Central Government notifies revised thresholds for Merger Control and extends Exemptions |

The Ministry of Corporate Affairs, Govt. of India has made important revisions to the merger control regime in India. The following three Notifications were published in the Gazette of India on March 4, 2016.

THRESHOLDS FOR NOTIFICATION REVISED– Through the first Notification, the Central Government has increased thresholds, both assets and turnover, for any transaction to qualify as a combination under Section 5 of the Competition Act, 2002 (“Act”)by 100%. Consequently, the following shall be the revised thresholds under the Act to trigger the filing requirement for any transaction before the Competition Commission of India (CCI):

Threshold for proposed combination (acquirer + target)		Threshold for group post acquisition
In India	In or outside India	In India	In or outside India
Assets	Assets	Assets	Assets
Jointly worth more than INR 2,000 Crores (INR 20 billion)	Jointly worth more than USD 1000 million (including assets worth at least INR 1000 Crores (INR 10 billion) in India)	Jointly worth more than INR 8,000 Crores (INR 80 billion)	Jointly worth more than USD 4 billion (including assets worth at least INR 1000 Crores (INR 10 billion) in India)
Turnover	Turnover	Turnover	Turnover
Jointly worth more than INR 6,000 Crores (INR 60 billion)	Jointly worth more than USD 3.50 billion (including at least INR 3,000 Crores (INR 30 billion) in India)	Jointly worth more than Rs 24,000 Crores (INR 240 billion)	Jointly worth more than USD 12 billion (including at least INR 3000 Crores (INR 30 billion) in India)

Unless exempted or excluded otherwise, all combinations meeting the above thresholds are mandatorily required to be sought approval of the CCI before consummation.

TARGET EXEMPTION REVISED AND EXTENDED-Through another Notification, the Central Government has increased the thresholds limits for the target exemption. The exemption is now available to those transactions where the assets of the target enterprise (whose control, shares, voting rights or assets are being acquired) are not more than rupees three hundred and fifty Crores OR the turnover of the target enterprise(whose control, shares, voting rights or assets are being acquired) is not more than rupees one thousand Crores. The exemption, colloquially referred to as the “Target Exemption”, shall be applicable for a further period of five years from March 4, 2016.
EXEMPTION FOR “GROUP” EXTENDED-Through a third notification, the Central Government has extended the exemption to a ‘Group’ exercising less than fifty per cent of voting rights in other enterprise from the provisions of Section 5 of the Act. The said exemption shall be applicable for a further period of five years from March 4, 2016.

Suggested Reading: (i) CCI further amend Combination Regulations

(II) Economics of Exemptions from Competition Law

(iii) How mergers affect competition

(iv) Are Merger Regulations effective

About the author

M M SHARMA

 Comdt. (Retd.) M. M. Sharma heads the Competition Law & Policy team in VA since 2009 and has over 30 years’ experience as an Advocate of Delhi High Court and holds a Post Graduate Diploma in Economics of Competition Law from Kings College, London. He has worked in the Competition Commission of India (CCI) as Additional Registrar during 2006-2008 and was responsible for drafting the Implementing Regulations under the Competition Act, 2002. He has experience of working as Head-Legal /In-house Counsel for a large Corporate Group in the Steel and Power sector before joining VA in 2009. He has represented clients as an independent arguing Counsel in landmark cases decided by CCI, the Competition Appellate Tribunal (COMPAT) , High Courts and the Supreme Court. As a prolific writer, he contributes articles and is regularly quoted on competition issues in National Newspapers and interviewed by TV Channels. He also teaches as a visiting faculty in various Universities and Institutions and is widely regarded as a subject expert in various Committees of Apex Business Chambers, such as FICCI, CII, ASSOCHAM and PHD CCI.  Mr. Sharma has been mentioned as a “Notable Practitioner” in the “Competition/Antitrust” category of Chambers & Partners (Asia Pacific) Ranking of Leading Lawyers for Business in India for the year 2012 and 2013. VA’s competition law and policy team has also been awarded the Law Firm of the Year Award for “Competition/Antitrust Law” for 2013 by the Indian Business Law Journal. Included as a ‘Recognised Practitioner’ in Individual Lawyers’ranking by Chamber’s Asia Pacific Guide 2020 for Antitrust/Competition Law.

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