On 4 March 2011, the Indian Government brought into force the provisions of the Competition Act 2002 (the 'Act') relating to the regulation of mergers. The notification followed the release of new draft merger regulations by the Competition Commission of India ('CCI'). India had enacted its competition law in 2002 but, in order to address industry concerns, had suspended the operation of the merger provisions in the Act.
However, from 1 June 2011, mergers and acquisitions which meet the turnover thresholds will have to be notified to the CCI within 30 days of the transaction being approved by the companies. A merger must be notified if any of the thresholds below are met.
- Combined assets of the acquirer and target in India is at least Rs. 1,500 crores (€240 million) or combined worldwide assets are valued at least USD 750 million (€ 540 million) with at least Rs. 750 crores (€ 120 million) of Indian assets.
- The combined turnover of the entities in India is at least Rs. 4,500 crores (€ 720 million) or combined worldwide turnover is at least USD 2,250 million (€ 1.6 billion) including at least Rs. 2,250 crores (€ 360 million) of turnover in India.
- The value of assets in India belonging to corporate group which the merged entity or target would belong to is at least Rs. 6,000 crores (€ 960 million) or the value of the worldwide assets held by the group is at least USD 3 billion (€ 2.1 billion) with at least Rs. 750 crores (€ 120 million) of assets in India.
- The turnover in India of the group which the merged entity or target would belong to is at least Rs. 18,000 crores (€ 2,900 million) or the worldwide turnover of the group is at least USD 9 billion (€ 6.5 billion) with at least Rs. 2,250 crores (€360 million) of turnover in India.
The CCI will have a period of 210 days from the date of notification within which it must assess the merger and at the end of the assessment the CCI has the power to prohibit the merger or ask for remedies in order to clear the merger.
Initial comments appear to indicate that Indian industry is satisfied with the increased merger thresholds although some concerns remain over what would appear to be an unduly long 210 day period which the CCI has to review mergers.
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