transaction Documents

Most gun-jumping risk can be controlled through the way the transaction is documented and run.

Interim covenants deserve particular care, because the commercial instinct to protect value often produces clauses that go further than the law allows. A practical approach is to divide consent matters into those that protect the value of the business, which may be included, and those that would allow the buyer to direct how the target competes, which should be left to the target's management until approval.

A Practical Checklist for the Interim Period

1. Test notifiability early. Consider the asset and turnover thresholds, the deal value threshold and any interconnected transactions before signing, not after.
2. Draft interim covenants for competition law, not only for value. Review consent rights against the question of whether they give the buyer influence over ordinary commercial decisions.
3. Set up a clean team before the data room opens. Classify information in advance and control who can see what.
4. Brief the business teams. Commercial staff on both sides should understand what they may and may not do before approval, including in communications with customers and employees.
5. Keep a record of interim conduct. Documented decisions and approvals will help demonstrate compliance if the CCI later enquires.
6. Do not pay early. Structure the consideration so that no substantial payment is made before approval.

Conclusion

So, the deal is signed, but can it close? Only once the CCI has approved it or the waiting period has expired, and until then the parties must continue to act as independent businesses. The greater risk is rarely a deliberate early closing. It lies instead in board appointments, consent rights, information flows and integration steps that, taken together, give the buyer control before it is entitled to it. Thus, parties who build competition law into their interim covenants, clean-team arrangements and closing mechanics from the outset will be able to plan for the future of the combined business without implementing it prematurely.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.