MCA notifies changes in competition law related to M&As
The Ministry of Corporate Affairs (MCA) has raised the threshold limit for mergers and amalgamation requiring approval from the Competition Commission of India (CCI). In its latest notification, the MCA enhanced the threshold value on the basis of wholesale price index and exchange rate of rupee by 150 percent. The government has notified certain changes under the competition law with respect to mergers and acquisitions that are also expected to reduce the regulatory burden on the Competition Commission of India (CCI). Notifications relate to Section 5 of the Competition Act which stipulates that the acquisition of one or more enterprises or the merger or amalgamation of enterprises, surpassing the specified threshold, qualifies as a 'Combination' under the Act.
As per MCA notification, if the acquisition target possesses an asset value below Rs. 450 crore or turnover less than Rs. 1,250 crore, then such a merger or acquisition would be exempt from approval by the Competition Commission of India (CCI). This exemption is applicable for a duration of two years from the date of publication in the official gazette. In cases where a segment of an enterprise, a division, or a business undergoes acquisition, takes control, merges, or amalgamates with another enterprise, the calculation of relevant assets and turnover to determine thresholds under Section 5 of the Act is contingent on the value of the said portion, division, or business.
