Professional Documents
Culture Documents
THE COUNTRY
O VERVIEW
• Regulation combinations (an acquisition, merger or amalgamation) by
Competition
of Commission
the of India (“CCI“) is governed under Sections 5 & 6 of the
Competition Act, 2002 (“Act“)
• ‘control’ - includes controlling the affairs or management by (i) one or more enterprises,
either jointly or singly, over another enterprise or group or; (ii) one or more groups, either
jointly or singly, over another group or enterprise.
• ‘enterprise’ - a person or a department of the Government, who or which is, or has been,
engaged in any activity, relating to the production, storage, supply, distribution, acquisition
or control of articles or goods, or the provision of services, of any kind, or in investment, or in
the business of acquiring, holding, underwriting or dealing with shares, debentures or other
securities of any other body corporate, either directly or through one or more of its units or
divisions or subsidiaries, whether such unit or division or subsidiary is located at the same
place where the enterprise is located or at a different place or at different places, but does not
include any activity of the Government relatable to the sovereign functions of the
Government.
• ‘group’ - means two or more enterprises which, directly or indirectly, are in a position to (i)
exercise twenty-six per cent. or more of the voting rights in the other enterprise or (ii) appoint
more than fifty per cent, of the members of the board of directors in the other enterprise or
(iii) control the management or affairs of the other enterprise;
NOTIFICATION EVENT
• Time Limit for filing of Form I or Form II (as may be applicable): Within 30 days of
such Notification Events.
• Time Limit for filing of Form III: to be filed in an acquisition by Public Financial
Institution, FII, Bank, VCF within 7 days of date of acquisition.
Where acquirer already has 50% holding of the target except when going from joint
to sole ownership.
Merger or amalgamation – one already has more than 50% or if more than 50% held
within same group except when going from joint to sole ownership.
LATEST A MENDMENTS & IMPLICATIONS
• Concept of “other document” introduced under Section 6 of the Act.
• Power of CCI to invalidate any notice not in conformity with the Combination
Regulations
Implication: CCI has accordingly issued ‘Introductory Notes to Forms’ and ‘Notes to
Form I’ aimed at providing detailed guidance.
• Summary of Combination
Implication: Summary of 500 words or less required to be submitted along with the notice
which shall be published by the CCI on its website.
LATEST A MENDMENTS & IMPLICATIONS
• New category for exemption under Regulation 4 of the Combination Regulations –
Acquisition of shares, control, voting rights or assets approved by the CCI pursuant to
and in accordance with its order under Section 31 of the Act.
Time limit available to CCI for forming its prima facie opinion has now been
qualified as 30 working days as opposed to the earlier position of 30 days. Further,
any additional time taken for requisitioning information will be excluded.
RESIDUAL ISSUES
• Joint ventures (“JV“) - Section 5 of does not explicitly address JVs. Clarity is required on a
JV, from a Greenfield as well as Brownfield perspective as to whether any difference
between the two. Section 5 mentions an enterprise, which is a going concern, therefore, a
new JV may not require notification.
• Definition of “Control“
While control must be ascertained on a case-by-case basis, the CCI (as per Orders made)
appears to be taking an expansive view in that the ability to veto any strategic
commercial operation is sufficient to confer control.
As a result, many pure financial investment and private equity transactions involving
acquisitions of entitlements to less than 25 per cent shareholdings in companies have
now become subject to review by the CCI.