New Delhi: The Competition Commission of India (CCI) has, in consultation with the government, revised the guidelines relating to mergers and acquisitions (M&As), which among other things has capped the time period for approvals to a maximum of six months, 30 days less than what was originally proposed.
The reduction in the time period for M&As above a threshold, defined differently for foreign and Indian companies, has come about after extensive lobbying by industry over the last two years. The draft guidelines were posted on the CCI website and will now have to be notified by the government before being made operational. In the US, the approval period for M&As is a maximum of two months.
If cabinet approval is immediately obtained by the ministry of corporate affairs (MCA), the government can move legislative amendments to the Competition Act, 2007, in the ongoing budget session, a government official said.
While CCI started taking cases relating to cartelization and abuse of dominant position in 2009, it is only partially functional because provisions relating to M&As have not been notified yet.
“CCI’s endeavour is to clear maximum number of M&As that need to be ratified by it within 30 days and very few cases would take longer,” said Dhanendra Kumar, CCI chairman. “The idea is to expedite the process of approval.”
Industry had lobbied MCA, of which CCI is a part, for reducing the approval period, citing international examples.
The Competition Act, 2007, had said CCI could take a maximum 210 days for ratifying M&As above a certain threshold. CCI received statutory powers as a competition regulator in 2007.
M&A lawyer Samir Gandhi of Economic Law Practice said the draft regulations are a marked improvement over earlier versions of the document and introduce provisions on pre-merger consultations, truncated timelines for some forms of merger clearance and protection for confidential information. The draft will go a long way in addressing some of the key concerns that have troubled industry.
The draft merger rules allow companies to file shorter applications, provided they meet certain criteria. An example is one of the merging entities owning assets valued at a maximum Rs250 crore with a turnover not exceeding Rs750 crore. This, Gandhi said, will fast-track approvals.
Currently, the thresholds for CCI approval are a combined turnover of Rs3,000 crore for a domestic firm, Rs6,000 crore for domestic firms with overseas presence and Rs24,000 crore for a conglomerate with local domestic presence. However, firms and conglomerates will have to approach CCI for approval if the combined revenue of the Indian operations of the acquirer and the acquired are at least Rs1,500 crore.
M.M. Sharma, head of competition law practice at Vaish Associates Advocates, said: “This is a half-done measure. We are still far behind the advanced jurisdictions where there are clear-cut phases one and two, which gives a lot of comfort to the parties. They have just made a lot of cosmetic changes.”
Nikhil Kanekal contributed to this story.