MERGERS & ACQUISITIONS REGIME IN INDIA, POST COMPETITION

COMMISSION OF INDIA COMBINATION REGULATIONS, 2011: A CRITICAL

STUDY

M. Phil Dissertation

Submitted in
Partial fulfillment of the requirement for the degree of

MASTER OF PHILOSOPHY IN LAW

By

Aparna Pandey
191734401006

Under the Guidance and Supervision of

Dr. KalpeshKumar. L. Gupta

Associate Professor,
Faculty of Law, Parul University

February, 2020

Parul Institute of Law, Parul University

P.O. Limda – 391 760, Ta.Waghodia,
Gujarat, INDIA.
 CERTIFICATE

This is to certify that the dissertation entitled Mergers & Acquisitions Regime in India, Post
Competition Commission of India Combination Regulations, 2011: A Critical Study is a report
of the original work done by me. The work has not been submitted for award of any other
Degree/ Diploma than the M. Phil Degree.

The extent of plagiarism does not exceed the permissible limit laid down by the University.

Date: 22/02/2020 Aparna Pandey

Endorsed by:

Guide/Supervisor

2
 ACKNOWLEDGEMENT
After the completion of this project work, I am experiencing sincere feelings of achievement
and satisfaction. Looking into the past I realize how impossible it was for me to succeed on
my own. I wish to express my deep gratitude to all those who have extended their helping
hands towards me in various ways during my research period.

It gives me immense pleasure to express my deep sense of gratitude and heartfelt thanks to
my guide Professor (Dr.) Kalpeshkumar L. Gupta, Associate Professor, Faculty of Law,
Parul University, Vadodara, Gujarat. I am thankful to him for his invaluable guidance and
constant encouragement. I am also highly indebted to Professor (Dr.) Akil Saiyed, Dean,
Faculty of Law, Parul University, Vadodara, Gujarat, and all faculty members of Parul
University, Vadodara, Gujarat for giving me insight on various levels.

I am very much thankful to all staff members of Parul University, Vadodara, Gujarat for
helping and assisting me during my entire curriculum period of Master of Philosophy in Law.

My sincere thanks and gratitude to all my friends and colleagues for their constant support
and guidance.

I am very thankful to my family members for providing me the moral support and being a
constant source of motivation for me to carry out the entire research work successfully.

I am thankful to all who supported me in the present research work at any point of time.

Place :- Vadodara ___________________

Date :- 22/02/2020 Aparna Pandey
(Enrollment No. 191734401006)

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 LIST OF ABBREVIATIONS

AAEC- Appreciable Adverse Effect on Competition

CCI- Competition Commission of India

GOI-Government of India

IICA- Indian Institute of Corporate Affairs

M&A- Mergers & Acquisitions

MRTP Act- Monopolies and Restrictive Trade Practices Act

MRTPC- Monopolies and Restrictive Trade Practices Commission

OECD-Organization for Economic and Development

SEBI- Securities Exchange Board of India

SEBI (SAST) – SEBI(Substantial Acquisitions of Shares & Takeovers) Regulations,2011

UK-United Kingdom

USA-United States of America

UOI- Union of India

UNCTAD- United Nations Conference on Trade and Development

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 Table of Contents
 INTRODUCTION………………………………………………………………..7-16
1.1 Introduction………………………………………………………………………………..7

1.2 Statement of Problem…………………………………………………………………….10

1.3Objectives of the problem………………………………………………………………...10

1.4 Hypothesis………………………………………………………………………………...10

1.5 Rationale of the Study……………………………………………………………………10

1.6 Literature Review………..……………………………………………………………10-13

1.7 Research Methodology……………………………………………………………….......13

1.8 Relevance & outcome of Study…………………………………………………………..13

1.9 Scheme of Chapterization…………………………………………………………….14-16

 THEORETICAL FRAMEWORK OF MERGERS & ACQUISITIONS…..17-46

2.1 Evolution of Competition Law in India……………………………………………...17-21

2.2 Introduction to Mergers & Acquisitions…………………………………………….23-28

2.3 Origin of Merger Control Regime in India………………………………………….29-47

 COMPETITION COMMISSION OF INDIA & COMBINATION

REGULATIONS……………………………………………………………….48-72

3.1 Monopolistic & Restrictive Trade Practices Act, 1969………………………….....48-54

3.2 Combination Regulations………………………………………………………........54-60

3.3 Other laws governing Mergers & Acquisitions in India…………………………..60-72

 CASE STUDY & FILING OF COMBINATIONS…………………………..73-84

4.1 Procedure followed by CCI in Regulation of Combinations……………………...73-76
4.2 Combination Filing in CCI from 2011-2020……………………………………….76-81

4.3 Analysis of landmark judgements on Combinations……………………………...81-84

 CONCLUSION & RECOMMENDATIONS………………………………...84-85

5.1 Conclusion……………………………………………………………………………….86
5.2 Recommendations………………………………………………………………………86

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 Bibliography…………………………………………………………………..87-89

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 CHAPTER 1

INTRODUCTION

1.1 Introduction

“Competition is always a good thing. It forces us to do our best. A monopoly renders people
complacent and satisfied with mediocrity."

-Nancy Pearcy

Competition, in general, is an act in which someone is trying to gain or lose something for which
someone else is also trying. In financial terms, Competition is a fight wherein each selling
individual attempts to get what the other look for at a similar time: benefit, sales, and market
share by offering the best practicable mix of value, cost, and facilities. Competition is the
procedure of contention to draw in more clients or improve benefit.

Competition is a significant imperative in the proficient working of business sectors. It

advantages to the customer by empowering advancement, productivity and augmenting of
decision, empowering customers to purchase the commodities at a sensible cost and contributing
to our national importance.

Competition Policy takes initiatives to improve the competitive strategy, and guarantee the
customers so they feel the worth of that system. These points are accomplished by and by
through competition law. Competition if diminished, can antagonistically influence the society,
the competitive arrangement keeps a check on this perspective too.

The Competition Act, 2002 (as amended), follows the philosophy of modern competition laws
and aims at fostering competition and protecting Indian markets against anti-competitive
practices. The Act prohibits anti-competitive agreements, abuse of dominant position and
regulates combinations (mergers and acquisitions) with a view to ensure that there is no adverse
effect on competition in India. The provisions of the Act relating to regulation of combinations
have been enforced with effect from 1st June, 2011.

Competition law is about economic behavior. It is as a rule progressively perceived that markets
have an essential task to carry out in any economy. Effectiveness is related with competition and

7
the business sectors can satisfy their capacities proficiently just on the off chance that they
remain competitive. As the job of the market grows, the job of the state additionally experiences
a change. The administrative job of the state requests activity to keep up aggressive conditions in
the business sectors. Enactment is in this way, required to keep the degeneration of the business
sectors to a monopolistic or a close monopolistic circumstance.

Competition law is a structure of legal provisions intended to keep up aggressive market

structures. Hence, competition Law, comprehensively, identifies with endeavors at advancing
rivalry through administrative means. Competition law has developed massively as of late,
particularly since the mid-1990s. Hundreds of nations over the world have embraced competition
law. One of the inspirations for presenting current competition laws is to advance the
development of a competitive market.

The Combination Regulations are the principal regulations governing the merger notification
process in India. Some of the changes proposed by the CCI seem to be aimed at addressing
issues that have arisen in the implementation of the merger control regime over the past couple
of years whereas others seek to incorporate procedures that are already being followed by the
CCI in practice.

The term ‗combination‘ for the purposes of the Competition Act is defined very broadly, to
include ―any acquisition of shares, voting rights, control or assets or merger or amalgamation of
enterprises, where the parties to the acquisition, merger or amalgamation satisfy the prescribed
monetary thresholds in relation to the size of the acquired enterprise and the combined size of
the acquiring and acquired enterprises with regard to the assets and turnover of such
1
enterprises.‖

Combinations are classified into horizontal, vertical and conglomerate combinations. If a

proposed combination causes or is likely to cause appreciable adverse effect on competition, it
cannot be permitted to take effect. Horizontal combinations are those that are between rivals and
are most likely to cause appreciable adverse effect on competition. Vertical combinations are
those that are between enterprises that are at different stages of the production chain and are less

1.‘The Study of Merger And The Role of Competition Commission of India’

http://www.legalservicesindia.com/article/2244/Merger-And-The-Role-of-Competition-Commission-of-India.html

8
likely to cause appreciable adverse effect on competition.2 Conglomerate combinations are those
that are between enterprises not in the same line of business or in the same relevant market and
are least likely to cause appreciable adverse effect on competition. The thresholds are specified
in the Act in terms of assets or turnover in India and outside India. Entering into a combination
which causes or is likely to cause an appreciable adverse effect on competition within the
relevant market in India is prohibited and such combination shall be void.

―The Combinations Regulations specify a category of transactions not likely to have an

appreciable adverse effect on competition in India as: The acquisition of shares or voting rights
of an enterprise:

 Made as an investment or in the ordinary course of business such that the total
shares/voting rights held by the acquirer directly or indirectly, does not exceed 15 percent
of the total shares/voting rights of the target and does not lead to acquisition of control of
the target
 Where the acquirer held majority shares/voting rights in the target prior to the acquisition,
except where the transaction results in transfer from joint to sole control
 Made pursuant to a bonus issue, stock splits, consolidation of shares or rights issue to the
extent of the entitled proportion, not leading to any acquisition of control
 By a securities underwriter or registered stock broker of a stock exchange on behalf of its
client‖3

From June 1, 2011, with the notification of the Combination Regulations, the CCI will have full
power to review acquisition, acquisition of control, mergers and amalgamation under the
Competition Act. Where the parties to the combination fail to notify the CCI (in spite of an
obligation to do so) and the CCI initiates investigation on its own, the CCI shall direct the parties
to the combination to file notice in Form II. Further, the failure to notify and obtain required
approval attracts penalties (up to 1% of total turnover or the assets, whichever is higher) under
the Competition Act, and in such cases, the transaction would be rendered void, if the CCI

2. Report of the High Level Committee on Competition Policy and Law Government of India, Para 2.9.7, ‘Competition
regime in India’, http://shodhganga.inflibnet.ac.in/bitstream/10603/74926/7/chapter%204.pdf
3. ‘CCI Proposes Amendments to Combination Regulations’ ,
https://competition.cyrilamarchandblogs.com/tag/combination-regulations/

9
subsequently determines that the combination has an ‗appreciable adverse effect on competition
in India‟.

1.2 Statement of Problem

The objective of competition law is to ensure that persons or enterprises obtaining the autonomy
through merger or acquisitions do not damage the structure of competition in the Indian market.
The present research will look at the significant role played by the competition authorities after
the enforcement of combination regulations, 2011.

1.3 Objectives of the Study

1. To study about history of Competition Commission of India(CCI).

2. To study about the legal aspects of Mergers and Acquisitions in India.
3. To study about the role of CCI in Merger control in India.

1.4 Hypothesis

Combination regulations of 2011 have played an effective role in merger control in India.

1.5 Rationale of the Study

The present study will mainly focus on Mergers and Acquisitions in India post the enforcement
of combination regulations, 2011 to analyze how these regulations will make CCI a unique body
of jurisprudence in encouraging the merger control activities in India.

1.6 Literature Review

1. India‘s New Competition Law: A Comparative Assessment by Aditya Bhattacharjee

Introduction: The author examines the modified Competition Act of India by analyzing the
functioning of its predecessors, the MRTP Act, 1969. The researcher highlights those works that
has been done earlier. Recent cases have been analyzed for the study clearly shows that the cases
elaborated consumer contractual and complaint disputes that are not of majority of competition.
Few cartels have been prosecuted, the growth of a rule of reason for vertical agreements was
constrained by the legislature and merger review was ceased in 1991. Thereafter, the verdicts

10
increasingly tried to enforce ―fair‖ business conduct ―in the public interest‖, often safeguarding
not competition but the competitors involvement. Though the new Act has much better
characteristics, it is peppered with ambiguities which might ignore hard-core predatory, cartel
pricing, and potentially anti-competitive cross-border mergers, while it also perpetuates the
earlier tendency to penalize ―unfair‖ behavior with no effect on competition.

Limitations: The author argues that the several institutional limitations that will also lessen the
effectiveness of the act and competition advocacy a plea for capacity building and staged
execution.

Research Gaps: The paper does not discuss anything about merger control regime in India. The
author has not dealt with combination regulations in detail as number of cases has been decided
based on section 5 & 6 of Competition Act 2002.

2. K.K. Sharma “India: Prohibition of Anti-Competitive Agreements and Abuse of

Dominant Position” Competition Policy Journal, Sep 3, 2013

Introduction: The paper discusses about the functioning of CCI and compares it with the
competition commission of Singapore. Although the flow of information started coming in right
in first few weeks of the enforcement powers being given to the CCI, and although the first
investigation reports from the Director General began flowing in from September 2009, it took a
while for CCI to start delivering its orders restraining erring market players or imposing penalties
on them or their associations. The reasons for this were not far to seek. The CCI had to give an
opportunity of being heard to the different parties involved. On May 25, 2011, disposing of the
very first information before CCI, the CCI agreed with the findings of DG that the United
Producers and Distributors Forum (UPDF) have been indulged in cartelizing conduct by way of
not supplying prints of the motion pictures to multiplex theatres, but imposed a token penalty of
100,000 each on cartelizing members. When compared with Singapore, wherein the first few
cartel cases were used to showcase the determination of the authority, this may have been an
opportunity missed here by CCI.

Limitations: The researcher discusses the Paper Merchants Associations in Delhi (PMAD) in
Vijay Paper Merchant case and also the National Stock Exchange and similar other cases. The
major limitation of this paper is that the author has not discussed much about merger control

11
regime in Singapore. The paper only discusses about Competition Commission of Singapore
which creates a restraint for the readers to compare it with other countries for merger control.

3. Merger under the Regime of Competition Law: A Comparative Study of Indian

Legal Framework with EU and UK, the paper focuses on comparative analysis of merger
regime in India, EU and UK. The paper mainly deals with how competition law is playing an
effective role in India, EU and UK.

4. Regulation of Combinations by Gurminder Kaur, Corporate Mergers and

Acquisitions, Deep and Deep Publications, New Delhi, 2005, this paper deals with
Combinations regulations which has been made by the Competition authorities for merger
control in India. The paper also clearly states that the concept of mergers and acquisitions has
caught like fire. They have become very popular from all angles, policy considerations,
businessmen outlook and even consumer point of view.

5. Overview: Key Concepts in Competition Law, by Vinod Dhall (ed.), Competition

Law Today (Concepts, Issues and the Law in Practice), Oxford University Press, New
Delhi, 2007, discusses that under competition law, the term ‗merger‘ is used in a broad sense
covering combinations of enterprises in various forms e.g., a merger proper, amalgamations,
acquisition of shares, voting rights or assets, or acquisition of control over an enterprise. Mergers
are a normal activity within the economy and are a means for enterprises to expand business
activity.

6. Competition Law and Policy in India: The Journey in a Decade, by Vijay Kumar
Singh NUJS Law Review, 4 NUJS L. Rev. 523 (2011), discusses about the evolution of
Competition law in India into full force nearly a decade after its inception. Within this decade of
evolution, competition law and policy in India has seen an active interpretational exercise. The
paper summarizes the historical growth of competition law and policy in India and the major
issues involved in this act has been dealt in detail.

7. Combination Control: Strengthening the Regulatory Framework of Competition

Law In India? by Tanaya Sanyal & Sohini Chatterjee, NUJS LAW REVIEW 5 NUJS
L.Rev. 425 (2012), the paper seeks to give knowledge about the combination regulation
mechanism operating in India, with special focus on specific provisions of the Competition Act,

12
2002 and Combination Regulations, 2011 in their recently amended form. The author has made
an attempt to investigate the viability of the mechanism and demarcate its contributions from its
shortcomings in the regulatory landscape of Indian competition law.

8. Merger Control under Competition Law: A Comparative Study of the Laws of

India, the United States and the European Union by Mallika Ramachandran, Indian Law
Institute, New Delhi, 2009, pp. 2-3, has stated in her article that The regulation of mergers is an
important part of the Competition Act, which seeks to prevent ‗combinations‘ that cause or likely
to cause an ‗appreciable adverse effect‘ on competition in India. This includes combinations that
have taken place outside the country where the adverse effects of the same occur in India. With
growing international trade and merger activity in the country, a study of the provisions on
merger control assumes greater importance.

9. Tejas K. Motwani, “Analysis of Merger Control under Indian Competition Law”,

Project Report, Competition Commission of India (CCI), 3 November 2011, p. 3 has stated
in his report that merger control under competition law involves ex-ante review i.e. to prevent a
transaction adversely affecting competition.

10. Recent Developments in Merger Control in India by Cyril Shroff and Nisha Kaur
Uberoi, International Antitrust Bulletin, December 2012, Vol. 4, p. 15-17 has clearly
discussed about India‘s Merger control regime under Competition Act, 2002. The article talks of
major changes which has been brought by CCI in its combination regulations streamlining the
merger control process in India.

11. Competition Law in India: Perspectives by Viswanath Pingali et al., has analysed
about the major aspects under Competition law. Competition law allows for giving weight to
consumer welfare—as price rise is a factor for assessment of effects of mergers but efficiency
and innovation effects are also very crucial for assessing the competitive effects of the merger.
Commentaries by various scholars and practitioners of M&A have been discussed in this article.

12. Competition Policy and Law: Academic Perspective by Subhashish Gupta, has
discussed in detail about the evolution of competition law which depends on the goals of
competition policy. He suggest that competition policy must be part of a larger pro-competitive

13
enterprise that affects each sphere of government – the judiciary, the legislature, and executive
and administrative branches – for effective implementation of a competition law.

Research Gaps: There is no research study that analyses the functioning of competition
commission of India as a whole i.e. studying the rules regarding prohibition of anti-competitive
agreements, role of CCI in curbing abuse of dominant position and the procedures followed by
CCI for regulation of combinations.

1.7 Research Methodology

The present research is based on primary and secondary sources. Relevant material from primary
sources is collected from statutory provisions of the relevant legislation. A doctrinal study will
be made by collecting data from the sources available over the internet, books, magazines,
journals, digests and other secondary resources. Overall system of merger control shall be dealt
with according to the collection of data from the past studies done on this topic.

1.8 Relevance and Outcome of the Study

Globally, the idea of merger audit/merger control is finished by competition controllers to avoid
mergers and acquisitions that are probably going to diminish competition in the market and rapid
higher costs, bring down quality merchandise or benefits, or less advancement. A few nations
have voluntary regimes while most have compulsory regimes. Mandatory regime means that
which prescribes a threshold limit in the concerned competition law which will result into merger
clearance by the authorities. The proposed research seeks to evaluate the effect of combination
regulation 2011 in merger control on the Indian competition market.

1.9 Scheme of Chapterization

The present study has been divided into five chapters. In the first chapter, the researcher has
discussed about the introduction which deals with synopsis, literature review and research
methodology. The second chapter talks about the theoretical aspect of Mergers & Acquisitions
which mainly deals with evolution, origin and introduction to mergers & acquisitions. Chapter

14
three talks of Competition Commission of India & Combination Regulations including an
introduction to Monopolistic & Restrictive Trade Practices Act, 1969, Competition Commission
of India and other laws governing M&A regime in India. Chapter four includes some important
case studies and filing of combinations. The last chapter i.e. chapter five is a concluding chapter
with some suitable recommendations.

Chapter 1- Introduction

The first chapter comprises of the introduction which mainly gives the background about
mergers and acquisitions regime under Competition Law in India. It throws light on the overall
aspect of mergers regime mentioned under the competition act in India.

Chapter 2- Theoretical Framework of Mergers & Acquisitions

The second chapter deals in detail about how the competition law evolved and what was the need
to enforce this particular legislation. This chapter also gives a brief introduction about mergers
and acquisitions and its origin in India.

Chapter 3- Competition Commission of India & Combination Regulations

The third chapter will discuss about Monopolistic & Restrictive Trade Practices Act,1969. Its
origin and shortcomings and will give an introduction to Combination Regulations mentioned
under the Competition Act 2002. This chapter will also discuss about the different laws
governing merger control regime in India.

Chapter 4- Case study & Filing of Combinations

The fourth chapter will comprise of Procedure followed by CCI in Regulation of Combinations
in filing of combinations. Analysis of landmark judgements on Combinations and Description of
Combination Filing will be dealt in detail in this. Other Judgments by COMPAT, NCLT, etc.
will also be dealt upon.

15
Chapter 5- Conclusion and Recommendations

This chapter will give a conclusion making a critical study on the whole topic. It will also give
suitable recommendations on how this merger control regime in India could be made more
effective in practical terms.

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 CHAPTER 2

THEORETICAL FRAMEWORK OF MERGERS & ACQUISITIONS

2.1 Evolution of Competition Law in India

We are living in a free market economy age where business entities are engaged in competitive
practices. This sometimes (if not always) leads to the monopolization of the market by way of
anti-competitive agreements, abuse of dominance, mergers and takeovers between business
entities which result in distortion of the market. Most countries in the world have enacted
competition laws to protect their free market economies and have thereby developed an
economic system in which the allocation of resources is determined solely by demand and
supply.4
Although the antitrust laws are very much new to the Indian regulatory framework but the
western countries likes US and Canada has this kind of regulatory framework since last decade
of the 19th century. Canada became the first country of world to enact the antitrust law i.e.
Combines Act of 1889, followed by the US in the form of the Sherman Act, 1890. The Sherman
Act was followed by the Clayton Act 1914 which expanded on the general prohibition of the
Sherman Act to price discrimination, exclusive dealing and mergers. In the same year in US, the
Federal Trade Commission Act, 1914 also declared unlawful unfair methods of competition and
unfair or deceptive acts or practices in or affecting commerce and moreover, the Cellar-Kefauver
Act, 1950 which has amended the Clayton Act and now both stock as well as asset acquisitions
are prohibited which would result in a restraint of commerce or creation of monopoly.5 The
United Kingdom, on the other hand, introduced the considerably less stringent Restrictive Trade
Practices Act, 1956, but later on more elaborate legislations like the Competition Act 1998 and
the Enterprise Act, 2002 were introduced.6 India had antitrust legislation in the form of the
Monopolies and Restrictive Trade Practices Act, 1969 which was replaced by Competition Act,
2002. The Competition Act regulates mergers and acquisitions which results in distortion of the

4 Neeraj Tiwari, ―Merger under the Regime of Competition Law: A Comparative Study of Indian Legal Framework
with EC and UK‖, Bond Law Review, 25 August 2011, Vol. 23, Issue 1, 117-141, p. 117.
5 For further details, see, Stephen Calkins, ―Competition Law in the United States of America‖, in Vinod Dhall
(ed.), Competition Law Today (Concepts, Issues and the Law in Practice), Oxford University Press, New Delhi,
2007, pp. 401-425.
6 For further details, see, Christopher Bellamy, ―The Competition Regime in the UK‖, in Vinod Dhall (ed.),
Competition Law Today (Concepts, Issues and the Law in Practice), Oxford University Press, New Delhi, 2007, pp.
386-400.

17
market. The Indian Competition Act is more in line with competition laws across the globe with
its focus on promoting and maintaining competition as well as consumer welfare.
The competition law of India was previously contained in the Monopolies and Restrictive Trade
Practices Act, 1969 (MRTP Act). This Act was formed as a result of ‗command and control‘
policies adopted by Indian government after independence. The government intervention and
control pervaded almost all areas of economic activity in the country as India followed the
strategy of planned economic development. The companies needed license for everything from
setting up an industrial understanding, to its expansion or layoff of workers and closing it down.
The era was also known as „License-Raj.‟ The outcome of the „License-Raj‟ system was
restriction of freedom to entry into industry which ultimately resulted in concentration of power
into few individuals or groups.7 Thus, MRTP Act came into existence in 1969 to control such
monopolies. The word ‗socialist‘ in the Preamble to the Constitution of India has been embodied
with a high object. The principal aim of a socialist state is to eliminate inequality in income,
status and standard of life.8 The genesis of this Act is traceable to the Preamble of our
Constitution and Article 38 and 39 of the Directive Principles of State Policy. Further, Article 38
mandates upon the state to secure a social order in which justice-social, economic and political,
shall inform all the institutions of the national life. This provision further recognizes the need to
eliminate and minimize the inequalities in income which applied not only to the individuals but
also to the groups in different areas. Article 39 takes a step further and states that, the state shall
strive to secure that the operation of the economic system does not result in the concentration of
wealth and means of production to the common detriment. The thrust of the Act was directed
towards:
 Prevention of concentration of economic power to the common detriment;
 Control of monopolies;
 Prohibition of monopolistic, restrictive and unfair trade practices;
With the focus on curbing monopolies and not on promoting competition, the MRTP Act became
obsolete in certain respects in the light of international economic developments relating more
particularly to competition laws. It lacked provisions to deal with anti-competitive practices that

7 Hari Krishan, ―A Review of Mergers and Acquisitions in India‖, A Research Paper, Submitted to Competition
Commission of India (CCI), New Delhi, September 2012, pp. 1-56, p. 10.
8 D.S. Nakara v. Union of India, AIR 1983 SC 130.

18
may accompany the operation and implementation of the WTO agreements.9 But 1991 was a
watershed year. The license and control regime, which continued beyond when it might have
been justified, severely stunted economic ‗development.‘10 Financial crisis faced by the
government prompted it to usher economic reforms of a magnitude and at a pace not witnessed
before. Liberalization became the buzzword. The economy was opened up- privatization,
liberalization of international trade, inviting private investment to hitherto closed sectors and
other reforms took center stage.11 Part A of chapter III of MRTP Act which dealt with
provisions dealing with monopolistic enterprises seeking prior approval was deleted. As a market
economy has its own drawbacks and potential for market failure, this led to more than hundred
countries enacting modern competition law. Therefore, in India, same need was felt.
With liberalisation and increased competition among firms to conquer the market, competition
law emerged as the solution to such antagonism that has the potential to row its own destruction.
A free market economy can cause a small number of firms to be more successful than the others
and thus create a state of monopoly, thereby adversely affecting the competition in the market.
Competition law, thus, intervenes in such situations to regulate the market and thereby foster
healthy competition.12
With the economic liberalization making sweeping changes in industrial and trade policies,
foreign investment rules, capital controls and other spheres, it was felt that there is a need for a
new and modern competition law in the place of the old Monopolies and Restrictive Trade
Practices Act, 1969. Under the MRTP Act, the Central Government had the power to approve
mergers, amalgamation and takeovers etc. As a result thereof, this Act became another tool for
the government to keep with itself the control over big companies, which wanted to grow faster
and become globally competitive.11 As this Act could not keep pace with the sweeping changes
introduced by liberalization and globalization, the Central Government, therefore, constituted a
High Level Committee on Competition Policy and Law, under the chairmanship of S.V.S

9 D.P. Mittal, 2011, p. 13, para 0.5.

10 Vinod Dhall, ―Competition, Growth and Prosperity‖, Essays on Competition Law and Policy, retrieved from
www.cci.gov.in/images/media/articles/essay_articles_compilation_text2904new_2008 0714135044.pdf, accessed on
2 January 2020 at 6.24 pm.
11 Amitabh Kumar, ―The Evolution of Competition Law in India‖, in Vinod Dhall (ed.), Competition Law Today
(Concepts, Issues and the Law in Practice), Oxford University Press, 2007, pp. 479-498,
p, 489.
12 Vidyulatha Kishor, ―Comparative Merger Control Regulations-Lessons from EU and US‖, Project Report,
Competition Commission of India, New Delhi, 2-27 January 2012, p. 5.

19
Raghavan. The Committee submitted its report to the Central Government on the 22nd May
2000.13 On the basis of that report, the Competition Act, 2002 was enacted.
The background to the enactment of the Competition Act was succinctly explained by the
Supreme Court in the case of Competition Commission of India v. Steel Authority of India Ltd.14
“The decision of the Government of India to liberalize its economy with the intention of
removing controls persuaded the Indian Parliament to enact laws providing for checks and
balances in the free economy. The laws were required to be enacted, primarily, for the objective
of taking measures to avoid anti-competitive agreements and abuse of dominance as well as to
regulate mergers and takeovers which result in distortion of the market. The earlier Monopolies
and Restrictive Trade Practices Act, 1969 was not only found to be inadequate but also obsolete
in certain respects, particularly, in the light of international economic developments relating to
competition law. Most countries in the world have enacted competition laws to protect their free
market economies – an economic system in which the allocation of resources is determined
solely by supply and demand. The rationale of free market economy is that the competitive offers
of different suppliers allow the buyers to make the best purchase. The motivation of each
participant in a free market economy is to maximize self-interest but the result is favorable to
society. As Adam Smith observed: there is an invisible hand at work to take care of this”.
The Raghavan Committee took the view that regulatory focus should change from limitation of
the size of undertakings to prohibiting trade practices which cause an appreciable adverse effect
on competition. The Raghavan committee observed that competition regime in the world today
regulate (1) anti-competitive agreements (2) abuse of dominance, and (3) mergers, or more
generally, combinations among enterprises. By adopting this tripartite scheme, the Competition
Act, 2002 has made a historic shift bringing Indian law in line with the conceptual regulatory
framework prevailing in the United Kingdom, the European Community and the United
States.15

The Competition Act takes a new look at competition altogether and contains
specific provisions on anti-competition agreements, abuse of dominance, mergers,

13 See, The Report of High Level Committee on Competition Policy and Law (The Raghavan Committee) in H.K.
Saharay, Textbook on Competition Law, Universal Law Publishing Co. Pvt. Ltd., New Delhi, 2012, pp. 6-73.
14 (2010) 103 SCL 269 (SC).
15 Reeti Sonchhatra, ―Regulation of Mergers under Indian Competition Law‖, Madras Law Journal, 2009, Vol. 5,
pp. 13-19, p. 13.

20
amalgamations and takeovers and competition advocacy. The Competition
Commission of India (CCI) has been established to control anti-competitive agreements, abuse
of dominant position by an enterprise and for regulating certain combinations. The substantive
provisions of the Competition Act relating to anti-competitive agreements (Section 3) and abuse
of dominance (Section 4) have been notified while the provisions relating to combinations
(Section 5 and 6) have not yet been notified.

 Anti-competitive agreements (Section 3)

The Competition Act essentially contemplates two kinds of anti-competitive
agreements:
❖ Horizontal agreements or agreements between entities engaged in similar trade
of goods or provisions of services, and
❖ Vertical agreements or agreements between entities in different stages / levels of
the chain of production, in respect of production, supply, distribution, storage,
sale or price of goods or services

Anti-competitive agreements that cause or are likely to cause an appreciable adverse effect on
competition within India are void under the provisions of the Competition Act. A horizontal
agreement that (i) determines purchase / sale prices, or (ii) limits or controls production supply,
markets, technical development, investment or provision of services, or (iii) shares the market or
source of production or provision of services, by allocation of geographical areas / type of goods
or services or number of customers in the market, or (iv) results in bid rigging / collusive
bidding, are presumed to have an appreciable adverse effect on competition. On the other hand,
vertical agreements, such as tie-in arrangements, exclusive supply or distribution agreements,
etc. are anti-competitive only if they cause or are likely to cause an appreciable adverse effect on
competition in India. It may be noted that in the case of a vertical agreement, there is no
presumption that such agreement would have an appreciable adverse effect on competition in
India, and the CCI would have to prove such effect However, in the case of a horizontal
agreement, the burden of proof would lie with the entities who are party to the agreement, to
prove that there is no appreciable adverse effect on competition in India.

21
  Abuse of Dominant Position (Section 4)
An entity is considered to be in a dominant position if it is able to operate independently of
competitive forces in India, or is able to affect its competitors or consumers or the relevant
market in India in its favour. The Competition Act prohibits an entity from abusing its dominant
position. Abuse of dominance would include imposing unfair or discriminatory conditions or
prices in purchase/sale of goods or services and predatory pricing, limiting or restricting
production / provision of goods/services, technical or scientific development, indulging in
practices resulting in denial of market access etc.

 Regulation of Combinations (Section 5 & 6)

Certain combinations defined under the Competition Act are considered to affect competition in
India and are regulated by the CCI, such as:
❖ An acquisition where the transferor and transferee jointly have, or a mergeror amalgamation
where the resulting entity has, (i) assets valued at more than Rs. 10 billion or turnover of more
than Rs. 30 billion, in India; or (ii) assets valued at more than USD 500 million in India and
abroad, of which assets worth at least Rs 5 billion are in India, or, turnover more than USD 1500
million of which turnover in India should be at least Rs 15 billion.
❖ An acquisition where the group to which the acquired entity would belong, jointly has, or a
merger or amalgamation where the group to which the resulting entity belongs, has (i) assets
valued at more that Rs. 40 billion or turnover of more than Rs 120 billion, in India; or (ii) assets
valued at more than USD 2 billion in the aggregate in India and abroad, of which assets worth at
least Rs 5 billion should be in India, or turnover of more than USD 6 billion, including at least
Rs 15 billion in India.
A share subscription, financing facility or any acquisition by a public financial institution, FII,
bank or venture capital fund pursuant to any loan or investment agreement, would not qualify as
a combination that will be regulated by the CCI, and such transactions are therefore exempt
under the Competition Act. However, the public financial institution, FII, bank or venture capital
fund is required to notify the CCI of the details of the acquisition within 7 day of completion of
the acquisition.

22
2.2 Introduction to Mergers & Acquisitions

Indian enterprises were subjected to strict control regime before 1990s. This has led to haphazard
growth of Indian corporate enterprises during that period. The reforms process initiated by the
Government since 1991, has influenced the functioning and governance of Indian enterprises
which has resulted in adoption of different growth and expansion strategies by the corporate
enterprises. In that process, mergers and acquisitions (M&As) have become a common
phenomenon. M&As are not new in the Indian economy. In the past also, companies have used
M&As to grow and now, Indian corporate enterprises are refocusing in the lines of core
competence, market share, global competitiveness and consolidation. This process of refocusing
has further been hastened by the arrival of foreign competitors. In this backdrop, Indian
corporate enterprises have undertaken restructuring exercises primarily through M&As to create
a formidable presence and expand in their core areas of interest.16

The election of the Modi led government has brought back tremendous faith in investor
community. The coming year is expected to be a booming year in terms of M&A activity as the
investor community has seen certainty in Modi led government‘s reform agenda and the policies
have been largely formulated to encourage foreign investments. It is strongly believed that year
2016 will see a surge in M&A activity due to the new bankruptcy law, the faster pace of
approvals initiated by the government as part of its ease of doing business in India campaign and
the relaxation in Foreign Direct Investment norms.
Sectors such as IT-ITs, healthcare, energy, pharma, e-commerce and banking and financial
services were the key sectors in 2015.
In 2015, inbound deals dominated the Indian M&A landscape with interest coming from US,
German and Canadian bidders.
One can expect the increase in the M&A deals and activities in the upcoming time as both local
and international investors and business houses are eyeing India with a hope of tremendous
growth.

16 ―Mergers And Acquisitions In India: A Strategic Impact Analysis For The Corporate Enterprises In The Post
Liberalisation Period‖, Rabi Narayan Kar & Amit Soni,
http://www.igidr.ac.in/conf/oldmoney/MERGERS%20AND%20ACQUISITIONS%20IN%20INDIA.pdf

23
International factors such as decline in the crude prices and low inflation locally will also help
the government to unleash flexible business policies to draw interest of the players in the India
economy.17
Types of Mergers

From the perception of business organizations, there is a whole host of different mergers.
However, from an economist point of view i.e. based on the relationship between the two
merging companies, mergers are classified into following:
(1) Horizontal merger- Two companies that are in direct competition and share the same
product lines and markets i.e. it results in the consolidation of firms that are direct rivals. E.g.
Exxon and Mobil, Ford and Volvo, Volkswagen and Rolls Royce and Lamborghini

(2) Vertical merger- A customer and company or a supplier and company i.e. merger of firms
that have actual or potential buyer-seller relationship eg. Ford- Bendix

(3) Conglomerate merger- generally a merger between companies which do not have any
common business areas or no common relationship of any kind. Consolidated firma may sell
related products or share marketing and distribution channels or production processes.
On a general analysis, it can be concluded that Horizontal mergers eliminate sellers and hence
reshape the market structure i.e. they have direct impact on seller concentration whereas vertical
and conglomerate mergers do not affect market structures e.g. the seller concentration directly.
They do not have anticompetitive consequences.
The circumstances and reasons for every merger are different and these circumstances impact the
way the deal is dealt, approached, managed and executed. .However, the success of mergers
depends on how well the deal makers can integrate two companies while maintaining day-to-day
operations. Each deal has its own flips which are influenced by various extraneous factors such
as human capital component and the leadership. Much of it depends on the company‘s leadership
and the ability to retain people who are key to company‘s ongoing success. It is important, that

17 ―Mergers & Acquisitions in India‖, Legal & Tax Issues, April 2016,
http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/Mergers___Acquisitions_in_India.pd
f

24
both the parties should be clear in their mind as to the motive of such acquisition i.e. there should
be census ad- idiom.
Profits, intellectual property, consumer base are peripheral or central to the acquiring company,
the motive will determine the risk profile of such M&A. Generally before the onset of any deal,
due diligence is conducted so as to gauze the risks involved, the quantum of assets and liabilities
that are acquired etc.
A merger is a combination of two or more businesses into one business. Laws in India use the
term 'amalgamation' for merger. The Income Tax Act, 1961 [Section 2(1A)] defines
amalgamation as the merger of one or more companies with another or the merger of two or
more companies to form a new company, in such a way that all assets and liabilities of the
amalgamating companies become assets and liabilities of the amalgamated company and
shareholders not less than nine-tenths in value of the shares in the amalgamating company or
companies become shareholders of the amalgamated company.
According to the Oxford Dictionary the expression merger or amalgamation means ―Combining
of two commercial companies into one‖ and ―Merging of two or more business concerns into
one‖ respectively. A merger is just one type of acquisition. One company can acquire another in
several other ways including purchasing some or all of the company‘s assets or buying up its
outstanding share of stock.
To end up the word ―MERGER‖ may be taken as an abbreviation which means:
M-Mixing
E-Entities
R-Recourses for
G-Growth
E-Enrichment and
R-Renovation.3

ACQUISITION:-
Acquisition in general sense is acquiring the ownership in the property. Acquisition is the
purchase by one company of controlling interest in the share capital of another existing
company. This means that even after the takeover although there is change in the management of
both the firms retain their separate legal identity.

25
  History of mergers and acquisition
Most of the mergers and acquisitions are an outcome of the favorable economic factors like the
macroeconomic setting, escalation in the GDP, higher interest rates and fiscal policies. These
factors not only trigger the M & A process but also play an active role in laying the mergers and
acquisition strategies between bidding and target firms. The history of mergers and acquisitions
can be traced back to the 19th century which has evolved in different phases mentioned as under:

From 1897 – 1904:

During this period merger took place between the firms which were anti-competition and
enjoyed their dominance in the market according to their productivity in sectors like electricity,
railways, etc. Most of the mergers during this period were horizontal in nature and occurred
between the steel, metal and construction industries.

From 1903 – 1905:

Most of the mergers which took place during the first phase were considered as unsuccessful for
not being efficient enough to attain the required competence. The crash was stimulated by the
decelerating of the world's financial system in 1903, which was followed by a stock market
collapse in 1904. During this phase the authorized structure was not encouraging either. Later the
apex judiciary body issued its directive on the anti-competitive mergers stating that they could be
de-merged by implementing the Sherman Act.

From 1916 – 1940:

Unlike the preceding phase, this period concentrated on mergers between oligopolies, rather
between anti-competitive firms. The mergers and acquisitions process was triggered by the
financial boom which was seen after the World War I. The expansion further lead to
developments in the fields of science and technology and the emergence of infrastructure firms
which provided services for required growth in railroads and transportation by automobiles. The
government strategies laid in 1920s made the corporate ambiance supportive enough for firms to
work in harmony. Financial institutions like government and private banks also played a
significant part in aiding the mergers and acquisitions process. The mergers which occurred

26
during 1916-1929 were horizontal or multinational in nature. Most of these industries were the
manufacturers of metals, automobile tools, food commodities, chemicals, etc. This phase ended
in 1929 with a massive decline in stock market followed by great depression. However, the tax
exemptions in 1940s encouraged the conglomerates to involve themselves in M & A activities.

From 1965 – 1970:

Most of the mergers from 1965-70 were horizontal mergers and were triggered by elevating
stock and interest rates, and stern implementation of anti-trust rules and regulations. During this
phase the bidding companies were small in size and fiscal strength than the target companies.
These kinds of mergers were sponsored by equities, thereby eliminating the roles of banks which
they actively played in investment activities earlier. In 1968, the Attorney General decided to
break the multinationals which resulted in the end of merging activities after that. The decision
was triggered by the inefficient performance of the multinationals. But 1970s saw the emergence
of mergers which made their mark by performing effectively. Some of them were INCO merging
with ESB, OTIS Elevator with United Technologies and Colt Industries with Garlock Industries.

From 1981 – 1989:

This phase saw the acquisition of the companies which were much bigger in size as compared to
the firms in previous phases. Industries like oil and gas, pharmaceuticals, banking, aviation
combined their business with their national and international counterparts. Cross border buyouts
became regular with most of them being unfriendly in nature. This phase came to an end with the
introduction of anti-acquisition laws, restructuring of fiscal organizations and the Gulf War.

From 1992 till present:

This period was stimulated by globalization, upsurge in stock market boom and deregulation
policies. Major mergers were seen taking place between telecom and banking giants out of which
most were sponsored by equities. There was a change in the attitude of the industrialists, who
opted for mergers and acquisitions for long term profitability rather than short lived benefits.
Promising economic trends, investments by corporate and revised government policies motivated
the participation of many conglomerates to contribute in the acquisition trend. Therefore, we can

27
conclude that as long as business entities exist and the economic factors are favorable, the trend
of mergers and acquisitions will continue.

2.3 Origin of Merger Control in India

The Indian merger control regime came into effect on 1 June 2011 with the notification of
Sections 5 and 6 of the Competition Act 2002 (the Competition Act). The regime is governed by
the Competition Act, notifications issued by the Ministry of Corporate Affairs, Government of
India (MCA) and the Competition Commission of India (Procedure in regard to the transaction
of business relating to combinations) Regulations 2011, as amended up to 8 January 2016 (the
Combination Regulations).

Under the Indian merger control regime, a ‗combination‘ (i.e., an acquisition, merger or
amalgamation) must be notified to and approved by the Indian competition authority, the
Competition Commission of India (CCI), if it breaches the prescribed asset and turnover
thresholds and does not qualify for any exemptions. The requirement to notify the CCI is
mandatory and such combinations are subject to a ‗standstill‘ or suspensory obligation. Where a
combination causes or is likely to cause an ‗appreciable adverse effect on competition‘ (AAEC)
within the relevant market in India, the combination is void. By 1 May 2019, the CCI had cleared
approximately 600 combinations, with a vast majority within the 30-working-day Phase I period.
To date, the CCI has cleared eight combinations subject to remedies after a detailed Phase II
investigation, but is yet to outright block a combination.18

In this chapter we give a brief overview of the recent trends in Indian merger control, including
key amendments to the Combination Regulations and then outline the circumstances under
which parties to a transaction are required to notify the CCI, and the factors taken into account
by the CCI when determining whether a combination is likely to cause an AAEC.

18 The CCI has passed orders directing structural modifications in combinations relating to diverse sectors. These
are: (1) Linde/Praxair,C-2018/01/545, dated 6 September 2018, in the gas and energy sector; (2) Bayer/Monsanto,
C-2017/08/523, dated 14 June 2018, Agrium/Potash, C-2016/10/443, dated 27 October 2017, Dow/DuPont, C-
2016/05/400, dated 8 June 2017 and ChinaChem/Syngenta, C-2016/08/424, dated 16 May 2017, in the agro-
chemical sector; (3) PVR/DT Cinemas, C-2015/07/288, dated 4 May 2016 in the film exhibition and distribution
sector; (4) Holcim/Lafarge, C-2014/07/190, dated 30 March 2016, in the cement sector; and (5) Sun/Ranbaxy, C-
2014/05/170, dated 5 December 2014, in the pharmaceutical sector.

28
  Applicable Thresholds

A ‗combination‘ is any acquisition, merger or amalgamation that meets certain asset or turnover
thresholds, under Section 5 of the Competition Act. The asset and turnover thresholds applicable
to combinations comprise two tests, which are applicable to the immediate parties to the
transaction and separately to the group to which the target or merged entity (as the case may be)
will belong, and have both Indian and worldwide dimensions.

The ‗parties test‘ looks at the assets and turnover of the immediate parties to the transaction, that
is, the acquirer and the target, or the merging parties, and a notification is triggered if the parties
have any of the following:

 combined assets in India of 20 billion rupees;

 a combined turnover in India of 60 billion rupees;
 combined global assets of US$1 billion including combined assets in India of 10 billion rupees;
or
 combined global turnover of US$3 billion including combined turnover in India of 30 billion
rupees.19 Even if the parties‘ test thresholds are not met, a notification may be triggered if the
‗group‘ to which the parties would belong post-transaction has any of the following:
 assets in India of 80 billion rupees;
 turnover in India of 240 billion rupees;
 global assets of US$4 billion including assets in India of 10 billion rupees; or
 global turnover of US$12 billion including a turnover in India of 30 billion rupees.20

 Exemptions

Every combination must mandatorily be notified to the CCI, unless the parties are able to benefit

19 Sections 5(a)(i), Section 5(b)(i) and Section 5(c)(i) of the Competition Act, read with the notification SO 675(E)
dated 4 March 2016 issued by the MCA.
20 Section 5(a)(ii), Section 5(b)(ii) and Section 5(c)(ii) of the Competition Act, read with the notification SO 675(E)
dated 4 March 2016 issued by the MCA.

29
 from the exemptions provided in the Competition Act, the Combination Regulations or the
Notification 21 issued by the MCA. These exemptions are as follows.

 Statutory Exemptions
The requirement of mandatory notification prior to completion does not apply to any financing
facility, acquisition or subscription of shares undertaken by foreign institutional
investors,22venture capital funds,23 public financial institutions24 and banks pursuant to a
covenant of an investment agreement or a loan agreement. Such transactions need to be notified
in the simpler and shorter Form III within seven days of the date of acquisition.25

Categories of transactions usually exempt from mandatory notification – Schedule 1 of the

Combination Regulations identifies certain categories of transactions that are ordinarily not
likely to cause an AAEC in India, and need not normally be notified to the CCI. They are as
follows:

 acquisition of shares or voting rights made solely as an investment or in the ordinary course of
business, that entitles the acquirer to less than 25 per cent of the total shares or voting rights of
the target enterprise, and there is no acquisition of control of the target enterprise;26
 acquisition of additional shares or voting rights of an enterprise, where the acquirer or its group,
prior to the acquisition, already holds 25 per cent, but not 50 per cent, and there is no acquisition
of joint or sole control over the target enterprise by the acquirer or its group;

21 Government of India Notification dated 27 March 2017, S.O. 988(E).

22 As defined under Regulation 2(f) of the SEBI (Foreign Portfolio Investors) Regulations, 2014 introduced under
the Securities and Exchange Board of India Act, 1992 (SEBI Act).
23 As defined in Regulation 2(m) of the Securities and Exchange Board Of India (Venture Capital Funds)
Regulations, 1996 introduced under the SEBI Act.
24 As defined in Section 2(72) of the Companies Act, 2013.
25 As defined in Section 6(4) of the Competition Act.
26 Explanation to Schedule 1(I):
The acquisition of less than 10 per cent of the total shares or voting rights of an enterprise shall be treated as solely
as an investment:
Provided that in relation to the said acquisition,
(A) the acquirer has ability to exercise only such rights that are exercisable by the ordinary shareholders of the
enterprise whose shares or voting rights are being acquired to the extent of their respective shareholding; and
(B) the acquirer is not a member of the board of directors of the enterprise whose shares or voting rights are being
acquired and does not have a right or intention to nominate a director on the board of directors of the enterprise
whose shares or voting rights are being acquired and does not intend to participate in the affairs or management of
the enterprise whose shares or voting rights are being acquired.

30
 acquisition of shares or voting rights by an acquirer who has 50 per cent or more of the shares or
voting rights of the enterprise prior to the acquisition, except where the transaction results in a
transfer from joint to sole control;
 acquisition of assets not directly related to the business activity of the party acquiring the asset or
made solely as an investment or in the ordinary course of business, not leading to control of an
enterprise, and not resulting in acquisition of substantial business operations in a particular
location or for a particular product or service, irrespective of whether such assets are organized
as a separate legal entity;
 amended or renewed tender offer, where a notice has been filed with the CCI prior to such
amendment or renewal;
 acquisition of stock-in-trade, raw materials, stores and spares, trade receivables and other similar
current assets in the ordinary course of business;
 acquisition of shares or voting rights pursuant to a bonus issue, stock split, consolidation, buy
back or rights issue, not leading to acquisition of control;
 acquisition of shares or voting rights by a securities underwriter or a stockbroker on behalf of a
client in the ordinary course of its business and in the process of underwriting or stockbroking;
 acquisition of control, shares, voting rights or assets by one person or enterprise, of another
person or enterprise within the same group, except in cases where the acquired enterprise is
jointly controlled by enterprises that are not part of the same group; and
 a merger or amalgamation involving two enterprises where one of the enterprises has more than
50 per cent of the shares or voting rights of the other enterprise, or a merger or amalgamation of
enterprises in which more than 50 per cent of the shares or voting rights in each of such
enterprises are held by enterprises within the same group, provided that the transaction does not
result in a transfer from joint control to sole control; and
 acquisition of shares, control, voting rights or assets by a purchaser approved by the CCI
pursuant to and in accordance with its order under Section 31 of the Competition Act (i.e.,
divestment-related acquisitions).

 Target-based exemption (de minimis exemption)

Transactions where the target enterprise either holds assets of less than 3.5 billion rupees in
India, or generates turnover of less than 10 billion rupees in India, are currently exempt from the

31
mandatory pre-notification requirement. Pursuant to the March 2017 notification the exemption
has been extended to mergers and amalgamations as well (it was previously applicable only to
transactions structured as acquisitions).

 Applicability of thresholds to asset acquisitions

Pursuant to the March 2017 notification, in the transfer of a portion of an enterprise, division or
business (i.e., in an asset sale), the applicability of the thresholds under Section 5 of the
Competition Act and the de minimis exemption is limited to only the value of the assets and
turnover of such a portion of enterprise, division or business.27 The pre-amendment position
required the value of the assets and turnover of the entire target enterprise to be taken into
consideration for the de minimis exemption to apply. Given that the CCI has previously
penalised parties for failing to make a notification as parties had calculated assets by accounting
the value of assets to be contributed,28 the March 2017 notification provides a welcome
clarification. Further, the exemption is valid until 29 March 2022 unless it is further extended.

 „Control‟ as per the CCI

The acquisition of control or a shift from joint to sole control is an important determinant for
whether exemptions relating to minority investments and intra-group re-organizations are
applicable. Under the Competition Act, ‗control‘ is defined to include ‗controlling the affairs or
management by (1) one or more enterprises, either jointly or singly, over another enterprise or
group, (2) one or more groups, either jointly or singly, over another group or enterprise‘. There is
no „bright line‟ shareholding percentage identified as conferring control.

The CCI has examined the issue of what constitutes ‗control‘ in several cases. In SPE
Mauritius/MSM Holdings,29 the CCI held that veto rights enjoyed by a minority shareholder
over certain strategic commercial decisions might result in a situation of joint control over an
enterprise. These rights include engaging in a new business or opening new locations or offices
in other cities; appointment and termination of key managerial personnel (including material

27 Government of India Notification dated 27 March 2017, S.O. 988(E).

28 See the CCI‘s decisions in ITC Limited (C-2017/02/485, dated 11 December 2019) and SRF-DuPont (C-
2015/12/347, dated 16 August 2016).
29 C-2012/06/63, dated 9 August 2012.

32
terms of their employment); and changing material terms of employee benefit plans. In Century
Tokyo Leasing Corporation/Tata Capital Financial Services Limited,30 the CCI observed that
veto rights could create a situation of control over when they pertain to approval of the business
plan, approval of the annual operating plan (including budget), discontinuing any existing line or
commencing a new line of business, and the appointment of key managerial personnel and their
compensation. In Caladium Investments/Bandhan Financial Services,31 the CCI expanded the
scope of such affirmative rights to include veto rights over amendments to charter documents,
changes in capital structure, changes to dividend policy and appointment of auditors in the list of
rights that could be seen as leading to joint control.

As a general matter, the CCI precedent seems to suggest that where there are a number of veto
rights, they should not be evaluated in isolation, and whether control exists is based upon an
assessment of these rights as a whole.32
Interestingly, in the Jet/Etihad case,33 the CCI concluded that the acquistion by Etihad Airways
(Etihad) of 24 per cent of the equity share capital of Jet Airways (Jet) allowed Etihad to exercise
joint control over Jet‘s assets and operations, on account of the terms of the agreements entered
into between Jet and Etihad, and Etihad‘s ability to appoint two of the six directors on Jet‘s board
of directors. Notably, the Indian capital markets regulator, the Securities and Exchange Board of
India (SEBI), differed on this issue, clarifying that under the SEBI (Substantial Acquisition of
Shares and Takeovers) Regulations 2011 (the Takeover Code), the definition of ‗control‘ is
narrower than under the Competition Act to conclude that the acquisition does not grant ‗joint
control‘ of Jet to Etihad under the Takeover Code.

In a recent decision involving a notification to the CCI for the acquisition of shares of Telewings
Communications Services Private Limited (Telenor India) by Lakshdeep Investments & Finance
Private Limited34 (Telenor order), the CCI conclusively held that a shareholding of 26 per cent
constitutes joint control under the Competition Act. The CCI found that regardless of affirmative
voting rights, with a 26 per cent shareholding, a shareholder has the ability to block special

30 C-2012/09/78, dated 4 October 2012.

31 C-2015/01/243, dated 5 March 2015.
32 C-2012/06/63, dated 9 August 2012.
33 C-2013/05/122, dated 12 November 2013.
34 Order under Section 43A of the Competition Act, dated 3 July 2018.

33
resolutions under the (Indian) Companies Act, 2013 that is sufficient to constitute negative
control.

Significantly, in another recent decision,35 the CCI penalised UltraTech Cement Limited
(UltraTech) for omitting to disclose material information36 (the UltraTech order) in relation to
its acquisition of the cement manufacturing plants of Jaiprakash Associates Limited (JAL). The
CCI held that UltraTech was required to furnish details of the shareholding of Kumar Mangalam
Birla (and his family members) (KMB/KMB Family) and the companies owned and controlled
by them in Century Textiles and Industries (Century) and Kesoram Industries (Kesoram), as both
these companies compete with JAL. While Ultratech contended that there was no requirement to
disclose these details as Century and Kesoram did not qualify as group entities and were not
controlled by a common shareholder, the CCI held that control included ‗material influence‘ in
addition to de facto and de jure control. The CCI interpreted material influence as the ‗presence
of factors that enable an entity to influence the affairs and management of another enterprise.
These factors include: shareholding, special rights, status and expertise of an enterprise or
person, Board representation, structural/financial arrangements etc.‘

Therefore, to the extent that KMB (1) had seats on both Century and UltraTech‘s boards of
directors, and (2) had chaired four of Century‘s 20 board meetings, he had the ability to exercise
‗material influence‘ over Century‘s affairs and may further distort competition on account of
having access to competitively sensitive information. The CCI also noted that KMB and KMB
Family had strategic shareholding in Kesoram and Century, which conferred them with negative
control over both the companies. The test of material influence has expanded the scope of what
the CCI considers as control from the globally recognised standard of decisive influence. This
expanded definition of control may separately implicate what constitutes ‗group‘ companies,
including for determining whether asset and turnover group thresholds are satisfied for notifying
the CCI, as the control test is a factor for determining whether two or more entities qualify as a
‗group‘.

35 UltraTech Cement Limited (C-2015/02/246, dated 12 March 2018).

36 Under Section 44(b) of the Competition Act.

34
Investors therefore need to keep in mind that even minority investments may be, and in certain
instances have been, viewed as an acquisition of control requiring notification to the CCI.37 This
could extend to entirely innocuous financial investments.

 Treatment of Joint Ventures(JVs)

One of the common ways in which investors choose to do business in India is by way of joint
ventures (JVs) with Indian counterparts. These joint ventures may be ‗greenfield‘ (i.e., through
the setting up of an entirely new enterprise) or ‗brownfield‘ (i.e., via an investment in an existing
enterprise).

The Competition Act does not specifically deal with JVs from a merger control perspective.
However, as setting up a greenfield JV or the entry of a new partner in a brownfield JV involves
the acquisition of shares, voting rights or assets, such acquisition may require notification to the
CCI, if the jurisdictional thresholds are met and are not otherwise eligible for any exemption.
A greenfield JV would involve the setting-up of a new enterprise, which by itself will not have
sufficient assets or turnover to trigger a notification. Prior to the March 2017 notification, where
any of the parent companies to the JV transfer assets to the JV at the time of incorporation, a
merger filing may have been triggered on account of the anti-circumvention rule in Regulation
5(9) of the Combination Regulations. The anti-circumvention rule requires that where, in a series
of steps or individual transactions that are related to each other, assets are being transferred to an
enterprise for the purpose of such enterprise entering into an agreement relating to an acquisition
or merger or amalgamation with another person or enterprise, for the purpose of Section 5 of the
Act, the value of assets and turnover of the enterprise whose assets are being transferred shall
also be attributed to the value of assets and turnover of the enterprise to which the assets are
being transferred. In such an event, despite the fact that the newly created joint venture may not
itself have any assets or turnover, the acquisition of shares, voting rights or assets in the joint
venture may require a notification to the CCI. However, the March 2017 notification clarifies
that when only a portion of an enterprise, division or business is involved in a transfer (i.e., in an
asset sale), then only the value of the assets and turnover of such portion of enterprise, division

37 See, for example, Piramal Enterprises Limited/ Shriram Transport Finance Company/Shriram Capital
Limited/Shriram City Union Finance Limited (C-2015/02/249, dated 2 May 2016), and Cairnhill CIPEF
Limited/Mankind Pharma Limited (C-2015/05/276 dated 13 April 2017).

35
or business should be considered and not the value of assets and turnover of the entire enterprise
housing the relevant business, division or portion.

The March 2017 notification therefore has created uncertainty over the application of the anti-
circumvention rule. As a general matter, the principles of statutory interpretation require a
harmonious construction between the substantive provisions of an enabling statute and a rule or
any other form of delegated legislation. As such, any delegated legislation has to be read and
construed consistent with the enabling statute. Accordingly, the anti- circumvention rule
(provided under the Combination Regulations which is delegated legislation by the CCI) should
be construed in light of, and consistently with, the provisions of the March 2017 notification
(enacted by the government of India).

Interestingly, the Combination Regulations also contains a ‗substance test‘ whereby the CCI can
look beyond a transaction structure and assess whether the substance of the transaction would
trigger a notification requirement to the CCI, and treat such a structure as the relevant structure
for the purpose of merger control.

 The merger control regime – relevant considerations to reviewing a combination

 The „appreciable adverse effect on competition‟ test

The Competition Act prohibits the entering into of any combination, which has or is likely to
have an AAEC in the relevant market in India, and treats all such combinations as void.38

Consistent with practices in other jurisdictions, the CCI first determines the relevant market or
relevant markets, and in that context considers the competitive effects of the combination. It then
considers a number of non-exhaustive factors set out in the Competition Act to determine
whether the combination is likely to cause an AAEC.

38 Section 6(1) Competition Act, 2002.

36
A relevant market is defined as the market, which may be determined with reference to the
relevant product market or the relevant geographic market or with reference to both the
markets.39

In turn, a relevant product market is defined as a market comprising all those products or
services that are regarded as interchangeable or substitutable by the consumer, by reason of
characteristics of the products or services, their prices and intended use.40 Notably, the CCI is
only required to consider products or services that are interchangeable or substitutable by
consumers. However, while the relevant product market has been defined from a consumer
perspective, Section 19(7) of the Competition Act identifies supply-side factors (such as
exclusion of in-house production and presence of specialized producers) that the CCI may also
consider in defining the relevant product market.

The relevant geographic market is a market comprising the area in which the conditions of
competition for supply of goods or provision of services or demand of goods or services are
distinctly homogenous and can be distinguished from the conditions prevailing in the
neighbouring areas.41 The Competition Act provides the factors that the CCI needs to assess for
determining the relevant geographic market.42 These are, regulatory trade barriers, local
specification requirements, national procurement policies, adequate distribution facilities,
transport costs, language, consumer preferences, and need for secure or regular supplies or rapid
aftersales services.

The CCI has also used economic tools such as the Elzinga-Hogarty test, the Herfindahl-
Hirschman Index and chains of substitution in certain cases43 to determine the scope of the
relevant market and market concentration, but this is more the exception than the rule.

39 Section 2(r) Competition Act, 2002.

40 Section 2(t) Competition Act, 2002.
41 Section 2(s) Competition Act, 2002.
42 Section 19(6) Competition Act, 2002.
43 Holcim/Lafarge, Linde/Praxair and Bayer/Monsanto.

37
Upon determining the boundaries of the relevant market or markets, the CCI considers the
competitive effects of the combination. The CCI is required to consider all or any of the
following factors:

(a). actual and potential level of competition through imports in the market;
(b). extent of barriers to entry into the market;
(c). level of combination in the market;
(d). degree of countervailing power in the market;
(e). likelihood that the combination would result in the parties to the combination being able to
significantly and sustainably increase prices or profit margins;
(f). extent of effective competition likely to sustain in a market; extent to which substitutes are
available or are likely to be available in the market;
(g). market share, in the relevant market, of the persons or enterprise in a combination,
individually and as a combination;
(h). likelihood that the combination would result in the removal of a vigorous and effective
competitor or competitors in the market;
(i). nature and extent of vertical integration in the market;
(j). possibility of a failing business;
(k). nature and extent of innovation;
(l). relative advantage, by way of the contribution to the economic development, by any
combination having or likely to have an AAEC; and
(m). whether the benefits of the combination outweigh the adverse impact of the combination, if
any.
In the approximately 600 cases that the CCI has reviewed so far, it has typically considered
factors such as the parties‘ and competitors‘ market shares, market concentration levels post-
combination, the number of competitors remaining post-combination, barriers to entry, extent of
growth in the market and countervailing buyer power to determine whether the combination
being considered is likely to cause an AAEC. In the past, CCI has stopped short of expressly
identifying an economic theory of harm to the parties or in its orders. An illustrative decision is
the PVR/DT case. With respect to the acquisition by PVR Limited (PVR) of the film exhibition
business of DLF Utilities Limited (DT), the CCI expressly considered that post-combination

38
market shares and increments, the lack of efficiencies, the likelihood that the combination would
result in the parties being able to significantly and sustainably increase prices or profit margins,
and the lack of incentives to innovate further as sufficient grounds to determine there would be
an absence of effective competitors and, therefore, the combination of PVR and DT would likely
have an AAEC.44 However, recently, in Bayer/Monsanto, the CCI identified harm to future
innovation efforts, input foreclosures, and portfolio effects such as exclusion of competitors
arising out of the transaction, before approving the transaction with modifications.

The CCI‘s analysis focused on whether a combination is likely to cause an AAEC in India, even
in cases where parties may have proposed global markets, or where markets are import-driven.

 Merger Remedies
An interesting development in the Indian merger control regime has been the perceptible shift in
the CCI‘s initial ‗soft attitude‘ in clearing mergers. Initially the CCI did not use its powers to
direct modifications to the terms of transactions or impose commitments to ensure compliance
with the provisions of the Competition Act. The provisions relating to combinations came into
force on 1 June 2011. Since then, the CCI has formally approved 15 different combinations
subject to modifications in the form of structural and behavioural commitments, even though
there are no formal guidelines on merger remedies as yet.

 Voluntary commitments offered by parties during Phase I investigations

In several cases, modifications have been volunteered by the parties themselves in the Phase I
stage rather than being directed by the CCI.45 In Mumbai International Airport Private
Limited/Oil PSUs46 the parties offered various behavioural remedies voluntarily, on the basis of
which approval was granted by the CCI. Typically, the CCI scrutinises non-compete provisions
closely and where it believes the duration or scope of the restriction is ‗excessive‘ directs parties
to undertake to modify the non-compete. For example, in Elder Pharmaceutical/Torrent
Pharmaceuticals,47 the CCI approved the transaction after the parties agreed to modify the scope

44 C-2016/07/414, dated 9 August 2016.

45 Regulation 19(3) of the Combination Regulation.
46 C-2014/04/164, dated 29 September 2014.
47 C-2014/01/148, dated 26 March 2014.

39
of a non-compete clause in the agreement and reduce its scope from five to four years. Similarly,
in Agila Specialities/Mylan Inc,48 Tata Capital/TVS Logistics,49 Clariant Chemicals (India)
Limited/Lanxess India Private Limited50 and Advent International Corporation/MacRitchie
Investments Private Limited,51 the CCI approved the transaction only after the parties undertook
to reduce the term of the non-compete clause. In Orchid Chemicals and Pharmaceuticals
Ltd/Hospira,52 the CCI acknowledged that a non-compete clause is essential to acquire the full
value of the asset, however, the clause must be reasonable in its application. In 2017, the CCI
issued a Guidance Note on Non-Compete Restrictions53 that sets out non-compete restrictions
that the CCI is likely to consider ‗ancillary‘ to a proposed transaction and therefore unlikely to be
viewed as problematic. More recently, where the CCI believes that a given non-compete is not
‗ancillary‘ to the proposed transaction, it simply records so in its approval decision.54 This is a
departure from its previous practice where it would direct parties to modify the non-compete
restriction in order to approve the proposed transaction. The likely objective of recording this
restriction is to empower the CCI to examine the impact of such ‗non-ancillary‘ non-competes
under the post facto behavioural provisions of the Competition Act.

In addition to non-compete clauses, the CCI has also accepted voluntary commitments and
approved transactions in Phase I review. For instance, in St Jude Medical Inc/Abbott
Laboratories,55 the parties offered voluntary structural remedies through divestment of assets. In
China National Chemical Corp/Syngenta AG,56 the CCI granted an approval subject to a remedy
proposal offered by the parties wherein they voluntarily agreed to treat two of their respective
Indian subsidiaries as separate independent businesses for seven years, in addition to divestment
of three formulated crop protection products sold by Syngenta in India. In Dish TV/Videocon,57
the CCI granted an approval after it accepted voluntary commitments offered by the parties that

48 C-2013/04/116, dated 20 June 2013.

49 C-2015/06/286, dated 29 July 2015.
50 C-2016/02/373, dated 11 May 2016.
51 C-2015/05/270 dated 12 June 2015.
52 C-2012/09/79, dated 21 December 2012.
53 Available at http://cci.gov.in/sites/default/files/Non-Compete/Introductory_%20para_on_Non-compete.pdf.
54 BCP Topco VI Pte Ltd/Sona BLW Precision Forgings Ltd, C-2018/11/611, dated 19 December 2018; SVF
Doorbell (Cayman) Ltd/Delhivery Pvt Ltd, C-2019/01/633, 21 February 2019; Tirumula Milk Products Pvt
Ltd/Sunfresh Agro Industries Pvt Ltd, C-2019/02/644, dated 22 March 2019.
55 C- 2016/08/418, dated 13 December 2016.
56 C-2016/08/424, dated 16 May 2017.
57 C-2016/12/463, dated 4 May 2017.

40
included bearing the cost of (1) realigning and re-configuring antennae installed by customers to
make it compatible with the transponders; and (2) the antenna and set-top box, which may be
required to be changed as a result of the transaction. Similarly, in JFDHL/Den Networks58 and
JCDHPL/Hathway59 that, like Dish TV/Videocon, also concerned the cable market, the CCI
granted approval after accepting similar undertakings. These undertakings include (1) bearing the
cost of realignment or change in customer premises equipment, in case of technical realignment
as well as customers retaining the liberty to bundle any of broadband, cable TV and telephone
without a ‗pre-fixed‘ set, and (2) providing compliance reports to the CCI for five years.
Northern TK Venture/Fortis Healthcare60 involved an investment by Northern TK Venture
(Northern TK) in Fortis Healthcare Hospital and Fortis Malar Hospital. Norther TK/IHH had
existing investments in a competing hospital, Apollo Gleneagles Hospital. The CCI approved the
transaction after accepting voluntary commitments to ensure that the competing hospitals
operated independently and did not have common directors, and that the commercially sensitive
information relating to pricing data and day-to-day operations was not exchanged or disclosed,
including through directors and the enforcement of disciplinary action. Northern TK was also
directed to submit a compliance certificate, along with supporting affidavits by the respective
directors, confirming compliance of the voluntary commitments, to be supplied annually.

 Modifications directed by the CCI pursuant to Phase II investigations

In almost a decade of merger control enforcement, the CCI has directed eight modification
orders following Phase II investigations, of which, save one, directed structural modifications. In
Sun/Ranbaxy, Holcim/Lafarge and PVR Cinemas/DT, the CCI approved the transactions on the
condition that certain assets of the parties involved in these transactions would be divested to
third parties to prevent AAEC in the relevant markets identified. Interestingly, the CCI also
issued a revised divestment order in Holcim/Lafarge after the original divestment process ran
into regulatory hurdles. In Dow/DuPont, CCI approved the transaction, subject to the divestment
of assets, cancellation of certain trademarks and a commitment that the parties would not enter
the market for Flusilasole, a fungicide (the underlying active ingredient and formulations) for a
certain duration, and also sell off their MAH grafted polyethylene business. In Agrium/Potash,

58 C-2018/10/609, dated 21 January 2019.

59 C-2018/10/610, dated 21 January 2019.
60 C-2018/09/601, dated 29 October 2018.

41
the CCI directed the divestment of PotashCorp‘s shareholding in three companies (divestment
assets) as well as a commitment to not acquire stake in the divested businesses for a period of 10
years. More recently, the CCI approved Linde/Praxair, subject to divestment of: (1) Linde India
Limited‘s entire shareholding in Bellary Oxygen Company Private Limited, a joint venture
between Linde India Ltd and Inox Air Products Limited; (2) Praxair‘s three on-site plants in the
east region of India, located at Jamshedpur, and two cylinder filing stations located at Asansol
and Kolkata; and (3) Linde‘s one on-site plant in the South Region of India, located at Bellary,
Karnataka and two cylinder filing stations located at Hyderabad and Chennai. CCI also recently
approved the Bayer/Monsanto transaction subject to a detailed modification plan that included
divestments and voluntary commitments by Bayer. The CCI directed the divestment of two
businesses of Bayer – its global glufosinate ammonium business and global broad acre crop
seeds and traits business – to an approved purchaser and accepted the following voluntary
commitments: (1) exercise broad licensing policies in India; and (2) not to offer clients bundled
products. As with other divestments, the CCI appointed a Divestiture and Monitoring Agency to
oversee the implementation of the modifications and directed Bayer to undertake to submit
regular compliance reports to the Monitoring Agency every six months for the duration of the
commitments. According to public reports,61 the CCI has also recently approved Schneider
Electric India Pvt Ltd‘s acquisition of Larsen and Toubro‘s electrical and automation business
after accepting behavioural commitments.62

 Merger filing time frames

As stated above, the June 2017 notification63 does away with the requirement to necessarily
notify a combination within 30 calendar days of the trigger event, which may be:

(a). the final approval of the merger or amalgamation by the board of directors of the enterprises
concerned; or
(b). the execution of any agreement or other document for the acquisition of shares, voting
rights, assets or control.

61 https://energy.economictimes.indiatimes.com/news/power/competition-comm-gives-nod-to-schneider-lt-
deal/68941742.
62 C-2018/05/573, the detailed order is not public yet.
63 Government of India Notification dated 29 June 2017, S.O. 2039(E).

42
The term ‗other document‘ has been defined as being any binding document, by whatever name,
conveying an agreement or decision to acquire control, shares, voting rights or assets, and
includes any document executed by the acquirer conveying the decision to acquire, in the case of
hostile acquisitions. Interestingly, the CCI had introduced a third category of trigger event, which
is the public announcement (PA) under the Takeover Code made by parties for the acquisition of
shares, voting rights or control in a publicly listed enterprise. The PA was introduced as a
‗trigger‘ by way of an amendment to the Combination Regulations in January 2016. The
Combination Regulations now state that where a public announcement has been made in terms of
the Takeover Code, for acquisition of shares, voting rights or control, such public announcement
shall be deemed to be the ‗other document‘.64 Over time, the CCI also appears to have expanded
the scope of trigger events to include:

(a). binding term sheets;65

(b). non-binding term sheets;66
(c). contract notes and collaboration agreements;67
(d). settlement agreements or agreed structures;68 and implementation agreements.69
While the 30-day filing deadline has been done away with the trigger event still marks the time
from which parties‘ suspensory obligations kick in.

The CCI has also made it mandatory for parties to file a single notification for interconnected
transactions, one or more of which qualify as a notifiable combination. While what constitutes
‗interconnected‘ is somewhat indeterminate, and is essentially determined by the CCI on a case-
by-case basis, transactions do not need to have any causal link or interdependence. The CCI‘s
decisional practice identifies the following parameters for determining whether two or more
transactions are interconnected:

64 Regulation 5(8) of the Combination Regulations.

65 Caladium Investment Pte Ltd/Bandhan Financial Services Limited (C-2015/01/243), dated 5 March 2015.
66 NBCC (India) Limited/Hindustan Steel Works Construction Limited (C-2017/03/491), dated 31 March 2017.
67 Piramal Enterprises Limited/Shriram Transport Finance Company (C-2015/02/249), dated 26 May 2015.
68 Public Sector Pension Investment Board/ Grupo Isolux Corsán SA (C-2015/10/330), 3 December 2015.
69 Ultratech Cement Limited/Jaypee Cement Corporation Limited (C-2013/10/135) dated 20 December 2013.

43
(a). commonality of business and parties involved;
(b). simultaneity in negotiation, execution and consummation of transaction documents;
(c). commercial feasibility of isolating the two transactions – i.e., whether one would happen
without the other; and
(d). cross-conditionalities in transaction documents or public announcement of the parties.70

Moreover, there is no time limit under the Competition Act or the Combination Regulations
within which the CCI would consider transactions to be interconnected (unlike in the EU),
though the CCI does not consider transactions before 1 June 2011 notifiable, as this was the date
on which the Indian merger control provisions came into force. One of the most notable
implications of two transactions being viewed as interconnected is the extension of CCI‘s review
jurisdiction and standstill obligations to such transactions that may have otherwise been exempt
from notification requirements.

Parties have the option of notifying the CCI in either Form I, which is the default short-form
notification, or in Form II, the more detailed long-form notification, where the parties have a
horizontal overlap of over 15 per cent or a vertical overlap of over 25 per cent – although more
recently, where combined market shares exceed 15 per cent, the CCI requires parties to file in the
longer Form II. In a recent round of amendments to the Combination Regulations, the CCI
overhauled the format of Form I, streamlining it and introducing accompanying guidance notes
to assist parties in filing Form I.

Once notified, the CCI is bound to issue its prima facie opinion within 30 working days of filing,
not accounting for ‗clock stops‘; namely, when the CCI asks for additional information or directs
parties to correct defects in their submissions. However, the CCI is also bound to issue its final
order within 210 calendar days, even though the Combination Regulations provide that the CCI
will ‗endeavour‘ to pass relevant orders or directions within 180 days. In practice, the CCI has
cleared the vast majority of all transactions within 30 working days (excluding ‗clock stops‘),
therefore giving positive signals to the business community.

70 Orders passed under Section 43A in Thomas Cook, C-2014/02/153 dated 21 May 2014 and Piramal Enterprises
Limited, C-2015/02/249 dated 2 May 2016; Mandala Rose Co-Investment Limited/Jain Irrigation Systems Limited,
C-2015/12/356 dated 28 March 2016.

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  Invalidation of notifications
The CCI has enhanced powers to invalidate a notification within the 30-working-day review
period in three circumstances:

(a). if it is not in accordance with the Combination Regulations;

(b). if there is any change in the information submitted in the notification, which affects the
competitive assessment of the CCI; and
(c). if the transaction was notified in Form I, but the CCI is of the view that the transaction ought
to have been notified in Form II (in this case, the CCI returns the Form I notification and directs
parties to re-file in Form II).

While the CCI has the discretion to grant notifying parties a hearing before it determines to
invalidate a notification, it is not mandatory for the CCI to do so. Further, the time taken by the
CCI to arrive at such decision is excluded from the review clock.

The CCI appears to have used this power for invalidation in a technical fashion. In BNP
Paribas/Sharekhan,71 the CCI invalidated a notification on the technical ground that the
individual who signed the notification on behalf of the notifying party was not properly
authorised to do so. In GE/Alstom,72 the CCI directed the parties to re-file the notification
entirely in Form II (even for markets where there was insignificant overlap), as they had
provided more detailed Form II level information only where overlaps were in excess of the
market-share thresholds prescribed under the Combination Regulations. Recently, the CCI
directed parties to re-file the Bandhan/Gruh73 merger primarily because in some narrower
segments the (indirect) combined market shares was greater than 15 per cent, although there was
a miniscule incremental increase in market shares.74

71 C-2015/12/354, dated 22 December 2015.

72 C-2015/01/241, dated 5 May 2015.
73 C-2019/03/651, approved on 15 April 2019 (detailed order not available yet).
74 C-2019/03/651, approved on 15 April 2019 (detailed order not available yet).

45
Gun-jumping (or failure to file)

The June 2017 notification puts an end to the possibility of penalties for delayed filing.
Transacting parties will no longer be constrained to decide on the strategy, collect information
and make the filing within the short window of 30 calendar days. However, failure to file before
implementation of the transaction or gun-jumping risks empowers the CCI to impose a penalty of
up to 1 per cent of the assets or turnover of the combination, whichever is higher.75 The
maximum penalty imposed to date is 50 million rupees each in Piramal Enterprises/Shriram76
and GE/Alstom77 – both penalties were much lower than the statutory upper limit. Typically,
proceedings initiated by the CCI to examine gun-jumping concerns are initiated in parallel and
do not hold up the substantive review of the notified combination. In Chhatwal Group
Trust/Shrem Roadways Private Limited,78 the CCI levied a penalty of 1 million rupees on
Chhatwal Group Trust, finding that the payment of ‗token money‘ in advance of signing
definitive transaction documents amounts to implementation of the proposed transaction and
resulted in gun-jumping. While passing this order, the CCI considered its recent orders in In Re:
UltraTech Cement Limited79 and In Re: Adani Transmission Limited,80 where penalty was
levied on the acquirers for pre-payment of consideration, in part or full, which was construed as
steps towards consummating the transactions, acting as gun-jumping.

In a recent gun-jumping decision passed by the CCI, a penalty of 1 million rupees was imposed
on the acquirer for simply including an anteriority clause relating to certain conduct that
identified a notional date falling before receipt of the CCI‘s approval (Bharti Airtel Ltd/Tata
Teleservices Limited69). Although the relevant conduct took place only after the CCI‘s approval,
the CCI found that the act of identifying a notional date that was before the CCI approval was
likely to reduce the target‘s incentive to compete with the acquirer from such a notional date. In

75 Under Regulation 8 of the Combination Regulations where the parties to the combination fail to file notice under
Section 6(2) of the Competition Act, the CCI may, either upon its own knowledge or Information Inquire into
whether such a combination has caused AAEC on competition within India and accordingly direct the parties to file
a notice under either Form I or Form II. Section 43A of the Competition Act provides for penalty leviable for failure
to comply with directions of Commission and Director General, including failure to file notice.
76 C-2015/02/249, penalty order dated 26 May 2015.
77 C-2015/01/241, penalty order dated 16 February 2016.
78 C-2018/01/544, penalty order dated 8 August 2018.
79 C-2015/02/246, penalty order passed on 12 March 2018.
80 C-2018/01/547, penalty order passed on 30 July 2018.

46
the Telenor order, the CCI levied a penalty of 500,000 rupees on Telenor ASA for implementing
certain transaction steps, which were not explicitly notified to the CCI for approval but were
nevertheless disclosed to the CCI by way of another filing. As these decisions indicate, the CCI
appears to be taking a strict and somewhat narrow interpretation of gun-jumping that may not
require actual conduct towards implementing the transaction, but does involve scrutinising
transaction documents to ascertain if any conduct reduces competitiveness in the market.

Penalty for making false statements and non-disclosure of material information

The CCI levied penalties for omission to disclose material information81 in the UltraTech order.
The CCI held that UltraTech was required to furnish details of the shareholding of KMB/KMB
Family and the companies owned or controlled by them, since they had the ability to exercise
‗material influence‘ and negative control over competitors of JAL, namely, Century and
Kesoram.

81 Under Section 44(b) of the Competition Act.

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 CHAPTER 3
COMPETITION COMMISSION OF INDIA & COMBINATION REGULATIONS

3.1 Monopolistic & Restrictive Trade Practices Act,1969

The Monopolies & Restrictive Trade Practices (MRTP) Act, 1969, aims at preventing
concentration of economic power in the hands of few business houses. The Act provides for
control of monopolies, probation of monopolistic, restrictive and unfair trade practice and
protection of consumer interests. Premises on which the MRTP Act rests are unrestrained
interaction of competitive forces, maximum material progress through rational allocation of
economic resources, availability of goods and services of quality at reasonable prices and finally
a just and fair deal to the consumers.
 Aim of Monopolistic and Restrictive Trade Practices (MRTP) Act, 1969:

1. Prevention of concentration of economic power to the common detriment.

2. Control of monopolies.
3. Prohibition of Monopolistic Trade Practices (MTP).
4. Prohibition of Restrictive Trade Practices (RTP).
5. Prohibition of Unfair Trade Practices (UTP).82

The Act has three areas of Regulatory Provisions: Concentration of economic Power,
Competition Law and Consumer Protection. The MRTP Act 1969 came up to ensure that there is
no concentration of economic power at a single place. Besides it also checked the restrictive,
monopolistic and restrictive trade practices. The main body to monitor this act is MRTP
Commission that has right to inquire into any complaint that is related to monopolistic trade
practice and is also having right for recommending any concrete plans for making any action to
the central government. The MRTP is the only body that has the right to inquire, cease or award
compensation in case there are some restrictive and unfair trade practices being practiced.

Definition of Monopolistic Trade Practice

82 ―Monopolistic and Restrictive Trade Practices (MRTP) Act, 1969?,‖ https://www.owlgen.com/question/what-is-

monopolistic-and-restrictive-trade-practicesmrtp-act-1969/

48
The act defines the Monopolistic Trade Practice as ―Such practice indicates misuse of one‘s
power to abuse the market in terms of production and sales of goods and services.

 Firms involved in monopolistic trade practice tries to eliminate competition from the
market.
 Then they take advantage of their monopoly and charge unreasonably high prices. They
also deteriorate the product quality, limit technical development, prevent competition and
adopt unfair trade practices‖

Definition of Unfair Trade Practice

The act defines Unfair Trade Practice as
 False representation and misleading advertisement of goods and services.
 Falsely representing second-hand goods as new.
 Misleading representation regarding usefulness, need, quality, standard, style etc of goods
and services.
 False claims or representation regarding price of goods and services.
 Giving false facts regarding sponsorship, affiliation etc. of goods and services.
 Giving false guarantee or warranty on goods and services without adequate tests.

Definition of Restrictive Trade Practice

The act defines Restrictive Trade Practice as ―The traders, in order to maximize their profits and
to gain power in the market, often indulge in activities that tend to block the flow of capital into
production. Such traders also bring in conditions of delivery to affect the flow of supplies leading
to unjustified costs.‖

Monopolies and Restrictive Trade Practices Commission

Monopolies and Restrictive Trade Practices Commission (MRTPC) was set up under section 5 of
the Monopolies and Restrictive Trade Practices Act, 1969.83 The MRTPC is an organ of
Department of Company Affairs, Ministry of Company Affairs, Government of India.
 MRTPC was a quasi-judicial body.

83 https://www.gktoday.in/gk/the-monopolies-and-restrictive-trade-practices-act-1970/

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  Major function of the MRTP Commission is to enquire into and take appropriate action in
respect of unfair trade practices and restrictive trade practices.
 In regard to monopolistic trade practices the Commission is empowered to inquire into
such practices.
 Upon a reference made to it by the Central Government.
 Upon its own knowledge or information and submit its findings to Central Government
for further action.

Concepts Addressed under the Act

It is important to first understand the salient features that govern the Act in order to truly
understand the scope of their applicability and the practical difficulties that arose in their
implementation. Following are the concepts addressed under the Act –

 Command and Control Approach – The Act made it mandatory for enterprises having
assets exceeding Rs. 20 crores to take approval of the Central Government before any
kind of corporate restructuring or takeover. The criterion for identifying the dominant
undertakings was also fixed. Enterprises having assets of more than Rs. 1 crore were
automatically considered as dominant.84
 Monopolistic Trade Practices – MTPs as covered under the Chapter IV of the MRTP
Act are the activities undertaken by Big Business Houses by abusing their market
position that hamper or eliminate healthy competition in the market. Such practices
are anti-consumer-welfare.
 Restrictive Trade Practices– RTPs are activities that block the flow of capital or
profits in the market. Some firms tend to control the supply of goods or products in
the market either by restricting production or controlling the delivery. MRTPA
discourages and prevents the firms from indulging in RTPs.85
 Unfair Trade Practices – UTP is basically an act of false, deceptive, misleading or
distorted representation of facts pertaining to goods and services by the firms. Section

84 Mohammad Asad Mahmood, Critical Analysis of Competition Law in India, Latestlaws.com.

85 R. Shyam Khemani, India‘s Competition Policy Reforms, 30 Int‘l Bus. Law. 7 (2002).

50
 36-A of the MRTPA prohibits firms from indulging in Unfair Trade Practices (UTPs).
This provision was inserted by the landmark 1984 Amendment to the MRTPA.86

MRTPA also provided for the establishment of MRTP Commission which shall be a regulatory
authority to deal with the offences under the MRTPA. At the time of its enactment, the MRTPA
being the first legislation addressing the competition law issues in India seemed to be a perfect
law to catch the defaulters. However, with the passage of time, the wave of globalization that
entered the country changed the whole scenario87. There arose a need for modifications in the
existing MRTP Act in order to keep it at pace with the changing economic scenario.

Why did it fail?

Following are the reasons that led to the failure of MRTP Act, 1969 –

1. Excessive Government Control – Under the MRTP Act, both small and big
businesses were subjected to excessive government control. It was mandatory for the
enterprises to take approvals from the government before carrying out any kind of
corporate restructuring or takeover. The presence of such complex procedures, many
firms found it difficult to survive, thereby affecting the final consumers.88
2. Vague and ambiguous law – Section 2(o) of the MRTP Act defined the term
‗restrictive trade practices‘ which covered any activity that prevented, distorted or
restricted competition. There was no specific provision that defined the various kinds
of anti-competitive activities that would be termed as offences under the Act. Anti –
competitive practices such as cartels, bid rigging, abuse of dominance, collusion,
price-fixing, predatory pricing etc were nowhere defined89 Section 2(o) thus included
all types of possible offences within its ambit thereby leading to a large variety of
interpretations by various courts wherein the core essence of the law was lost.
3. Per se rule instead of Rule of Reason – In the MRTP Act there were as much as 14
offences that were considered as per se illegal. The concept of Rule of Reason was not

86 Shiju Varghese Mazhuvanchery, The Indian Competition Act: A Historical and Developmental Perspective, 3
Law & Dev. Rev. 241 (2010).
87 CUTS International, National Law University, Jodhpur & , Study of Cartel Case Laws in Select Jurisdictions –
Learnings for the Competition Commission of India, COMPETITION COMMISSION of INDIA, Apr. 25, 2008.
88 Sahil Parikh, Background and Basics of Competition Law, S.H. Bathiya & Associates, Sept. 21, 2012.
89 Haridas Exports vs. All India Float Glass Manufacturers Association (2002), 6 SCC, 600.

51
 applied. Though the Supreme Court in the Telco case90 recognized the Rule of
Reason, but this development was again frustrated by the passage of the unfortunate
1984 Amendment which mandated that all listed RTPs under Section 33 shall be
treated as per se illegal.
4. Dominance per se bad – Under the MRTP Act, dominance was in itself considered as
bad, it didn‘t matter whether the party has abused it or not. There was a mathematical
formula for determining dominance i.e, the undertaking as to have 25% or more
control over market share of goods or services. However, the catch here was that that
if a firm acquired 20% or 23% of the market share at a particular time; the same was
not considered as dominant.91
5. Promotion of exports at any cost – Under Section 38 of MRTP Act, if any project
enterprise had a high potential for exports in future, it would cause the authority to
simply blindly approve all its applications under the Act without considering the any
anti-competitive or monopolistic shadow that it might have. Due to its excessive stress
on exports, it ignored all possible drawbacks that a project might have. In many cases,
it led to more costs being incurred than the foreign exchange earned through
exports.92
6. A Policy of Voluntary Disclosure – The MRTPA machinery was highly depended
upon voluntary disclosures made the enterprises as there was no agency that could
keep a 24*7 check on the market control and structuring of the companies. This
proved as a big leeway to the companies leading to late registrations or sometimes no-
registration of any change in the company structure. This acted as a means to keep the
company out of the purview of the Act.93
7. Inefficiency of the MRTP Commission – MRTP Commission was set up to regulate
the anti-competitive practices in the country. However, even though MRTPC had both
administrative and judicial functions, the members of the Commission were appointed

90 Telco v. Registrar of Restrictive Trade Agreements 1977 AIR 973, 1977 SCR (2) 685; Mahindra & Mahindra
Limited v/s Union of India 1984 (16) ELT 76 Bom, 1982 138 ITR 670 a Bom; Continental T.V. v GTE Sylvania;
Voltas Ltd v/s Union of India 433 U.S. 36 (1977).
91 Ministry of Human Resources and Development (MHRD), Evolution of Competition Law and Policy in India, E-
Pathshala .
92 Rahul Singh, Shifting Paradigms, Changing Contexts: Need for a New Competition Law in India, 8 J. Corp. L.
Stud. 143 (2008).
93 Vijay Kumar Singh, Competition Law and Policy in India: The Journey in a Decade, 4 NUJS L. Rev. 523 (2011).

52
 by the government itself which created a doubt upon the independence of its
functioning. Moreover, the Commission was not able to perform its functions
efficiently and effectively due to –

 Unnecessary delays in replacing the members of the Commission.

 Unwillingness of the government to appoint members promptly or in opening new
branch offices.
 Obsolescence – With the dynamic movement of the Indian trade market towards an open
and more globalised economy, especially after the New Economic Policy Reforms, led to
the MRTP Act soon becoming obsolete. It could not stand the tests of time which
required an overhauling of the competition law policies in India in consonance with the
new issues arising due to the entry of the large scale foreign firms in India.94
 No Extraterritorial Application – The MRTP Act, had no extraterritorial application
i.e, it could not be applied to business undertakings outside India even if their anti-
competitive conduct had a detrimental effect of the Indian market, unless one of the
parties were of Indian origin. Thus, when it came to activities such as international
cartels, MRTP Act was impotent. 95
 No penalties for offences – Section 12 of the MRTP Act dealt with the powers of MRTP
Commission and the types of orders that it can issue in case of taking place of any anti-
competitive activities. On a plain reading of the provision, we can infer that the
Commission did not have the power to impose harsh penalties or fines on the defaulters.
The best it can do is to issue ‗cease and desist‘ orders or charge nominal fines. Jail terms,
though provided for, were rarely imposed.96
 Concurrent Jurisdiction under Consumer Protection Act – Post 1984 Amendment,
Section 36A was inserted in the Act with the aim to protect the customers from UTPs. As
a result, the Commission was soon piled up with consumer complaints for defective
goods and inefficient services which were already provided for in the Consumer

94 Dorothy Shapiro, A Competition Act by India, for India: The First Three Years of Enforcement under the New
Competition Act, 5 Indian J. Int‘l Econ. L. 59 (2012).
95 Aditya Bhattacharjea, India‘s New Antitrust Regime: The First Two Years of Enforcement, 57 Antitrust Bull.
449 (2012).
96 Amit Kapoor, Competition Regulation-history, Insights and Issues for the Way Forward, 2009 Manupatra
(2009).

53
 Protection Act. The consumers were thus left with an option whether to approach the
Consumer Court or the MRTP Commission as they both had concurrent jurisdiction. The
majority of the time of the Commission was spend resolving consumer disputes while in
reality the primary purpose for which the Commission was set up was to regulate anti-
competitive practices. A backlog of these cases was subsequently transferred to CCI.97

Thus it was clear that MRTP Act, 1969 failed in fulfilling the object for which it was created in
the first place. The Commission did not have many powers and was most engaged in consumer
cases. Moreover, the various amendments that took place weakened and liberalized the
government‘s attitude towards monopolistic and anti-competitive practices, rather than
strengthening it.

3.2 Combination Regulations

Section 5 of the Competition Act explains the circumstances under which acquisition, merger or
amalgamation of enterprises would be taken as ‗combination‘ of enterprises.
They are enumerated here under:
1. The acquisition of one enterprise by another involves acquiring shares, voting rights or assets
of another enterprise to enable it to exercise control. If as a result, the value of assets or the
turnover of the combining enterprises or groups exceeds the specified thresholds the combination
is deemed to have potential of affecting the competition adversely.
2. Acquiring of control by a person over an enterprise when such person has already direct or
indirect control over another enterprise engaged in production, distribution or trading of a similar
or identical or substituted goods or provision of similar or identical or substituted service, if the
value of assets or turnover of both the said enterprises is more than the amount mentioned in
section 5(b).
3. Merger or an amalgamation of enterprise is a combination in case the enterprise remaining
after merger or the enterprise created as a result of merger has more than the assets or turnover
above the prescribed thresholds.

97 UK Essays, MRTP Act: Rise Fall and Need for Change: Eco Legal Analysis, November 2013.

54
Thus, the combination of two enterprises as a result of one having now been acquired, under the
same control is a combination having potential of affecting competition.
 Threshold Limits
Threshold limits in terms of assets or turnover are set out in merger control provisions of
competition statutes to determine which merger, acquisition or joint venture as the case may be,
will qualify as a combination or concentration or such transaction which is required to be
notified to or which may be reviewed by the competition authority. It may be noted that while
thresholds are essentially set out for the purpose of notification requirements, in India, they form
part of the definition of the term ‗combinations‘.
Goldberg observes that the application of thresholds for notification lessens the administrative
burden for competition authorities, compared with mandatory notification for all mergers, also
enabling competition authorities to focus on mergers most likely to cause concern.98 The ICN‖s
recommended practices for merger notification provide that thresholds should be clear,
understandable, based on objectively quantifiable criteria and on information that is readily
assessable to the merging parties.99
Thresholds limits have been set out in various jurisdictions in terms of assets of the undertakings
involved, turnover and net sales. In addition the laws/regulations also set out what is known as a
local nexus provision which requires a certain minimum part of the assets of the acquiring or
target company to be within the territorial limits of the country, the authority of which is
reviewing the transaction.100
Indian law has this local nexus provision while setting out the threshold limits. The section 5 of
Indian Competition Act, 2002 sets out certain thresholds and as already explained only an
acquisition, acquiring of control, merger or amalgamation above these thresholds is covered by
the definition of combination. The thresholds are:
(1) Enterprise Level: Parties to the combination have, either combined assets of morethan Rs.
1,500 crores or combined turnover of more than Rs. 4,500 crores in India. If both or any of the
parties to the combination have assets/turnover outside India also, then parties to the combination

98 Alan H. Goldberg, 2007, p. 96.

99 ICN Recommended Practices on Merger Notification Procedures, 2002, pp. 3-4, retrieved from
http://www.internationalcompetitionnetwork.org, accessed on 12 January, 2020 at 3.05 pm.
100 Id., p. 1. Such a provision is also in line with the recommended practices of the ICN, which provides
that the jurisdiction must be exercised only on those transactions that have appropriate nexus with the
jurisdiction concerned.

55
have, either combined assets of more than $750 million including at least Rs. 750 crores in India
or combined turnover of more than $2250 million including at least Rs. 2,250 crores in India. As
certain part of turnover or assets is required to be in India, thus Indian law has this local nexus
provision which is in line with the recommended practices of the International Competition
Network.
(2) Group Level: The group to which the enterprise whose control, shares, assets or voting rights
are being acquired i.e. the target enterprise would belong after the acquisition or the group to
which the enterprise remaining after the merger or amalgamation would belong has either assets
of more than Rs. 8,000 crores in India or turnover of more than Rs. 18000 crores in India. If the
group has assets/turnover outside India also, then the group has assets of more than $ 3 billion
including at least Rs. 750 crores in India or turnover of more than $ 9 billon including at least Rs.
2,250 crores in India.
Assets: Assets include fixed, current as well as intangible assets. Value of tangible assets is to be
determined by taking the book value of the assets as shown in the audited books of account of
the enterprise of the financial year immediately preceding the financial year in which the date of
proposed merger falls as reduced by depreciation.
For intangible assets value has to be determined if not shown. There will not be much difficulty,
it the enterprise has acquired the asset by purchase. In that case the amount paid is spread over
the economic life of the asset and the value for the unexpired period is taken into account.
Turnover: As defined in section 2(f) of the Competition Act ‗includes value of sale of goods or
services‘. Hence, the gross value of turnover has to be taken into account. In CIT v. Karur Vysya
Bank Ltd.101 it refers to total value of all sales is affected by a manufacturer or trader, or the
amount of money turnover in a business.
Thus, combinations below the given thresholds are beyond the jurisdiction of the Commission in
so far as regulation of combination is concerned. Section 20(3) provides that these thresholds are
subject to periodic revision by the Central Government so as to account inter alia for inflation
and exchange rate fluctuations.102 The value of assets or turnover can be enhanced or reduced
by the Central Government in consultation with the Commission, after every two years. There is,

101 (2000) 109 Taxman 168 (Mad.).

102 Vinod Dhall, ―The Indian Competition Act, 2002‖, in Vinod Dhall (ed.) Competition Law Today:
Concepts, Issues and the Law in Practice, Oxford University Press, New Delhi, 2007, pp. 498-539,
p. 526.

56
thus, no rigidity about the threshold monetary limit to define a combination. But setting of
thresholds does not solve all the problems because in some cases small mergers which do not
meet the monetary requirements can have adverse impact on competition. On the other hand
large conglomerates will have to incur heavy notification fee and wait for 210 to acquire a small
company that has no significant presence in the market and where the acquirer alone meets the
minimum thresholds. Moreover, setting of thresholds in terms of assets and turnover as done
under our Competition Act may prove to be troublesome for capital intensive industries such as
oil and gas which may lead to an in-consequential merger covered under the provisions of the
Act.
Section 6: Regulation of Combinations
Section 6 of the Competition Act deals with regulation of combinations. It contains a prohibition
against a combination which causes or is likely to cause an appreciable adverse effect on
competition and also provisions requiring pre-notification of combinations. All types of intra-
group combinations, mergers, demergers, reorganizations and other similar transactions should
be specifically exempted from the notification procedure and appropriate clauses should be
incorporated in sub-regulation 5(2) of the Regulations.
Section 6(1) states that no person or enterprise shall enter into a combination which causes or is
likely to cause an appreciable adverse effect on competition within the relevant market in India
and such a combination shall be void.
A combination leads to adverse effect only if it creates a dominant enterprise which is likely to
abuse its dominance. Market dominance need not necessarily lead to abuse. But when the
companies are too big, they can indulge in abuse and exploit the consumers through market
manipulation.103 But on the other hand, bigness has its own advantages in form of economies of
scale, accelerated growth and larger expenditure on research (such as in pharmaceuticals).
A combination, whether horizontal, vertical or conglomerate is to be tested by the standard of
section 6(1), that is, whether it ―causes or is likely to cause appreciable adverse effect on
competition within the relevant market in India‖ which requires a prediction of the
combination‘s impact on present or future competition. Section 6(1), therefore, requires not only

103 D.P. Mittal, 2011, p. 370, para 6.2.

57
an appraisal of the immediate impact of the combination on competition but also a prediction of
its effect on competitive conditions in future, to prevent the destruction of competition.104
This fact was well highlighted in FTC v. Proctor and Gamble Co.105 the Supreme Court of the United
States observed that any merger must be tested by the standard of Article 7 of the Clayton Act,
that is, whether it may substantially lessen competition, which requires a prediction of merger‘s
impact on present and future competition. In that case, Proctor and Gamble, a large, diversified
manufacturer of household products, acquired in 1957 the assets of Clorox Chemical Co., the
leading manufacturer of household liquid bleach, and the only one selling on a national basis.
Clorox had 48.8 percent of the national market with higher percentages in some regional areas.
Clorox and one other firm accounted for 65 percent of liquid bleach sales, and with other four
firms for almost 80 percent with the rest divided among more than 200 small producers. Proctor
is a dominant factor in the areas of soaps, detergents and cleaners, with total sales in 1957 in
excess of a billion dollars and an advertising budget of more than $80,000,000, due to which
Proctor receives substantial discounts from the media.
In the context of the Indian competition law, the above decision is relevant to suggest that while
judging illegality of a combination under section 6(1) thereof, what is required to be seen is not
only its immediate but also the likely effect in future, on the competition conditions.
Section 6(1) prohibits combination which causes or is likely to cause an appreciable adverse
effect on ‗competition within the relevant market in India.‘ The objective of the regulation is the
maintenance of competition and preservation of the competitive structure of the relevant market
in India. A combination which adversely affects or is likely to affect it is void. Thus, in order to
assess whether a combination shall have that effect, it is necessary to determine that:106
The combination has acquired a market power; As a result of which the competition is, or likely
to be effected adversely and appreciably within the relevant market.
Section 6(1) aims at preventing the creation of enterprises through acquisition or other
combinations which have the ability to exercise market power to adversely affect competition
within the relevant market in India. Therefore, it is first necessary to delimit the market in which
the enterprises compete and determine the relevant market in India before holding a combination
anti-competitive.

104 See, United States v. Philadelphia National Bank, 374 US 321.

105 386 US 586 as cited in D.P. Mittal, 2011, pp. 372-373, para 6.2-2.
106 D.P. Mittal, 2011, p. 373, para 6.2-3.

58
  Mandatory Reporting or Notification
Section 6(1), as aforesaid, prohibits a person or enterprise form entering into a combination
which causes or is likely to cause an appreciable adverse impact on competition within the
relevant market in India. Such a combination is void. There is however, an exception to this in
the form of section 6(2). Section 6(2) provides that any person or enterprise proposing to enter
into combination in terms of section 5 shall give notice to the Competition Commission of India.
The notice in the prescribed form with the fee as determined is to be given within thirty days of:
 Execution of an agreement or other document for acquisition or acquiring of control;
 Approval by the board of directors of the enterprise concerned with merger or
amalgamation;
In JSW Steel Ltd., In re,107 the CCI held that as per the details provided in the notice given
under section 6(2) and the assessment of the combination after considering the relevant factors
mentioned in section 20(4), it may be found that the proposed combination is not likely to have
appreciable adverse effect on competition in India and therefore CCI approved the proposed
combination under section 31(1).
Similarly in Alstom Bharat Forge Power Ltd. (ABFPL), In re,108 two power generation
companies i.e. ABFPL and KAPL, jointly gave a notice of the proposed combination pursuant to
approval by Board of Directors of these Companies to a scheme of amalgamation under the
provisions of the companies Act. Under proposed combination, KAPL will merge into ABFPL,
as a result of which KAPL will lease to exist and all assets and liabilities of KAPL would be
transferred to ABFPL. There existed no horizontal overlap between activities of ABFPL and
KAPL in India. Products of both the companies would be complementary to each other. The CCI
approved the merger after considering the details provided under section 6(2) and concluded that
the proposed combination was not likely to have appreciable adverse effect on competition
(AAEC) in India and approved the merger under section 31(1).
 Exemptions
 The Combination Act and Regulations provide that notice in respect of certain
combinations need not normally be filed with the Commission as those transactions are
ordinarily not likely to cause appreciable adverse effect which are:

107 (2014) 125 SCL 37 (para 11).

108 (2014) 125 SCL 34.

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  An acquisition of assets, referred to in sub-clause (i) or sub-clause (ii) of clause (a) of
section 5. - Acquisition of shares solely as an investment or in the ordinary course of
business and does not entitle the acquirer to hold 25% or more of total shares. - Where
the acquirer, are being acquired, prior to acquisition holds 50% or more shares or voting
rights whose shares are being acquired, except in the cases where the transaction results
in transfer from joint control to sole control. - Where the acquisition of assets is not
directly related to the business activity of the party acquiring the asset.
 An acquisition of stock-in-trade, raw materials, stores and spares, trade receivables and
other similar current assets in the ordinary course of business.
 An acquisition of shares or voting rights pursuant to a bonus issue or stock splits or
consolidation of face value of shares or buy back of shares or subscription to rights issue
of shares, not leading to acquisition of control.
 Any acquisition of shares or voting rights by a person acting as a securities underwriter or
a registered stock broker of a stock exchange on behalf of its clients.
 An acquisition of shares or voting rights or assets, by one person or enterprise, of another
person or enterprise within the same group.
 A merger or amalgamation of two enterprises where one of the enterprises has more than
50% shares or voting rights of the other enterprise, and/or merger in which more than
50% shares or voting rights in each of such enterprises are held by enterprise within the
same group.
 A combination referred to in section 5 of the Act taking place entirely outside India with
insignificant local nexus and effect on markets in India.

3.3 Other laws governing Mergers & Acquisitions in India

I. Accounting Standard-14 (AS-14), Accounting for Amalgamation, issued by The
Institute of Chartered Accountants of India (ICAI)
As per explanations given in AS-14, amalgamations fall into two broad categories:
amalgamation in the nature of merger and amalgamation in the nature of purchase.
An amalgamation should be considered to be an amalgamation in the nature of merger when all
the following conditions are satisfied:

60
❖ All the assets and liabilities of the transferor company become, after amalgamation, the assets
and liabilities of the transferee company.
❖ Shareholders holding not less than 90% of the face value of the equity shares of the transferor
company (other than the equity shares already held therein, immediately before the
amalgamation, by the transferee company or its subsidiaries or their nominees) become equity
shareholders of the transferee company by virtue of the amalgamation.
❖ The consideration for the amalgamation receivable by those equity shareholders of the
transferor company who agree to become equity shareholders of the transferee company is
discharged by the transferee company wholly by the issue of equity shares in the transferee
company, except that cash may be paid in respect of any fractional shares. The business of the
transferor company is intended to be carried on, after the amalgamation, by the transferee
company.
❖ No adjustment is intended to be made to the book values of the assets and liabilities of the
transferor company when they are incorporated in the financial statements of the transferee
company except to ensure uniformity of accounting policies.
An amalgamation should be considered to be an amalgamation in the nature of purchase, when
any one or more of the conditions specified above is not satisfied.
When an amalgamation is considered to be an amalgamation in the nature of merger, it should be
accounted for under the pooling of interests method. In preparing the transferee company‘s
financial statements, the assets, liabilities and reserves (whether capital or revenue or arising on
revaluation) of the transferor company should be recorded at their existing carrying amounts and
in the same form as at the date of the amalgamation. The balance of the Profit and Loss Account
of the transferor company should be aggregated with the corresponding balance of the transferee
company or transferred to the General Reserve, if any. If, at the time of the amalgamation, the
transferor and the transferee companies have conflicting accounting policies, a uniform set of
accounting policies should be adopted following the amalgamation. The effects on the financial
statements of any changes in accounting policies should be reported in accordance with
Accounting Standard 5
- Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies. The
difference between the amount recorded as share capital issued (plus any additional

61
consideration in the form of cash or other assets) and the amount of share capital of the transferor
company should be adjusted in reserves.
When an amalgamation is considered to be an amalgamation in the nature of purchase, it should
be accounted for under the purchase method. In preparing the transferee company‘s financial
statements, the assets and liabilities of the transferor company should be incorporated at their
existing carrying amounts or, alternatively, the consideration should be allocated to individual
identifiable assets and liabilities on the basis of their fair values at the date of amalgamation. The
reserves (whether capital or revenue or arising on revaluation) of the transferor company, other
than the statutory reserves, should not be included in the financial statements of the Accounting
for Amalgamations. Any excess of the amount of the consideration over the value of the net
assets of the transferor company acquired by the transferee company should be recognized in the
transferee company‘s financial statements as goodwill arising on amalgamation. If the amount of
the consideration is lower than the value of the net assets acquired, the difference should be
treated as Capital Reserve. The goodwill arising on amalgamation should be amortized to income
on a systematic basis over its useful life. The amortization period should not exceed five years
unless a somewhat longer period can be justified. Where the requirements of the relevant statute
for recording the statutory reserves in the books of the transferee company are to be complied
with, statutory reserves of the transferor company should be recorded in the financial statements
of the transferee company. The corresponding debit should be given to Amalgamation
Adjustment Account, which should be disclosed as a part of Miscellaneous Expenditure in the
balance sheet.
When the identity of the statutory reserves is no longer required to be maintained, both the
reserves and the aforesaid account should be reversed.
 Disclosure Requirement
For all amalgamations, the following disclosures should be made in the first financial statements
following the amalgamation:
(a) Names and general nature of business of the amalgamating companies,
(b) Effective date of amalgamation for accounting purposes,
(c) The method of accounting used to reflect the amalgamation and
(d) Particulars of the scheme sanctioned under a statute

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For amalgamations accounted for under the pooling of interests method, the following additional
disclosures should be made in the first financial statements following the amalgamation:
(a) Description and number of shares issued, together with the percentage of each company‘s
equity shares exchanged to effect the amalgamation and
(b) The amount of any difference between the consideration and the value of net identifiable
assets acquired, and the treatment thereof For amalgamations accounted for under the purchase
method, the following additional disclosures should be made in the first financial statements
following the amalgamation:
(a) Consideration for the amalgamation and a description of the consideration paid or
contingently payable and
(b) The amount of any difference between the consideration and the value of net identifiable
assets acquired, and the treatment thereof including the period of amortisation of any goodwill
arising on amalgamation.
When an amalgamation is effected after the balance sheet date but before the issuance of the
financial statements of either party to the amalgamation, disclosure should be made in
accordance with AS 4, ‗Contingencies and Events
Occurring After the Balance Sheet Date‘, but the amalgamation should not be incorporated in the
financial statements. In certain circumstances, the amalgamation may also provide additional
information affecting the financial statements.

II. The Companies Act, 1956

Companies in India are registered and regulated under the provisions of the Companies Act,
1956 which applies uniformly across India. Though the term ‗merger‘ is not defined under the
act, however, provisions dealing with schemes of arrangement or compromise between a
company, its shareholders and its creditors for the purposes of reconstruction, amalgamation and
combination transactions are thoroughly dealt with. The general law relating to M&As is
embodied in section 391 to 394 of the act and hence, a merger in India has to comply with the
provisions of these sections.

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  Section 391: Power to Compromise or Make Arrangements with Creditors and
Members
(1) Where a compromise or arrangement is proposed (a) between a company and its creditors or
any class of them; or (b) between a company and its members or any class of them, the Tribunal
may, on the application of the company or of any creditor or member of the company or, in the
case of a company which is being wound up, of the liquidator, order a meeting of the creditors or
class of creditors, or of the members or class of members, as the case may be to be called, held
and conducted in such manner as the Tribunal directs.
(2) If a majority in number representing three-fourths in value of the creditors, or class of
creditors, or members, or class of members as the case may be, present and voting either in
person or, where proxies are allowed under the rules made under section 643, by proxy, at the
meeting, agree to any compromise or arrangement, the compromise or arrangement shall, if
sanctioned by the Tribunal, be binding on all the creditors, all the creditors of the class, all the
members, or all the members of the class, as the case may be, and also on the company, or, in the
case of a company which is being wound up, on the liquidator and contributories of the
company, provided that no order sanctioning any compromise or arrangement shall be made by
the Tribunal unless the Tribunal is satisfied that the company or any other person by whom an
application has been made under subsection (1) has disclosed to the Tribunal, by affidavit or
otherwise, all material facts relating to the company, such as the latest financial position of the
company, the latest auditor's report on the accounts of the company, the pendency of any
investigation proceedings in relation to the company under sections 235 to 351, and the like.
(3) An order made by the Tribunal under sub-section (2) shall have no effect until a certified
copy of the order has been filed with the Registrar.
(4) A copy of every such order shall be annexed to every copy of the memorandum of the
company issued after the certified copy of the order has been filed as aforesaid, or in the case of
a company not having a memorandum, to every copy so issued of the instrument constituting or
defining the constitution of the company.
(5) If default is made in complying with sub-section (4), the company, and every officer of the
company who is in default, shall be punishable with fine which may extend to one hundred
rupees for each copy in respect of which default is made.

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(6) The Tribunal may, at any time after an application has been made to it under this section stay
the commencement or continuation of any suit or proceeding against the company on such terms
as the Tribunal thinks fit, until the application is finally disposed of.
 Section 392: Power of Tribunal to Enforce Compromise and Arrangement
(1) Where the Tribunal makes an order under section 391 sanctioning a compromise or an
arrangement in respect of a company, it (a) shall have power tosupervise the carrying out of the
compromise or an arrangement; and (b) may, at the time of making such order or at any time
thereafter, give such directions in regard to any matter or make such modifications in the
compromise or arrangement as it may consider necessary for the proper working of the
compromise or arrangement.
(2) If the Tribunal is satisfied that a compromise or an arrangement sanctioned under section 391
cannot be worked satisfactorily with or without modifications, it may, either on its own motion
or on the application of any person interested in the affairs of the company, make an order of
winding up the company, and such an order shall be deemed to be an order made under section
433 of this Act.
(3) The provisions of this section shall, so far as may be, also apply to a company in respect of
which an order has been made before the commencement of the Companies (Amendment) Act,
2001 sanctioning a compromise or an arrangement.
 Section 393: Information as to Compromises or Arrangements with Creditors and
Members
(1) Where a meeting of creditors or any class of creditors, or of members or any class of
members, is called under section 391, (a) with every notice calling the meeting which is sent to a
creditor or member, a statement should also be sent setting forth the terms of the compromise or
arrangement and explaining its effect; and in particular, stating any material interests of the
directors, managing director or manager of the company, whether in their capacity as such or as
members or creditors of the company or otherwise, and the effect on those interests of the
compromise or arrangement if, and in so far as, it is different from the effect on the like interests
of other persons; and (b) in every notice calling the meeting which is given by advertisement,
there shall be included either such a statement as aforesaid or a notification of the place at which
and the manner in which creditors or members entitled to attend the meeting may obtain copies
of such a statement as aforesaid.

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(2) Where the compromise or arrangement affects the rights of debentureholders of the company,
the said statement shall give the like information and explanation as respects the trustees of any
deed for securing the issue of the debentures as it is required to give as respects the company's
directors.
(3) Where a notice given by advertisement includes a notification that copies of a statement
setting forth the terms of the compromise or arrangement proposed and explaining its effect can
be obtained by creditors or members entitled to attend the meeting, every creditor or member so
entitled shall, on making an application in the manner indicated by the notice, be furnished by
the company, free of charge, with a copy of the statement.
(4) Where default is made in complying with any of the requirements of this section, the
company, and every officer of the company who is in default, shall be punishable with fine
which may extend to fifty thousand rupees]; and for the purpose of this sub-section any
liquidator of the company and any trustee of a deed for securing the issue of debentures of the
company shall be deemed to be an officer of the company, provided that a person shall not be
punishable under this subsection if he shows that the default was due to the refusal of any other
person, being a director, managing director, manager or trustee for debenture holders, to supply
the necessary particulars as to his material interests.
(5) Every director, managing director, or manager of the company, and every trustee for
debenture holders of the company, shall give notice to the company of such matters relating to
himself as may be necessary for the purposes of this section; and if he fails to do so, he shall be
punishable with fine which may extend to five thousand rupees.
Section 394: Provisions for Facilitating Reconstruction and Amalgamation of
Companies
(1) Where an application is made to the Tribunal under section 391 for the sanctioning of a
compromise or arrangement proposed between a company and any such persons as are
mentioned in that section, and it is shown to the Tribunal (a) that the compromise or arrangement
has been proposed for the purposes of, or in connection with, a scheme for the reconstruction of
any company or companies, or the amalgamation of any two or more companies; and (b) that
under the scheme the whole or any part of the undertaking, property or liabilities of any company
concerned in the scheme (in this section referred to as a "transferor company") is to be
transferred to another company (in this section referred to as "the transferee company"), the

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Tribunal may, either by the order sanctioning the compromise or arrangement or by a subsequent
order, make provision for all or any of the following matters:
(i) the transfer to the transferee company of the whole or any part of the undertaking, property or
liabilities of any transferor company;
(ii) the allotment or appropriation by the transferee company of any shares, debentures policies,
or other like interests in that company which, under the compromise or arrangement, are to be
allotted or appropriated by that company to or for any person;
(iii) the continuation by or against the transferee company of any legal proceedings pending by
or against any transferor company;
(iv) the dissolution, without winding up, of any transferor company;
(v) the provision to be made for any persons who, within such time and in such manner as the
Court directs dissent from the compromise or arrangement; and
(vi) such incidental, consequential and supplemental matters as are necessary to secure that the
reconstruction or amalgamation shall be fully and effectively carried out, provided that no
compromise or arrangement proposed for the purposes of, or in connection with, a scheme for
the amalgamation of a company, which is being wound up, with any other company or
companies; shall be sanctioned by the Tribunal unless the Court has received a report from the
Registrar that the affairs of the company have not been conducted in a manner prejudicial to the
interests of its members or to public interest, provided further that no order for the dissolution of
any transferor company under clause (iv) shall be made by the Tribunal unless the Official
Liquidator has, on scrutiny of the books and papers of the company, made a report to the
Tribunal that the affairs of the company have not been conducted in a manner prejudicial to the
interests of its members or to public interest.
(2) Where an order under this section provides for the transfer of any property or liabilities, then,
by virtue of the order; that property shall be transferred to and vest in and those liabilities shall
be transferred to and become the liabilities of the transferee company and in the case of any
property, if the order so directs, freed from any charge which is, by virtue of the compromise or
arrangement, to cease to have effect
(3) Within thirty days after the making of an order under this section, every company in relation
to which the order is made shall cause a certified copy thereof to be filed with the Registrar for
registration. If default is made in complying with this sub-section, the company, and every

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officer of the company who is in default, shall be punishable with fine which may extend to five
hundred rupees.
(4) In this section (a) "property" includes property rights and powers of every description; and
"liabilities" includes duties of every description; and (b) "Transferee company" does not include
any company other than a company within the meaning of this Act; but "transferor company"
includes anybody corporate, whether a company within the meaning of this Act or not.

III. Foreign Exchange Management Act, 1999

Foreign Exchange Management Act (‗FEMA‘) was enacted to consolidate and amend the law
relating to foreign exchange in India, with the object of promoting external trade and
maintenance of the foreign exchange market in India.
All foreign investments are regulated by FEMA and under the extant Foreign Direct Investment
(‗FDI‘) Policy of the Government of India. FDI is one of the most dynamic and evolving piece of
regulation that generates a lot of global interest for obvious reasons. However, the FDI laws have
been a difficult piece of legislation which begs for more attention and thoroughness on behalf of
the draftsmen.
Foreign investments in India can be made either through the ―automatic route‖, i.e., without any
requirement of regulatory approvals or under the ―specific approval route‖. The FDI policy of
the Government of India, for the ―automatic route‖ specifies different sectoral caps for foreign
investments for certain sectors, such as 49% for the insurance sector (increased from 26%), 49%
for the telecommunication sector etc., capitalization requirements, such as, for the Non-Banking
Financial Companies and certain conditions such as for construction and development projects
including housing, commercial premises etc.
For the foreign investments made above the prescribed limits requires approval from Foreign
Investment Promotion Board (‗FIPB‘). Insurance companies and recently the defense sector have
seen some relaxations from the above restrictions. Wherever required, approval from the FIPB
generally takes 4-6 weeks. The process of transfer of shares from a resident to a non-resident or
vice versa has to be at a price determined according to the guidelines announced by Reserve
Bank of India. Further, approval of the FIPB is also necessary in case of transfer of shares from
the resident to the non-resident in case of a company falling within the regulatory sector.

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Similarly, an approval of the RBI is required in case of transfer of shares from resident to non-
resident or vice-versa in case of a company falling within the financial services sector.

IV. The Indian Income Tax Act (ITA), 1961:

Merger has not been defined under the ITA but has been covered under the term 'amalgamation'
as defined in section 2(1B) of the Act. To encourage restructuring, merger and demerger has
been given a special treatment in the Income-tax Act since the beginning. The Finance Act, 1999
clarified many issues relating to Business Reorganizations thereby facilitating and making
business restructuring tax neutral. As per Finance Minister this has been done to accelerate
internal liberalization. Certain provisions applicable to mergers/demergers are as under:
Definition of Amalgamation/Merger — Section 2(1B). Amalgamation means merger of either
one or more companies with another company or merger of two or more companies to form one
company in such a manner that:
 All the properties and liabilities of the transferor company/companies become the
properties and liabilities of Transferee Company.
 Shareholders holding not less than 75% of the value of shares in the transferor company
(other than shares which are held by, or by a nominee for, the transferee company or its
subsidiaries) become shareholders of the transferee company.
The following provisions would be applicable to merger only if the conditions laid down in
section 2(1B) relating to merger are fulfilled:
(1) Taxability in the hands of Transferee Company — Section 47(vi) & section 47
(a) The transfer of shares by the shareholders of the transferor company in lieu of shares of the
transferee company on merger is not regarded as transfer and hence gains arising from the same
are not chargeable to tax in the hands of the shareholders of the transferee company. [Section
47(vii)]
(b) In case of merger, cost of acquisition of shares of the transferee company, which were
acquired in pursuant to merger will be the cost incurred for acquiring the shares of the transferor
company. [Section 49(2)].

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  Mandatory permission by the courts:
Any scheme for mergers has to be sanctioned by the courts of the country. The company act
provides that the high court of the respective states where the transferor and the transferee
companies have their respective registered offices have the necessary jurisdiction to direct the
winding up or regulate the merger of the companies registered in or outside India.
The high courts can also supervise any arrangements or modifications in the arrangements after
having sanctioned the scheme of mergers as per the section 392 of the Company Act. Thereafter
the courts would issue the necessary sanctions for the scheme of mergers after dealing with the
application for the merger if they are convinced that the impending merger is ―fair and
reasonable‖.
The courts also have a certain limit to their powers to exercise their jurisdiction which have
essentially evolved from their own rulings. For example, the courts will not allow the merger to
come through the intervention of the courts, if the same can be effected through some other
provisions of the Companies Act; further, the courts cannot allow for the merger to proceed if
there was something that the parties themselves could not agree to; also, if the merger, if
allowed, would be in contravention of certain conditions laid down by the law, such a merger
also cannot be permitted. The courts have no special jurisdiction with regard to the issuance of
writs to entertain an appeal over a matter that is otherwise ―final, conclusive and binding‖ as per
the section 391 of the Company act.

 Provisions Relating to Demergers

The term ‗demerger‘ in relation to companies is defined by Section 2(19AA) of the ITA to mean
the transfer, pursuant to a scheme of arrangement under the Merger Provisions by a demerged
company of its one or more undertakings, to any resulting company, in such a manner that:
❖ All the property of the undertaking, being transferred by the demerged company, immediately
before the demerger becomes the property of the resulting company by virtue of the demerger;
❖ All the liabilities relatable to the undertaking, being transferred by the demerged company,
immediately before the demerger, become the liabilities of the resulting company by virtue of the
demerger;

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❖ The property & the liabilities of the undertaking/undertakings being transferred by the
demerged company are transferred at values appearing in its books of account immediately
before the demerger;
❖ The resulting company issues, in consideration of the demerger, its shares to the shareholders
of the demerged company on a proportionate basis;
❖ The shareholders holding not less than 3/4ths in value of the shares in the demerged company
(other than shares already held therein immediately before the demerger, or by a nominee for, the
resulting company or its subsidiary) become shareholders of the resulting company(ies) by virtue
of the demerger, otherwise than as a result of the acquisition of the property or assets of the
demerged company or any undertaking thereof by the resulting company;
❖ The transfer of the undertaking is on a going concern basis;
❖ The demerger is in accordance with the conditions, if any, notified under subsection (5) of
section 72A by the Central Government in this behalf.
Section 2(19AAA) of the ITA defines the term ―demerged company‖ to mean a company, whose
undertaking is transferred, pursuant to a demerger, to a resulting company. Section 2(41 A)
defines a ―resulting company‖ to mean one or more companies (including a wholly owned
subsidiary thereof) to which the undertaking of the demerged company is transferred in a
demerger and, the resulting company in consideration of such transfer of undertaking, issues
shares to the shareholders of the demerged company.

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 CHAPTER 4
CASE STUDY & FILING OF COMBINATIONS
4.1 Procedure followed by CCI in Regulation of Combinations

The substantive aspects of the Indian merger control regime are set out under the Competition
Act, 2002 (specifically, Sections 5, 6, 20, 29 and 31). The procedural aspects are largely covered
under the Competition Commission of India (Procedure in Regard to the Transaction of Business
Relating to Combinations) Regulations, 2011 (the ‗Combination Regulations').
Notifiable transactions are reviewed and regulated by the Competition Commission of India
(CCI), a quasi-judicial body set up under the Competition Act, 2002 . The CCI has the following
powers:

 the power to approve transactions (Section 31(1));

 the power to disapprove/block transactions (Section 31(2));
 the power to impose modifications/conditions (ie, remedies) to a transaction (Section
31(1));
 the power to impose penalties for failure to comply with its orders (Section 42);
 the power to impose penalties for failure to comply with its directions (Section 43);
 the power to impose penalties for failure to notify a transaction (Section 43A); and
 the power to impose penalties for furnishing false or incomplete information on a
transaction (Sections 44 and 45).

 The Review Process

The review process for combination under the Act involves mandatory precombination
notification to the Commission. Any person or enterprise proposing to enter into a combination
shall give notice to the Commission in the specified form disclosing the details of the proposed
combination within 30 days of the approval of the proposal relating to merger or amalgamation
by the board of directors or of the execution of any agreement or other document in relation to
the acquisition, as the case may be. In case, a notifiable combination is not notified, the
Commission has the power to inquire into it within one year of the taking into effect of the
combination. The Commission also has the power to impose a fine which may extend to one per

72
cent of the total turnover or the assets of the combination, whichever is higher, for failure to give
notice to the Commission of the Combination.

 Forms of Notification
The Combination Regulations 2011 set out three different forms for filing a combination
notification:
 Form I (short form) with a fee of Rs 10 lakhs - Combination notifications must usually be
filed in Form I (Regulation 5(2)).
 Form II (long form) with a fee of Rs 40 lakhs- The parties to the combination have the
option to give notice in Form II. Form II is preferred where (Regulation 5(3)):
The parties to the combination either individually or jointly have a market share after
combination of more than 25% in the relevant market, in the case of any vertical overlaps; or
The parties to the combination have a combined market share after combination of more than
15% in the relevant market, in the case of any horizontal overlaps.
Procedure also mandates the compulsory filing of a Compact Disk (CD) with all the necessary
forms and documentation as part of the Combination Regulations.
i. Form III In case of public financial institutions, FIIs, bank or venture loan or any
investment agreement without fees in Form III

 Time Limit For Giving Notice to the Commission

Any person or enterprise proposing to enter into a combination shall notify the Commission in
the specified form disclosing the details of the proposed combination within 30 days of the
approval of such proposal by the board of directors or of the execution of any agreement or other
document.
The proposed combination cannot take effect for a period of 210 days from the date it notifies
the Commission or till the Commission passes an order, whichever is earlier. If the Commission
does not pass an order during the said period of 210 days the combination shall be deemed to
have been approved. The draft regulations propose to dispose of notifications within 30 days in
respect of Combination, which, in the opinion of the Commission, has little or no potential for
appreciable adverse effect on competition in Indian markets.

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In case of share subscription or financing facility or any acquisition, inter alia, by a public
financial institution, foreign institutional investor, bank or venture capital fund, pursuant to any
covenant of a loan agreement or investment agreement, details of such acquisition are required to
be filed with the Commission within seven days from the date of acquisition.

 Failure to File Notice (Regulation 8)

Where the parties to a combination fail to file notice, then Commission upon its own knowledge
or information relating to such combination, inquire into whether such a combination has caused
or is likely to cause an appreciable adverse effect on competition within India and direct the
parties to the combination to file notice in Form II within 30 days of the receipt of the notice.

1. Procedure for Investigation of Combinations

As per the Combination Regulations, the Commission shall form its prima facie opinion as to
whether the combination is likely to cause or has caused appreciable adverse effect on
competition within the relevant market in India within 30 days from the receipt of the notice. If
the Commission is prima facie of the opinion that a combination has caused or is likely to cause
adverse effect on competition in Indian markets, it shall issue a notice to show cause to the
parties as to why investigation in respect of such combination should not be conducted. On
receipt of the response, if Commission is of the prima facie opinion that the combination has or
is likely to have appreciable adverse effect on competition, the Commission shall deal with the
notice as per the provisions of the Act.

2. Inquiry Into Combinations

Combination evaluation involves the following process:
(a) Identification of the relevant market, consisting of relevant product market and relevant
geographic market
(b) Consideration whether the Combination has appreciable adverse effect on competition in the
relevant market in India
(c) Approval, rejection, or approval with modification of the Combination

3. Evaluation of Appreciable Adverse Effect on Competition

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The Act envisages appreciable adverse effect on competition in the relevant market in India as
the criterion for regulation of combinations. In order to evaluate appreciable adverse effect on
competition, the Act empowers the Commission to evaluate the effect of Combination on the
basis of factors mentioned in sub section (4) of section 20. These factors are indicated below:
Factors to be considered by the Commission while evaluating appreciable adverse effect of
Combinations on competition in the relevant market (sub -section (4) of section 20 of the Act)
―(a) Actual and potential level of competition through imports in the market;
(b) Extent of barriers to entry into the market;
(c) Level of concentration in the market;
(d) Degree of countervailing power in the market;
(e) Likelihood that the combination would result in the parties to the combination being able to
significantly and sustainably increase prices or profit margins;
(f) Extent to which substitutes are available or are likely to be available in the market;
(g) Market share, in the relevant market, of the persons or enterprise in a combination,
individually and as a combination;
(h) Likelihood that the combination would result in the removal of a vigorous and effective
competitor or competitors in the market;
(i) Nature and extent of vertical integration in the market;
(j) Possibility of a failing business;
(k) Nature and extent of innovation;
(l) Relative advantage, by way of the contribution to the economic development, by any
combination having or likely to have appreciable adverse effect on competition;
(m) Whether the benefits of the combination outweigh the adverse impact of the combination, if
any.
4. Orders of Commission on Certain Combinations (Section 31)
Where Commission is of the opinion that any combination does not or is not likely to have an
appreciable adverse effect on competition it shall by order approve the combination.-If yes then
it shall direct that combination shall not take effect.-
Commission may propose to modify combination make it lawful.-If parties accept modification
then it will be approved.-If parties do not accept modification, such combination shall be deemed
to have an appreciable adverse effect on competition. If the Commission does not on the expiry

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of a period of 210 days from the date of notice given to the Commission under sub-section (2) of
section 6, pass an order or issue direction in accordance with the provisions of sub-section (1)or
sub-section (7), the combination shall be deemed to have been approved by the Commission.

5. Frequency Count of Industries Which Filed Approval for Combination

Industry Total
Banking & Finance 5
Automobile 3
Telecom 3
Fast-moving Consumer 2
Goods (FMCG)
Pharmaceuticals 5
Insurance 2

Total-20
4.2 Combination Filings in CCI from 2011-2020

1. Combination Registration No. C-2019/02/645

i. Notice u/s 6 (2) of the Competition Act, 2002 filed by Varun Beverages Limited.
 The proposed combination relates to an acquisition of the 9 manufacturing plants and
franchise rights for 7 States and 5 Union Territories to VBL as a going concern on a
slump sale basis from PepsiCo India Holdings Private Limited (―PepsiCo‖/ ―Seller‖)
(―Proposed Combination‖). For the purpose of Proposed Combination, a Business
Transfer Agreement (―BTA‖) dated 18.02.2019 has been executed between VBL,
PepsiCo and RJ Corp Limited (―RJ Corp‖).
 VBL, a company incorporated in India, is a part of RJ Corp group and is a franchisee of
PepsiCo. VBL manufactures, distribute, sells, and markets beverage products of PepsiCo
under brands licensed by PepsiCo in certain territories of India.
 PepsiCo India, a company incorporated in India, is a subsidiary of PepsiCo Inc., a
corporation incorporated in the United States of America. PepsiCo is in the business of

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 marketing, manufacturing, distributing and selling of carbonated beverages, concentrate
syrup mix and food products. PepsiCo also manufactures and markets Carbonated Soft
Drinks (―CSDs‖) and non-CSDs under various PepsiCo Brands through its own bottling
facilities in certain territories of India.
 The Commission noted that PepsiCo and VBL are not competitors in any market in India.
However, there is an existing vertical relationship between PepsiCo and VBL stemming
from the VBL being an existing franchisee bottler for PepsiCo in certain territories of
India. As stated, the Proposed Combination is an expansion of VBL‘s bottling activities
for PepsiCo beverages to territories which were earlier operated by PepsiCo and
accordingly the Proposed Combination is not likely to cause any significant change in the
market structure or the competition dynamics.
 Considering the facts on record and the details provided in the notice given under Section
6(2) of the Act and assessment of the Proposed Combination on the basis of factors stated
in Section 20(4) of the Act, the Commission is of the opinion that the Proposed
Combination is not likely to have any appreciable adverse effect on competition in India
in any of the relevant market(s) and therefore, the Commission hereby approves the same
under Section 31(1) of the Act.109
2. Combination Registration No. C-2019/02/644
ii. Notice u/s 6 (2) of the Competition Act, 2002 given by Tirumula Milk Products
Private Limited
 On 11.02.2019, the Competition Commission of India (―Commission‖) received a notice
under Section 6(2) of the Competition Act, 2002 (―Act‖) filed by Tirumula Milk Products
Private Limited (―TMPPL‖/ ―Acquirer‖) pursuant to a Share Purchase Agreement dated
21.01.2019 (―SPA‖) executed by and amongst Prabhat Dairy Limited (―PDL‖), Cheese
Land Agro (India) Private Limited (―CLAIPL‖), Sunfresh Agro Industries Private
Limited (―SAIPL‖), Promoters and TMPPL and Business Transfer Agreement dated
21.01.2019 (―BTA‖) executed by and amongst PDL, Promoters, SAIPL and TMPPL
(hereinafter, PDL, SAIPL and TMPPL are collectively referred to as ―Parties‖).
 The proposed combination involves: (a) acquisition of the entire shareholding of SAIPL
by TMPPL from CLAIPL (70.71 percent) and PDL (29.29 percent); and (b) acquisition

109 www.cci.gov.in

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 of the dairy business of PDL by SAIPL as a going concern leading to indirect acquisition
of PDL‘s dairy business by the Acquirer (―Proposed Combination‖).
 During the course of review of the Proposed Combination, the Acquirer submitted certain
information(s)/clarification(s), vide submissions dated 08.03.2019 and 18.03.2019, inter
alia, related to overlaps between the activities of the parties. Further, the Acquirer, vide
application dated 18.03.2019 filed under Regulation 16 of the Competition Commission
of India (Procedure in regard to the transaction of business relating to combinations)
Regulations, 2011 (―Combination Regulations‖), provided information in relation to
additional overlaps in respect of Proposed Combination. The Commission considered the
same and decided to take the same on record.
 TMPPL, incorporated in India, is a part of BSA International Lactalis (―Lactalis Group‖),
a family-owned dairy group based in France. TMPPL is engaged in the business of milk
and milk products in India. Lactalis Group also owns 100 percent shares in Anik
Industries Limited (―AIL‖) which is also engaged in dairy business in India.
 PDL, incorporated in India, is engaged in the business of milk and milk products directly
or through its two subsidiaries viz:– (i) CLAIPL and (ii) SAIPL. PDL and SAIPL are
involved in procurement and manufacture of milk / dairy products, processing and
packaging of milk and milk products and wholesale trading of milk and milk products /
dairy products. PDL and SAIPL are also engaged in the business of third party labels
which entails manufacturing and then co-packing of milk and milk products under third
party brands namely for Britannia, Mother Dairy, Nandini (Karnataka Milk Federation),
Future Group and D-mart. CLAIPL trades in cattle feed but is not engaged in the business
of selling dairy products.
 It is observed that the activities of parties forming part of the Proposed Combination
relate to dairy products in India. The Commission, in its decisional practice, in cases
relating to dairy products, has observed that dairy products can be segmented on the basis
of duration for which these products can be stored. Accordingly, dairy products have
been segmented in two broad categories; (i) perishable dairy products, i.e. products for
short term consumption like milk, curd, paneer etc; and (ii) non-perishable dairy products
i.e. products for long term consumption like ghee, skimmed milk powder, etc. The
Commission has further observed that the markets can be further segmented on the basis

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 of each individual product. As regards relevant geographic market, the Commission in its
decisional practice, has observed that relevant geographic market can be considered as
territory of India for non-perishable dairy products; and territory of states where
perishable dairy products are sold by the parties. However, the Commission has left the
exact delineation of relevant market as open. The same approach has been followed in the
present case.
 7. On the basis of information given in the notice, it is observed that the activities of
Parties overlap in relation to both perishable dairy products viz., (i) Curd; (ii) Lassi; (iii)
Milk; and (iv) Fresh Paneer and non-perishable dairy products viz., (i) Ghee; (ii) Butter;
(iii) skimmed milk powder (―SMP‖); (iv) Dairy Whitener; (v) Ultra-high temperature
processed milk (―UHT Milk‖); and Ice Cream.
 8. Considering the activities of the Parties, the Commission decided to assessed the
Proposed Combination in the following markets:
(i) Market for Perishable Dairy Products:
a. Market for Curd in the state of Maharashtra;
b. Market for Lassi in the state of Maharashtra;
c. Market for Milk in the state of Maharashtra; and
d. Market for Fresh Paneer in the state of Maharashtra.
(ii) Market for Non-Perishable Dairy Products
a. Market for Ghee in the territory of India;
b. Market for Butter in the territory of India;
c. Market for SMP in the territory of India;
d. Market for Dairy Whitener in the territory of India;
e. Market for UHT Milk in the territory of India; and
f. Market for ice cream in the territory of India.
 The Commission observed that the combined market share and/or incremental market
share of the Parties in each of aforesaid perishable and non-perishable products is
insignificant to cause any change in competition dynamics or to cause any appreciable
adverse effect on competition in any of the aforesaid identified relevant markets.
 Considering the facts on record and the details provided in the notice given under Section
6(2) of the Act and assessment of the Proposed Combination on the basis of factors stated

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 in Section 20(4) of the Act, the Commission is of the opinion that the Proposed
Combination is not likely to have any appreciable adverse effect on competition in India
in any of the relevant market(s) and therefore, the Commission hereby approves the same
under Section 31(1) of the Act. However, the Commission is of opinion that the non-
compete obligation(s) envisaged by the Parties is not ancillary to the Proposed
Combination.
3. Combination Registration No. C-2018/10/605
iii. Notice u/s 6 (2) of the Competition Act, 2002 given by Life Insurance Corporation of
India
 On 15.10.2018, the Competition Commission of India (―Commission‖) received a notice
under Section 6(2) of the Competition Act, 2002 (―Act‖) filed by Life Insurance
Corporation of India (―LIC‖ / ―Acquirer‖) pursuant to the resolution passed by Board of
Directors of LIC dated 16.07.2018 and 04.09.2018.
 The proposed combination relates to acquisition of controlling stake to the extent of 51%
shareholding and management control rights in IDBI by LIC (―Proposed Combination‖).
 In terms of Regulation 14 of the CCI (Procedure in regard to the transaction of Business
relating to Combinations) Regulations, 2011 (―Combination Regulations‖), vide letter
dated 30.10.2018, certain information(s)/ clarification(s) inter alia, relating to overlaps
and relevant market were sought from the Acquirer. The response to the same was
submitted on 13.11.2018 after seeking extension of time.
 LIC, a statutory body, incorporated under the Life Insurance Corporation Act, 1956
(―LIC Act‖), is engaged in the provision of various schemes of life insurance to retail and
corporate customers.
 IDBI, originally constituted as a Development Financial Institution (DFI) under the
Industrial Development Bank of India Act, 1964 (―IDBI Act‖), is a listed entity and
incorporated as a banking company under the Companies Act, 1956 (―1956 Act‖). It
operates as a full service universal bank and provides a wide gamut of financial products
and services, encompassing deposits, loans, payment services and investment solutions.
 The Commission further observed that there is a potential vertical relationship between
LIC and IDBI with regard to banc assurance services. However, in this regard, the
Commission observed that considering the nature of banc assurance services and

80
 presence of IDBI in banc assurance segment, the Proposed Combination is not likely to
confer any ability or provide any incentive to LIC to foreclose other banks engaged in
provision of banc assurance services.
 Considering the facts on record and the details provided in the notice given under Section
6(2) of the Act and assessment of the Proposed Combination on the basis of factors stated
in Section 20(4) of the Act, the Commission is of the opinion that the Proposed
Combination is not likely to have any appreciable adverse effect on competition in India
in any of the relevant market(s) and therefore, the Commission hereby approves the same
under Section 31(1) of the Act.
To be continued…
4.3 Analysis of landmark judgements on Combinations
1. Jet Airways (India) Limited and Etihad Airways PJSC
 Parties to the Combination
i. Jet Airways (India) Ltd. (Jet)
ii. Etihad Airways PJSC (Etihad) ,wholly owned by the Government of Abu Dhabi
Facts of the Case
 In 2013, Etihad, a company incorporated in the United Arab Emirates (UAE), a national
airline of UAE, proposed to acquire 24% in Jet, a listed company incorporated in India.
 Primarily engaged in the business of:-
- International Air Passenger Transportation Services,
- Commercial Holiday Services
- Cargo Services
Etihad holds 29.21 % equity in Air Berlin; 40 percent equity in Air Seychelles; 10 percent equity
in Virgin Australia and 2.9 percent equity in Aer Lingus. Jet on the similar lines, is primarily
engaged in the business of providing low cost and full service scheduled air passenger transport
services to/from India along with cargo, maintenance, repair & overhaul services and ground
handling services. Proposal got approved by the Security Exchange Board of India (SEBI), the
Foreign Investment Promotion Board (FIPB) and Cabinet Committee of Economic Affairs
(CCEA).

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Issues Involved
Whether or not such transaction between Jet and Etihad has an Appreciable Adverse Effect on
Competition (AAEC) in India?

Decision of CCI
A relevant market in this case was concluded to be the market of international passenger air
transport based on the point of origin or point of destination (O&D). Thus, each such O&D
constituted a different route, and hence each different route, constituted a different relevant
market. To ascertain relevant market following points were considered:
1. Direct and Indirect flights between O&D being substitutable.
2. Indirect flights by competitor between O&D being substitutable.
3. Different classes of passengers, and inflight services rendered to different classes, being
substitutable.
4. Time and price sensitive passengers (Business/Holidays).
5. Etihad being not operating in domestic (Indian) aviation sector and India‟s open skies policy
in respect of international air cargo transportation.
Appreciable Adverse Effect on Competition (AAEC)
Now that the relevant market was defined, CCI ventured into ascertaining, whether or not there
would be any AAEC pertaining to such routes. CCI stressed upon the relevancy of trans-
boundary competition, as routes were international, while ascertaining AAEC through this
proposed combination. It was observed that there were 38 routes to/from India to other
destinations where Etihad and Jet fly and there was at least one competitor on each of such route.
Except 7 destinations, where Jet and Etihad had a combined share of more than 50 percent, rest
all destinations had less combined share. Also of these 7 destinations, on 3 routes, the share of
one was more than 50 percent and of the other less than 5 percent. Thus, post transaction change
in the market share was observed, not to marginally alter the competition dynamics.

Analysis of the Order

As mentioned, this case has been a first by CCI, wherein it examined the combination
arrangement between two airlines. CCI decision has primarily been based upon the observation
that there has been sufficient competition in the relevant market and therefore it is not likely that

82
there would be AAEC in those markets. This approach has been said to be inspired from the
decision in the merger between British Airways and Iberia, wherein, European Commission held
that the said merger will not affect competition till the time effective and credible competitors
are there in the relevant market.
As already mentioned the proposal was approved by SEBI, FIPB and CCEA and different
approval was sought under FEMA. The case involved many regulators, including CCI, looking
in to various aspects of this deal. Furthermore, this particular case has been the case where, CCI
decided upon AAEC without getting into investigation and basing its conclusion majorly upon
the information/details provided by the parties. And therefore re-emphasizing the idea that where
the material available is sufficient to form opinion for the purpose to ascertain the issue in a
combination case, investigation is not necessary. However, the dissenting ruling asserted the
need for investigation for giving approval to the proposed combination. It should be noted that
the decision has been clear, that in case of any incorrect information or in case of any
modification in the proposed combination, fresh approval would be sought by the parties.
Having said that, post its decision, CCI has imposed Rs.1 crore penalty under section 43 of the
Act on Etihad for consummating parts of the deal without getting its approval. Etihad in
February this year purchased three Heathrow airport slots of Jet Airways for $70 million and
leased it back to the Indian airline ahead of the deal. Despite the matter being pending for
approval, the two parties entered into an agreement which was not disclosed to CCI.
However, the said penalty will have no bearing on previous approval of the Jet- Etihad deal by
CCI. Meanwhile, Competition Appellate Tribunal has admitted a plea challenging CCI‟s
approval for the said deal.
TO BE CONTD…

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 CHAPTER 5
CONCLUSION & RECOMMENDATIONS
5.1 Conclusion
Combinations whether in the form of mergers, amalgamations or acquisitions are very important
for a developing country like India. They provide numerous advantages to an economy like
India in the form of diversification of business, increased synergy, accelerated growth, tax
benefits, improved profitability etc. They enable foreign collaboration through cross-border
mergers and enable companies to withstand global competition. But on the other hand, they may
lead to monopoly or create barriers to entry and similar anti- competitive practices. Therefore,
they need regulation. The need to swiftly permit such mergers which are beneficial to the
economy and prohibit anti-competitive ones has led to the formulation of merger control regime
all over the world.
In India, mergers were regulated under the MRTP Act, 1969. But the Act had become obsolete
in the light of international economic developments and was replaced by the Competition Act,
2002. The provisions relating to combinations came into force recently on 1 June 2011. The CCI
also notified the implementing combination regulations effective from the same date.
The Act and the Regulations together constitute the merger control regime. The gradual
succession from the MRTP Act to Competition Act is one of the most important milestones as
far as economic reforms in the field of competition law in the country are concerned. By shifting
the focus from the stage of merely ‗curbing monopolies‘ in the domestic market to ‗promoting
competition‘ the competition regime in India has attained recognition for its progressive
ways.110 It provides for pre-merger notification, review and remedies in the form of
modifications which if applied effectively can play a crucial role in regulating mergers. The
merger control provisions are designed in such a way to prevent mergers that are likely to have
an appreciable adverse impact on competition.
Mandatory pre-merger notification is provided which can help in ensuring that the CCI would
have relevant information of all proposed mergers above the threshold limit and would be able
to avert the competition problems that may arise in case of certain mergers.111 The merger
control law in India has all the elements of a progressive law and has imbibed several practices

110 Vidyullatha Kishor, 2012, p. 20.

111 Neeraj Tiwari, 2011, p. 141.

84
from the EU and US regimes. The underlying theme in this new enactment appears to be
compliance with transparency. Despite its nascent existence, it has achieved tremendous
success. But there are certain problems which need to be addressed so that the law can
effectively regulate mergers. These areas which have been highlighted in the last chapter
entitled ‗Conclusion and Suggestions‘ need to be deliberated upon and need further
modifications.112
But overall, the efficiency of the CCI is commendable as it has been approving competition in a
time bound manner given the nascence and ambiguities that are prevalent in the regime.
Therefore, such lacunas and ambiguities in the regime should be removed at the earliest to make
it more effective. If the various problems and concerns raised by the current provisions on
merger regulation in the Competition Act are addressed, the act can be an effective instrument in
achieving its aim and preventing anti-competitive practices in the market. Moreover, none of the
merger control decisions that have been arrived so far have resulted in any substantive legal
issues, which have made the role of the Commission much easier. The true test of the
Commission will only arise when complex and substantial legal issues are brought before it. But
commission should be commended to correctly analyse most of the decisions and to arrive at
clearances ahead of the time limit set by Combination Regulations.
Thus the CCIs responsiveness to the industry concerns and its eagerness to develop a unique
body of jurisprudence comparable to that of more advanced jurisdictions, is encouraging and
puts to rest any fears of merger control acting a road block to M&A activity in India.161 Overall,
the Indian competition law is forward looking and intends to create an economy which will
enable all to enjoy the fruits of developments through vigorous competition.

Recommendations
To be contd…

112 The areas of concern in Competition Act and the combination Regulations have been highlighted in
the topic ‗Suggestions for Amendments in Competition Law‘.

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89