CCI Consultation paper for regulations on corporate merger thresholds
Striving to further consolidate regulations pertaining to mergers, particularly those relating to the digital ecosystem, the Competition Commission of India (CCI) has floated a consultation paper proposing the CCI (Combinations) Regulations, 2023. It would follow up on the amendments introduced to the Competition Act by the Parliament earlier this year.
Among other things, the amendment introduced a new notification criterion, that is, a deal value threshold of Rs. 2,000 crore, besides requiring that the enterprise being acquired, merged or being amalgamated should have substantial business operations in India. To put it simply, any merger or acquisition exceeding the threshold would mandatorily require CCI approval. This was among the recommendations made by the Standing Committee on Finance assigned the task of examining the bill when it was first introduced.
The regulations propose that an entity would be deemed to be an ‘enterprise’ with ‘substantial business operations’ in the country should the number of its users, subscribers, customers or visitors, at any point of time during the preceding twelve months constituted 10% or more of its overall global count. This would be cumulative of all products and sources. Additionally, the criterions also entail that gross merchandise value during the same is 10% or more of the global share. The same holds for their turnover in India with respect to its global share. The proposed regulations address M&As in the digital space and list down definite criterions for easier compliance.
As per market experts, Certain high-value transactions which earlier were able to escape scrutiny would be caught in the CCI’s net and would allow the regulator to assess the impact from transactions in the relevant markets.
