Regulation of Combinations

Regulatory and Legal Considerations:

•Two Key Regulatory Bodies:

as an amalgamation between two companies, approval of the scheme under Sections 230 – 232 of the Companies Act, 2013 is required from the NCLT. The NCLT examines whether the scheme is fair to shareholders, creditors, and other stakeholders before sanctioning the amalgamation.

•Potential Legal Challenge and Mitigation Strategy:

vetted by legal experts and that all shareholders are provided with full and fair disclosure of all relevant information. Engage with dissenting shareholders to address their concerns and potentially offer them a revised settlement.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2026, Q. 1(c) (Syllabus 2022).

Criteria of Combination:

The Competition (Criteria of Combination) Rules, 2024 vides MCA Notification no. G.S.R. 548 (E) dated 9th September, 2024 provides for entities involved in combinations (such as mergers or acquisitions) to file notices under Section 6(4) of the Competition Act.

(1)For the purposes of 6 (4) of the Competition Act, the parties to a combination, their respective group entities and their affiliates who fulfils the following criteria, may give notice for such combination under that sub-section, namely:

(a)they do not produce or provide similar or identical or substitutable product or service;

(b)they are not engaged in any activity relating to production, supply, distribution, storage, sale and service or trade in product or provision of service, –

(i)which are at different stage or level of production; or

(ii)which are complementary to each other.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2025, Q. 3(d) (Syllabus 2017).

Deemed approval

A deeming provision has been introduced by section 31(11). It provides that, if the Commission does not, on expiry of a period of 210 days from the date of filing of notice under section 6(2) pass an order or issue any direction in accordance with the provisions of section 29(1) or section 29(2) or section 29(7), the combination shall be deemed to have been approved by the Commission. In reckoning the period of 210 days, the period of thirty days specified in section 29(6) and further period of thirty working days specified in section 29(8) granted by Commission shall be excluded. Furthermore, where extension of time is granted on the request of parties the period of two hundred ten days shall be reckoned after deducting the extended time granted at the request of the parties.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 3(a) (Syllabus 2017).

In exercise of the powers conferred by Section 54(a) of the Competition Act, 2002, the Central Government in the public interest hereby exempts all cases of combinations under section 5 of the Act involving the Central Public Sector Enterprises (CPSEs) operating in the Oil and Gas Sectors under the Petroleum Act, 1934 and the rules made thereunder or under the Oilfields (Regulation and Development) Act, 1948 and the rules made thereunder, along with their wholly or partly owned subsidiaries operating in the Oil and Gas Sectors, from the application of the provisions of sections 5 and 6 of the Act, for a period of five years from the date of publication of this notification in the Official Gazette.

The exemption, which was initially valid for five years until November 21, 2022, has been extended for another five years, now valid until November 21, 2027.

Paving a way for fast-track consolidation in the oil and gas sector, the Ministry of Corporate Affairs, Government of India has exempted all cases of combinations involving CPSEs operating in OGS, along with their wholly or partly owned subsidiaries operating in OGS, from Section 5 and Section 6 of the Competition Act, 2002.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 3(e) (Syllabus 2017).

Section 32 of the Competition Act, 2002 extends the extra territorial jurisdiction of Competition Commission of India to inquire and pass orders in accordance with the provisions of the Act into an agreement or dominant position or combination, which is likely to have, an appreciable adverse effect on competition in relevant market in India, notwithstanding that,

(a)an agreement referred to in section 3 has been entered into outside India; or

(b)any party to such agreement is outside India; or

(c)any enterprise abusing the dominant position is outside India; or

(d)a combination has taken place outside India; or

(e)any party to combination is outside India; or

(f)any other matter or practice or action arising out of such agreement or dominant position or combination is outside India.

have power to inquire in accordance with the provisions contained in sections 19, 20, 26, 29, 29A and 30 of the Act into such agreement or abuse of dominant position or combination if such agreement or dominant position or combination has, or is likely to have, an appreciable adverse effect on competition in the relevant market in India and pass such orders as it may deem fit in accordance with the provisions of this Act.

The above clearly demonstrate that the Competition Commission of India will have jurisdiction even if both the parties to an agreement are outside India but only if the agreement, dominant position or combination entered into by them has an appreciable adverse effect on competition in the relevant market of India.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 2A(iii) (Syllabus 2022).

Section 2 (s) of the Competition Act, 2002 defines the term “relevant geographic market” to mean 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.

Section 2 (t) of the Competition Act, 2002 defines the “relevant product market” to mean a market comprising all those products or services which are regarded interchangeable or substitutable by the consumer, by reason of characteristics of the products or services, their prices and intended use.

Relevant market is the mix of relevant geographic market or relevant product market or both.

Competition (Amendment) Act, 2023 expands the definition of relevant product market to include the perspective of suppliers. As per revised definition “relevant product market” means a market comprising of all those products or services–

i)which are regarded as inter-changeable or substitutable by the consumer, by reason of characteristics of the products or services, their prices and intended use; or

ii)the production or supply of, which are regarded as interchangeable or substitutable by the supplier, by reason of the ease of switching production between such products and services and marketing them in the short term without incurring significant additional costs or risks in response to small and permanent changes in relative prices.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 3(a) (Syllabus 2017).

As per Section 5 of the Competition Act, 2002, Combination is defined as (i) acquisition of control, shares, voting rights or assets; or (ii) 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 substitutable goods or provision of a similar or identical or substitutable service; or (iii) exceeding financial thresholds stated in it which are required to be mandatorily approved by the Competition Commission of India(CCI).

Regulation 9 of the CCI (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 states that it is the responsibility of the acquirer to notify an acquisition or a hostile takeover. In case of a merger or an amalgamation, a joint notice is to be filed by the merging or amalgamating parties. In case of formation of a joint venture, the responsibility to file a notice would lie with all the parties forming the joint venture.

Thresholds For Filing Notice:

Item 1 of Schedule 1 along with Explanation read with Regulation 4 of the CCI (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 states that where acquisition of voting rights or shares under section 5 shall be treated as Combination to be reported under section 6 if the acquirer becomes a member on the Board of Directors of the enterprise and exercise a right to nominate or control Board of Directors of the enterprise though acquisition is less than 25% of shares or voting rights of an enterprise. Acquisition of less than 10% shall be treated solely as an investment.

In the present case, XYZ Limited, the acquirer, has to notify the substantial acquisition or hostile takeover under section 6 of the Act to CCI because as a result of such acquisition, Combination is meeting threshold of combined assets (2700 cr+1500 cr=4400 cr) and it holds the total shares or voting rights of ABC Limited between 10 to 25% and got two directors in the Board of Directors of ABC Limited.

Regulation 5(3)(a) of the CCI(Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 states that the parties to the combination may, at their option, give notice in Form II, as specified in schedule II to these regulations, preferably in the instances where the parties to the combination are engaged in production, supply, distribution, storage, sale or trade of similar or identical or substitutable goods or provision of similar or identical or substitutable services and the combined market share of the parties to the combination after such combination is more than fifteen percent (15%) in the relevant market.

Regulation 5(9) of the CCI(Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 provides 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 the present case, XYZ Limited, the acquirer, has to notify the substantial acquisition or hostile takeover to CCI because as a result of such acquisition, it holds not less than 10% the total shares or voting rights of ABC Limited and got two directors in the Board of Directors of ABC Limited.

As it is meeting threshold criterion for demerger of TRM Limited from assets crossing ₹ 2000 crore, further acquisition of 51% shareholding by XYZ Limited in TRM Limted is part of the same transaction and market share of product “O” for TRM Limited is crossing 15%. A notice of combination shall be filed by the parties with CCI under section 5 and the CCI (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 1(a) (Syllabus 2022).

As per Section 5 of the Competition Act, 2002 (as amended in 2023), "Control" means the ability to exercise material influence, in any manner whatsoever, over the management or affairs or strategic commercial decisions by—

(i)one or more enterprises, either jointly or singly, over another enterprise or group; or

(ii)one or more groups, either jointly or singly, over another group or enterprise;

Further, “Group" means two or more enterprises where one enterprise is directly or indirectly, in a position to—

(i)exercise twenty-six per cent. or such other higher percentage as may be prescribed, of the voting rights in the other enterprise; or

(ii)appoint more than fifty per cent. of the members of the board of directors in the other enterprise; or

(iii)control the management or affairs of the other enterprise;

De Minimis Exemption: The Central Government has granted exemption to acquisition of small targets which is known as de minimis exemption. Combinations where the assets or the turnover is below the specific thresholds need not be notified to the Commission for its approval. According to Notification, all forms of combinations involving assets of not more than Rs.350 crore in India or turnover of not more than Rs.1,000 crore in India, are exempt from Section 5 of the Act for a period of 5 years.

The Government of India (MCA), through notification has extended the Small Target Exemption for another five years, i.e., until March 26, 2027.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2023, Q. 1(c) (Syllabus 2017).

According to Section 43A of Competition Act, 2002(as amended in 2023) If any person or enterprise fails to give notice to the Commission under sub-section (2) or sub-section

(4)of section 6 or contravenes sub-section (2A) of section 6 or submit information

pursuant to an inquiry under sub-section (1) of section 20, the Commission may impose on such person or enterprise, a penalty which may extend to one per cent., of the total turnover or assets or the value of transaction referred to in clause (d) of section 5, whichever is higher, of such a combination:

It may be noted that in case any person or enterprise has given a notice under subsection (4) of section 6 and such notice is found to be void ab initio under sub-section

(6)of section 6, then a notice under sub-section (2) of section 6 may be given by the

acquirer or parties to the combination, as may be applicable, within a period of thirty days of the order of the Commission under sub-section (6) of that section and no action under this section shall be taken by the Commission till the expiry of such period of thirty days.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2023, Q. 2A(i) (Syllabus 2017).

In accordance with international best practices, the Competition Commission of India allows for an informal and verbal consultation prior to filing of the notice to a proposed combination in terms of Regulation 5 of CCI (Procedure in regard to the transaction of Business relating to Combinations) Regulations, 2011 read with Section 6(2) of the Competition Act, 2002 with the Commission.

The parties intending to file a notice with the Commission are encouraged to approach the Commission for pre filing consultations. A request for pre-filing consultation should be made by the parties at the earliest and at least 10 days before the intended date of filing so that the commission gets ample amount of time to allocate appropriate team expert in particular case for pre-filing consultations. A copy of draft application comprising of Form I/II, as the case may be and supporting documents should be forwarded along with the request for scheduling a pre-filing consultation.

Such pre-filing consultations help the parties intending to file a notice with the Commission, in identifying the information required for filing a complete and correct Form I/II/III along with identification of additional information that the Commission may require to assess the likely impact of the proposed combination on competition in the relevant markets.

Hence, it is apprised to the management that such informal consultation is allowed.

A summary of the proposed combination along with the following details should also be submitted: (a) Basic details of the proposed combination including various steps involved in the same; (b) A brief description of the relevant market(s) and sector(s) involved; (c) The likely impact of the proposed combination on competition in those markets and sectors in general terms; (d) Key issues regarding which the parties wish to seek consultation from the Commission; (e) Any other details which according to the parties may be pertinent for a meaningful consultation.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2023, Q. 3(a) (Syllabus 2017).

Section 32 of the Competition Act, 2002 extends the jurisdiction of Competition Commission of India to inquire and pass orders in accordance with the provisions of the Act into an agreement or dominant position or combination, which has or is likely to have, an appreciable adverse effect on competition in relevant market in India, notwithstanding that-

(a)an agreement referred to in section 3 has been entered into outside India; or

(b)any party to such agreement is outside India; or

(c)any enterprise abusing the dominant position is outside India; or

(d)a combination has taken place outside India; or

(e)any party to combination is outside India; or

(f)any other matter or practice or action arising out of such agreement or dominant position or combination

is outside India.

The above clearly demonstrate that acts taking place outside India but having an effect on competition in India will be subject to the jurisdiction of Commission. The Commission will have jurisdiction even if both the parties to an agreement are outside India but only if the agreement, dominant position or combination entered into by them has or is likely to have an appreciable adverse effect on competition in the relevant market of India.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2023, Q. 2(c) (Syllabus 2017).

The procedure for investigation by the Commission has been stipulated under section 29 of the Competition Act. It involves the following stages:

(i)The Commission first has to form a prima facie opinion that a combination is likely to cause, or has

caused an appreciable adverse effect on competition within the relevant market in India. Further, when the Commission has come to such a conclusion then it shall proceed to issue a notice to the parties to the combination, calling upon them to show cause why an investigation in respect of such combination should not be conducted.

(ii)After receipt of the response of the parties to the combination, the Commission may call for the report

of the Director General.

(iii)When pursuant to response of parties or on receipt of report of the Director General whichever is later,

the Commission is, prima facie, of the opinion that the Combination is likely to cause an appreciable adverse effect on competition in relevant market, it shall, within seven working days from the date of receipt of the response of the parties to the combinations or the receipt of the report from Director General under section 29 (1A) whichever is later, direct the parties to the combination to publish within ten working days, the details of the combination, in such manner as it thinks appropriate so as to bring to the information of public and persons likely to be affected by such combination.

(iv)The Commission may invite any person affected or likely to be affected by the said combination, to file

his written objections within fifteen working days of the publishing of the public notice, with the Commission for its consideration.

(v)The Commission may, within fifteen working days of the filing of written objections, call for such

additional or other information as it deems fit from the parties to the said combination and the information shall be furnished by the parties above referred within fifteen days from the expiry of the period notified by the Commission.

(vi)After receipt of all the information and within 45 days from expiry of period for filing further information,

the Commission shall proceed to deal with the case, in accordance with provisions contained in section 31 of the Act.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2023, Q. 2A(i) (Syllabus 2017).

Section 5 of the Competition Act, 2002 explain the combination. Section 6 of the Competition Act, 2002 prohibits any person or enterprise from entering into a combination which causes or is likely to cause an appreciable adverse effect on competition within the relevant market in India and if such a combination is formed, it shall be void.

The Competition Commission of India shall have due regard to all or any of the following factors listed under section 20(4) for the purposes of determining whether the combination causes or is likely to cause an ‘Appreciable Adverse Effect on Competition’ (AAEC) in the relevant market. Most of the facts enumerated in section 20(4) are external to an enterprise. It requires the Commission to evaluate whether the benefits of the combination outweigh the adverse impact of the combination, if any. In other words, if the benefits of the combination outweigh the adverse effect of the combination, the Commission will approve the combination. Conversely, the Commission may declare such a combination as void.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2023, Q. 3(c) (Syllabus 2017).

The Central Government has granted exemption to acquisition of small targets which is known as de minimis exemption. Combinations where the assets or the turnover is below the specific thresholds need not be notified to the Commission for its approval. According to Notification No.S.O.988(E) dated March 27, 2017, all forms of combinations involving assets of not more than Rs.350 crore in India or turnover of not more than Rs. 1,000 crore in India, are exempt from Section 5 of the Act for a period of 5 years. Following table gives an overview of the thresholds for availing of the De Minimis exemption:

Notification No. S.O.988 (E) dated March 27, 2017 has given a relaxation to the combinations where a portion of an enterprise or division or business is being acquired, taken control of, merged or amalgamated with another enterprise.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2022, Q. 3(e) (Syllabus 2017).

The Mergers, amalgamations and acquisition in India are regulated by the Competition Commission of India (CCI). The CCI has to follow a set of procedures which have been laid down in the Competition Act, 2002 and with the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations 2011(Combination Regulation).

The CCI will consider a few criteria before sanctioning or approving a combination. These criteria are:

•Actual and potential level of competition through imports in the market;

•Extent of barriers to entry into the market;

•Level of combination in the market;

•Degree of countervailing power in the market;

•Likelihood that the combination would result in the parties to the combination being able to significantly and sustainably increase prices or profit margins;

•Extent of effective competition likely to sustain in a market;

•Extent to which substitutes are available or likely to be available in the market;

•Market share, in the relevant market, of the persons or enterprise in a combination, individually and as a combination;

•Likelihood that the combination would result in the removal of a vigorous and effective competition or competitors in the market;

•Nature and extent of vertical integration in the market;

•Possibility of a failing business;

•Nature and extent of innovation;

•Relative advantage, by way of the contribution to the economic development, by any combination having or likely to have appreciable adverse effect on competition;

•Whether the benefits of the combination outweigh the adverse impact of the combination, if any.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2022, Q. 2(a) (Syllabus 2017).

Yes, the parties to the combination can propose amendment to the proposed combination.

Where the Competition Commission of India (CCI) is of the opinion that the combination has, or is likely to have an appreciable adverse effect on competition, it shall direct that the combination shall not take effect.

Where the Commission is of the opinion that adverse effect which has been caused or is likely to be caused on competition can be eliminated by modifying such combination then it shall direct the parties to such combination to carry out necessary modifications to the combination.

The parties accepting the proposed modification shall carry out such modification within the period specified by the Commission.

Where the parties to the Combination do not accept the proposed modification such parties may within 30 days of modification proposed by the Commission, submit amendment to the modification proposed by the Commission.

Where the Commission agrees with the amendment submitted by the parties, it shall, by an order approve the combination.

Where the Commission does not accept the amendment, parties shall be allowed a further period of 30 days for accepting the amendment proposed by the Commission.

Where the parties to the combination fail to accept the modification within thirty days, then it shall be deemed that the combination has an appreciable adverse effect on competition and will be dealt with in accordance with the provisions of the Act.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2021, Q. 1(b) (Old syllabus).

Every combination must mandatorily be notified to the Competition Commission of India, unless the parties are able to avail any of the exemptions provided under the Competition Act, the Combination Regulations, or notifications issued by MCA.

For the purpose of "de minimis" exemption, transactions where the target enterprise either holds assets of less than Rs 350 Crore in India or generates turnover of less than Rs 1,000 Crore in India are exempt from the mandatory pre-notification requirement.

Following March 2017 notification, in the case of transfer of a portion of an enterprise, division or business, the de minimis exemption is limited to only the value of the assets and turnover of such a portion of enterprise, division or business.

However, prior to the March 2017 notification, the value of the assets and turnover of the entire target enterprise were to be taken into consideration for applying the de minimis exemption.

Thus subsequent to the 2017 notification, the asset value and turnover provided in the De Minimis exemption apply to the ‘enterprise’ whose control, shares, voting rights or assets are being acquired; and not to the value of the target assets/division/business being acquired .

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2021, Q. 2A(iii) (Old syllabus).

In accordance with international best practices, the Commission allows for an informal and verbal consultation with the staff of the Commission prior to filing of the notice to a proposed combination in terms the Competition Act, 2002 and the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011.

Such pre-filing consultations help the parties intending to file a notice with the Commission in identifying the information required for filing a complete and correct Form I/II/III as well in identifying additional information that the Commission may require to assess the likely impact of the proposed combination on competition in the relevant markets.

The parties intending to file a notice with the Commission are encouraged to approach the Commission for pre-filing consultations. A request for pre-filing consultation should be made by the parties intending to file a notice at the earliest and at least 10 days before the intended date of filing, to allow time for allocating a case team for the prefiling consultation. A copy of draft application comprising of Form I/II/III, as the case may be and supporting documents should be forwarded along with the request for scheduling a pre filing consultation.

A summary of the proposed combination along with the following details should also be submitted:

a.Basic details of the proposed combination including various steps involved in the same;

b.A brief description of the relevant market(s) and sector(s) involved;

c.The likely impact of the proposed combination on competition in those markets and sectors in general terms;

d.Key issues regarding which the parties wish to seek consultation from the Commission;

e.Any other details which according to the parties may be pertinent for a meaningful consultation.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2021, Q. 1(a) (Syllabus 2017).

The Commission under section 20 of the Competition Act, 2002 may inquire into the appreciable adverse effect caused or likely to be caused on competition in India as a result of combination in the following circumstances:

i.upon its own knowledge or information (suo moto); or

ii.upon receipt of notice under section 6(2) relating to acquisition referred to in section 5(a); or acquiring of control referred to in section 5(b); or merger or amalgamation referred to in section 5(c) of the Act.

It has also been provided that a suo moto enquiry shall be initiated by the Commission within one year from the date on which such combination has taken effect. Thus, the Act has provided a time limit within which suo moto inquiry into combinations can be initiated. This provision dispels the fear of enquiry into combination between merging entities after the expiry of stipulated period.

On receipt of the notice under section 6(2) from the person or an enterprise which proposes to enter into a combination, it is mandatory for the Commission to inquire whether the combination referred to in that notice, has caused or is likely to cause an appreciable adverse effect on competition within the relevant market in India.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2021, Q. 3(c) (Syllabus 2017).

In the instant matter, on receipt of such notice Competition Commission of India (CCI) initiates the action in terms of Section 29 of the Competition Act, 2002. Section 29 of the Act specifies that:

(i)The Commission first has to form a prima facie opinion that a combination is likely to cause, or has caused an appreciable adverse effect on competition within the relevant market in India. Further, when the Commission has come to such a conclusion then it shall proceed to issue a notice to the parties to the combination, calling upon them to show cause why an investigation in respect of such combination should not be conducted.

(ii)After receipt of the response of the parties to the combination, the Commission may call for the report of the Director General.

(iii)When pursuant to response of parties or on receipt of report of the Director General whichever is later, the Commission is, prima facie, of the opinion that the Combination is likely to cause an appreciable adverse effect on competition in relevant market, it shall, within seven working days from the date of receipt of the response of the parties to the combinations or the receipt of the report from Director General under section 29 (1A) whichever is later, direct the parties to the combination to publish within ten working days, the details of the combination, in such manner as it thinks appropriate so as to bring to the information of public and persons likely to be affected by such combination.

(iv)The Commission may invite any person affected or likely to be affected by the said combination, to file his written objections within fifteen working days of the publishing of the public notice, with the Commission for its consideration.

(v)The Commission may, within fifteen working days of the filing of written objections, call for such additional or other information as it deems fit from the parties to the said combination and the information shall be furnished by the parties above referred within fifteen days from the expiry of the period notified by the Commission.

(vi)After receipt of all the information and within 45 days from expiry of period for filing further information, the Commission shall proceed to deal with the case, in accordance with provisions contained in section 31 of the Act.

Thus, the provisions of section 29 provides for a specified timetable within which the parties to the combination or parties likely to be affected by the combination are required to submit the information or further information to the Commission to ensure prompt and timely conduct of the investigation. It further imposes on the Commission a time limit of 45 working days from the receipt of additional or other information called for by it under sub-section (4) of section 29 for dealing with the case of investigation into a combination, which may have an adverse effect of the competition.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 1(c) (Old syllabus).

The Competition Commission of India shall have due regard to all or any of the factors for the purposes of determining whether the combination would have the effect of or is likely to have an appreciable adverse effect on competition in the relevant market, namely:

(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;

(g)extent to which substitutes are available or likely to be available in the market;

(h)market share, in the relevant market, of the persons or enterprise in a combination, individually and as a combination;

(i)likelihood that the combination would result in the removal of a vigorous and effective competition or competitors in the market;

(j)nature and extent of vertical integration in the market;

(k)possibility of a failing business;

(l)nature and extent of innovation;

(m)relative advantage, by way of the contribution to the economic development, by any combination having or likely to have appreciable adverse effect on competition;

(n)whether the benefits of the combination outweigh the adverse impact of the combination, if any.

The above yardsticks are to be taken into account irrespective of the fact whether an inquiry is instituted, on receipt of notice under section 6(2) or upon its own knowledge.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 2(b) (Old syllabus).

Section 32 of the Competition Act, 2002 extends the jurisdiction of Competition Commission of India to inquire and pass orders in accordance with the provisions of the Act into an agreement or dominant position or combination, which is likely to have, an appreciable adverse effect on competition in relevant market in India, notwithstanding that,

(a)an agreement referred to in section 3 has been entered into outside India; or

(b)any party to such agreement is outside India; or

(c)any enterprise abusing the dominant position is outside India; or

(d)a combination has taken place outside India; or

(e)any party to combination is outside India; or

(f)any other matter or practice or action arising out of such agreement or dominant position or combination is outside India.

The above clearly demonstrate that acts taking place outside India but having an effect on competition in India will be subject to the jurisdiction of Commission. The Competition Commission of India will have jurisdiction even if both the parties to an agreement are outside India but only if the agreement, dominant position or combination entered into by them has an appreciable adverse effect on competition in the relevant market of India.

Hence the action taken by Competition Commission of India is valid.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 2A(ii) (Old syllabus).

Section 54 of the Competition Act, 2002 empowers the Central Government in public interest to exempt the enterprises being parties to ––

(a)any acquisition referred to in clause (a) of section 5 of the Competition Act;

(b)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 substitutable goods or provision of a similar or identical or substitutable service, referred to in section 5(b) of the Competition Act; and

(c)any merger or amalgamation, referred to in section 5(c) of the Competition Act, where the value of assets being acquired, taken control of, merged or amalgamated is not more than rupees three hundred and fifty crores in India or turnover of not more than rupees one thousand crores in India, from the provisions of section 5 of the said Act for a period of five years from the date of publication of this notification in the official gazette.

The above exemption is de minimis exemption under the Competition Act, 2002.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 3(c) (Old syllabus).

Prior approval from the Competition Commission of India is required to any combination as was held by Apex Court in SCM Solifert Limited & Anr. vs. CCI (Civil Appeal No. 10678 of 2016).

Section 6 (2) of Competition Act, 2002 requires filing of application within 30 days prior to combination. Such combination shall take effect after 210 days thereof or orders under Section 31, whichever is earlier.

Notification no. S.O. 2039(E) dated 29th June 2017 does away with time requirement of 30 days but to wait for orders by the Commission. In addition, notifications have been issued on 10-08-2017, 30-08-2017 and 22-11-2017 respectively granting exempting combinations relating for five years to Regional Rural Banks, Public sector Banks so also Public Sector Oil and Gas Bodies.

The provisions of section 6 of the Act do not apply to share subscription or financing facility or any acquisition, by a public financial institution, foreign institutional investor, bank or venture capital fund, pursuant to any covenant of a loan agreement or investment agreement.

Categories of combinations mentioned in Schedule I to the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 are ordinarily not likely to cause an appreciable adverse effect on competition in India, notice under sub-section(2) of section 6 of the Act need not normally be filed.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 2A(i) (Syllabus 2017).

Section 5 of the Competition Act, 2002 explains combination. The acquisition of one or more enterprises by one or more persons or merger or amalgamation of enterprises shall be a combination of such enterprises and persons through acquisition of controlling shares, voting rights or assets.

However, section 6 of the Competition Act, 2002 declares a combination as void if it causes or is likely to cause an adverse effect on competition within the relevant market in India.

The Commission shall have due regard to all or any of the following factors listed under section 20(4) of the Competition Act, 2002 for the purpose of determining whether the combination causes or is likely to cause an 'appreciable adverse effect on competition in the relevant market. The adverse impact can be caused due to extent of barriers to entry in the market or degree of countervailing power in the market, level of combination and other derogatory market forces.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 3(d) (Syllabus 2017).

Extra Territorial Jurisdiction of Commission

Section 32 of the Competition Act, 2002 extends the jurisdiction of Competition Commission of India to inquire and pass orders in accordance with the provisions of the Act into an agreement or dominant position or combination, which is likely to have, an appreciable adverse effect on competition in relevant market in India, notwithstanding that,

(a)an agreement referred to in section 3 has been entered into outside India; or

(b)any party to such agreement is outside India; or

(c)any enterprise abusing the dominant position is outside India; or

(d)a combination has taken place outside India; or

(e)any party to combination is outside India; or

(f)any other matter or practice or action arising out of such agreement or dominant position or combination is outside India.

Hence if any one of the parties to a combination is situated outside India but having an effect on competition in India, it will be subject to the jurisdiction of Commission. The Competition Commission of India will have jurisdiction if combination entered into has an appreciable adverse effect on competition in the relevant market of India and can pass appropriate orders.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2020, Q. 1(d) (Old syllabus).

Section 46 of Competition Act, 2002 and the Competition Commission of India (Lesser Penalty) Regulations, 2009 empowers Competition Commission of India (CCI) to impose lesser penalties on an entity making a "vital disclosure” with evidence; or in subsequent leniency applications, provide 'significant added value' to the evidence.

Competition Commission of India (CCI), in Re: Cartelization in respect of tenders floated by Indian Railways for supply of Brushless DC Fans (Suo Moto Case No 03 of 2013) , granted 75% reduction in penalty for coming forward.

With Competition Commission of India (Lesser Penalty) Amendment Regulations, 2017, the CCI recognizes more than three applicants for leniency. Subsequent applicants will be eligible for reduction in penalties up to 30% for giving 'significant added value to the evidence already in possession and thus, incentivise companies and individuals to proactively participate in cartel enforcement.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2020, Q. 2(c) (Old syllabus).

Yes, exemption notification has been issued by the Central Government for Sections 5 and 6 of the Competition Act, 2002 in relation to Banking Companies.

In exercise of the powers conferred by Section 54(a) of the Competition Act, 2002, the Central Government in the public interest vide its Notification S.O. 2828(E) dated 30th August, 2017 exempts, all cases of reconstitution, transfer of the whole or any part thereof and amalgamation of nationalized banks, under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, from the application of provisions of Sections 5 and 6 of the Competition Act, 2002 for a period of ten years from the date of publication of this notification in the Official Gazette.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2020, Q. 3(b) (Old syllabus).

Section 5 of Competition Act, 2002 envisages financial thresholds beyond which any combination requires approval of the Competition Commission of India.

Combinations that involve assets or turnover below threshold limits need to be notified to the Competition Commission of India for seeking approval.

Central Government has granted exemption to acquisition of small targets known as de minimis exemption. In terms of Notification No. S.O. 988 (E) dated March 27, 2017, all forms of combinations involving assets not more than ₹ 350 Crore in India or turnover of not more than ₹ 1000 Crore in India are exempt from Section 5 of the Act for a period of 5 years.

In the given case both value of assets and turnover are within the notified thresholds and hence no need to seek approval from the Competition Commission of India.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2020, Q. 1(c) (Syllabus 2017).

Section 20 (4) of the Competition Act, 2002 illustrates the factors that may be taken into view to test the appreciable adverse effect of competition (AAEC) by the Competition Commission of India.

The factors are actual and potential level of competition through imports in the market, barriers to entry in the market, market share, and likelihood of removing effective competition, innovation, whether benefits outweigh the adverse effects on competition.

The above yardsticks are to be taken into account irrespective of the fact whether an inquiry is instituted, on receipt of notice under section 6 of the Act or upon its own knowledge. The scope of assessment of adverse effect is confined to relevant market which is a mix of geographical and product involved as per the terms of Combination. Most of the facts enumerated in section 20(4) are external to an enterprise. It is noteworthy that Section 20(4) requires to invoke principles of a “balancing”. It requires the Commission to evaluate whether the benefits of the combination outweigh the adverse impact of the combination, if any. In other words if the benefits of the combination outweigh the adverse effect of the combination, the Commission will approve the combination. Conversely, the Commission may declare such a combination as void.

Being a quasi-judicial body, the Commission provides an opportunity of being heard to the affected parties before arriving at a decision to approve or reject a proposal through application or otherwise.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2020, Q. 2(c) (Syllabus 2017).

(i)For a scheme of compromise or arrangement to be approved by the Tribunal need to be accompanied by the approvals obtained from different Regulatory Authorities in terms of the prescribed rules.

(ii)Approval by the Board of Directors, shareholders different classes so also creditors of different classes in separate meetings.

(iii)If the shares in the company whether transferor or transferee are listed any stock exchange, observation letter from the concerned Stock Exchange.

(iv)Approvals from Competition Commission of India since there exceed threshold limits in the given case.

(v)Regulators' approvals specific to the business of the concerned companies may also be required, if the circumstances demand.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2020, Q. 2A(iii) (Syllabus 2017).

(i)Section 6 of the Competition Act, 2002, regulates a 'combination' by prohibiting any person or enterprise from entering into a combination which causes or is likely to cause an appreciable adverse effect on competition within the relevant market in India.

(ii)Any person who proposes to enter into a combination shall give notice to the Commission in the Form specified, and the fee which may be determined disclosing the details of the proposed combination.

(iii)Any person who proposes to enter into a combination shall comply with the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011.

(iv)The provisions for this combination shall not be able to applicable to share subscription or financing facility by a public financial institution, foreign institutional investor, any bank or venture fund.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2020, Q. 3(c) (Syllabus 2017).

As per the Competition Commission of India (General) Amendment Regulation, 2018 an advocate is authorized to accompany the person summoned by the Director General in investigation under the Competition Act, 2002. As per Regulation 46A, however, there are certain conditions. Such Advocate is not permitted unless a prior request in writing together with vakalatnama or power of attorney is made. He will not sit in front of the summoned person. During Examination on oath, he shall neither be in a hearing distance nor shall interact, consult, confer. There shall not be any misconduct on the part of such advocate. In case of any misconduct, if directed by the Commission, complaint may be forwarded to Bar Council of the concerned State, wherein the Advocate is a member.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2019, Q. 2A(iii) (Old syllabus).

Section 6 of the Competition Act, 2002 prohibits any person or enterprise from entering into a combination which causes or is likely to cause an appreciable adverse effect on competition within the relevant market in India and if such a combination is formed, it shall be void .

Any person or enterprise, who or which proposes to enter into a combination, shall give notice to the Commission. No combination shall come into effect until 210 days have passed from the day on which the notice has been given to the Commission or the Commission has passed orders, whichever is earlier.

Exemptions

The provisions of section 6 shall not apply to share subscription or financing facility or any acquisition, by a public financial institution, foreign institutional investor, bank or venture capital fund, pursuant to any covenant of a loan agreement or investment agreement. The public financial institution, foreign institutional investor, bank or venture capital fund shall, within seven days from the date of the acquisition, file, in the form as may be specified by regulations, with the Commission the details of the acquisition including the details of control, the circumstances for exercise of such control and the consequences of default arising out of such loan agreement or investment agreement, as the case may be.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2019, Q. 1(b) (Old syllabus).

Certain ambiguities are cleared on notification of the CCI (Procedure in regard to transactions of business relating to combinations) Amendment Regulations, 2018 on 9th October, 2018. There is a clarity in computing 210 days for a notified transaction that could be extendable on the number of requests by the Commission. Applicant has liberty to offer voluntary modifications. Regulation 27 of the said regulations has made provision for appointing agencies to oversee the implementation of modifications directed by the Commission. Regulation 25 of the said regulations affords parties not to wait for the Commission to order modification after a long Drawn Phase II review process. This would result in speedier resolution of the Competition Commission of India's concern according quicker approvals in line with international practices.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2019, Q. 3(a) (Syllabus 2017).