CCI Position Recently:

 The law ministry has given its nod to the Competition Commission of India

(CCI) to take decisions on pending combination applications without full
quorum by invoking the doctrine of necessity.

 CCI last met on 14th February 2023.

 Government invites applications for CCI Chairperson post till March 9, 2023.
 Industry seeks Ordinance to get around CCI Quorum hurdle.

The Competition Commission of India (CCI) has not referred any matter for investigation to
its director general since late October, people with direct knowledge of the matter told ET,
pointing to the likely lack of quorum at the competition watchdog.
Also, in cases where the DG has submitted investigation reports to the commission, it is yet
to take cognizance of the reports due to lack of quorum.1
The Competition Commission of India (CCI) is without a full-time Chairperson since the
retirement of Ashok Kumar Gupta from the post on October 25, 2022. Government Extends
Tenure of Sangeeta Verma as CCI's Acting Chairperson.

Section 22:
All questions which come up before any meeting of the Commission shall be decided by a
majority of the Members present and voting, and in the event of an equality of votes, the
Chairperson or in his absence, the Member presiding, shall have a second or casting vote:
Provided that the quorum for such meeting shall be three Members.]".
(2) The Benches shall be constituted by the Chairperson and each Bench shall consist of not
less than two Members.

At least 20 M&A deals worth $ 1.3 billion had been stuck for the last four months as the
CCI did not have the quorum required to clear deals:
The Competition Commission in the absence of requisite quorum will soon invoke the
“doctrine of necessity” principle to examine merger and acquisition deals, according to
sources. Currently, the Competition Commission of India (CCI) has only two members and
the post of Chairperson is vacant since Ashok Kumar Gupta retired in October, 2022.2
Against this backdrop, Attorney General R. Venkataramani intends to allow the Commission
to decide on mergers and acquisitions in its current incomplete composition, until a full
quorum is formed. This will be done by invoking the “doctrine of necessity” clause, which
1
https://economictimes.indiatimes.com/news/economy/policy/competition-watchdog-cci-in-a-bind-over-lack-
of-quorum/articleshow/97990597.cms?from=mdr
2
https://bricscompetition.org/news/competition-commission-of-india-to-start-clearing-ma-deals
gives the government overarching powers to take measures that may not be part of the law
concerned, but it could still use at a particular time to deal with an exigency or to restore
stability.

A Question of Quorum:3
Although the World Bank’s Ease of Doing Business ranking has been scrapped for
irregularities in the process, the government had reiterated it would maintain a relentless
focus on this dimension to activate the investment environment in India. At odds with this
stated intention is the recent move by the Competition Commission of India (CCI) to invoke
the “doctrine of necessity” to clear six deals involving mergers & acquisitions (M&A) and
investment proposals, though it lacked the requisite three-member quorum after Chairperson
Ashok Kumar Gupta retired on October 25, 2022. The Competition Act stipulates there
should be at least three members to approve deals but the CCI obtained the workaround for a
two-member quorum following a green signal from the law ministry to the corporate affairs
ministry, which is the CCI’s administrative ministry.

Law ministry allows CCI to clear pending mergers without full quorum:
The law ministry has given its nod to the Competition Commission of India (CCI) to take
decisions on pending combination applications without full quorum by invoking the doctrine
of necessity, a senior government official said. The doctrine of necessity enables legal
authorities to take certain actions at a particular moment, which would otherwise not be
regarded within the scope of the law in a general legal situation.4
At present, applications for 16 combinations or mergers, several of them involving global
companies, have been pending approval at the CCI as it lacks quorum. To approve
combinations, the CCI needs a quorum of three members. After the retirement of the
former CCI chairperson Ashok Gupta, there are only two members.
The law ministry’s suggestion comes in the backdrop of various industry bodies flagging the
issue to the government that the delay at CCI’s end had kept thousands of crores worth of
deals hanging.
Of the 16 deals that are pending, one is a major global deal that has received approvals in 11
jurisdictions and is only awaiting the CCI’s clearance. Ten deals involve a foreign enterprise.

CCI clears six deals after resolving quorum deadlock:

Competition Commission of India (CCI) on Thursday cleared six transactions, according to
separate official statements. The approvals show the regulator has found a solution to the
3
https://www.business-standard.com/article/opinion/a-question-of-quorum-123021200876_1.html
4
https://www.business-standard.com/article/companies/law-ministry-allows-cci-to-clear-pending-mergers-
without-full-quorum-123020201510_1.html
shortfall in its quorum requirement after seeking legal opinion from the law ministry. The
Commission at present has only two members including the acting Chairperson and the
government is in the process of finding a new Chairperson. Based on the legal opinion
received, CCI is now able to clear transactions with two members.5

Industry participants flag lack of quorum at CCI amid pending deal approvals:
With various mergers and acquisitions awaiting CCI approval, industry participants have
sought measures to address the issue of lack of quorum at the competition watchdog which
does not have a chairperson for more than two months now. Mergers and acquisitions beyond
a certain threshold require the approval of Competition Commission of India (CCI) under the
Competition Act, 2022. Section 5 and 6 of the Act relate to regulation of combinations in the
country.
For approval of combinations, the regulator needs to have a quorum of three members.
However, since the retirement of Chairperson Ashok Kumar Gupta on October 25, 2022,
there are only two members, resulting in lack of quorum at CCI.

Centre to modify Competition Amendment Bill based on House Panel Report:

The Central government is set to modify the Competition (amendment) Bill 2022 that is
pending before the Parliament based on recommendations made by the Parliamentary
Standing committee on Finance which gave its report in December.6

Recent Approvals with two members in Quorum:

 Saudi Aramco's acquisition of VGP Holdings gets CCI nod (22nd Feb 2023)

VGP Holdings LLC, a subsidiary of US motor oil and lubricants group Valvoline Inc, sells
Valvoline and other branded and private label engine and automotive preventive maintenance
products.

 CCI gives nod to deal involving VVDN Technologies (16th Feb 2023)

The proposed combination relates to acquisition of shareholding by the Kotak Special

Situations Fund (KSSF) and Kotak Pre-IPO Opportunities Fund (KPIOF) through a
combination of secondary share purchases of equity shares and subscription to compulsorily
convertible debentures of VVDN Technologies, according to CCI.

5
https://www.livemint.com/companies/news/cci-clears-six-deals-after-resolving-quorum-deadlock-
11675966621972.html
6
https://www.livemint.com/news/india/centre-to-modify-competition-amendment-bill-based-on-house-
panel-report-11674581532312.html
  CCI clears acquisition of certain assets of Jaiprakash Associates by Dalmia
Cement(Bharat) (16th Feb 2023)
Dalmia Cement (Bharat) Ltd is a wholly-owned subsidiary of Dalmia Bharat Ltd (DBL).
DBL engages in the business of manufacture and sale of cement, sugar and refractory
services. DBL is the ultimate parent entity of the Dalmia Bharat Group.

 CCI approves SALIC International's stake purchase in LT Foods

CCI has approved acquisition of certain equity share capital of LT Foods Ltd by SALIC
International Investment Corporation, according to an official release.Last year in November,
LT Foods said it has raised nearly Rs 390 crore by selling shares to Saudi Agricultural and
Livestock Investment Company (SALIC) through private placement.

 CCI gives nod to KKR purchasing stake in Hero Future Energies Global

The proposed combination relates to subscription of compulsorily convertible preference

shares of Hero Future Energies Global Ltd (HFE) by Ardor Holdings II Pte Ltd.

Policy decisions see a disconnect as regulators remain headless

"It is not good governance practice and sends the wrong signals to the corporate world. The
selection process should start three months before the incumbent retires. Bureaucracy needs
to push harder".