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Business News/ Politics / Policy/  CCI amends merger regulations to increase ease of doing business
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CCI amends merger regulations to increase ease of doing business

The changes to regulations are intended to make the paperwork for mergers and acquisitions simpler, and bring in greater transparency, clarity and reduce delays

In a departure from its earlier rules, the commission will now allow notice of a proposed merger to be signed by any person authorized by the board of directors. Photo: Ramesh Pathania/MintPremium
In a departure from its earlier rules, the commission will now allow notice of a proposed merger to be signed by any person authorized by the board of directors. Photo: Ramesh Pathania/Mint

New Delhi: In a bid to enhance the ease of doing business, antitrust regulator Competition Commission of India (CCI) on Friday amended regulations related to mergers and acquisitions (M&As) and made them more forward-looking.

The changes to its combination regulations are intended to make the paperwork for M&As simpler. They also seek to introduce greater transparency and clarity, and reduce delays in M&As.

“The merger regulation is four years old. Every year, around February-March, we go through the process of filing notices of mergers and bring in whatever changes (are) required. This is the fourth such exercise," CCI chairman Ashok Chawla said.

“We generally do a consultation with stakeholders. The objective is to make the process simpler and more smooth for those who interact with the CCI for filing. It is also to ensure that we get what we need from the companies easily," he added.

The draft amendments were put up on the official CCI website in March for feedback from different sectors.

The measures would make for greater ease of doing business, a parameter on which India has consistently come up short. India dropped two places to rank 142nd in the World Bank’s Ease of Doing Business report last year.

That’s something the National Democratic Alliance government of Prime Minister Narendra Modi has pledged to fix, as it courts foreign investors and strives to boost the manufacturing sector.

In a departure from its earlier rules, CCI will now allow notice of a proposed merger to be signed by any person authorized by the board of directors. Earlier, only a limited number of people such as board members and partners in partnership firms were allowed to do so.

The regulator has limited the scope of the so-called other document for notice of a proposed acquisition to mean communication of the intent to acquire an entity to a statutory authority.

Earlier, this communication of intent could be conveyed to the central government, state government or the statutory authority—options that only resulted in confusion.

A brief summary of the combinations that CCI is reviewing will also be put up on its website under the new regulations. This has been done to ensure greater transparency and will allow stakeholders to send their feedback on the proposed merger to the regulator.

“While most of the amendments are good and provide clarification and do away with unnecessary requirements, the publication of a summary of a deal...is to be dealt with carefully," said Anupam Sanghi, managing partner at Anupam Sanghi and Associates, who deals with competition law cases.

“These are confidential deals... Therefore, CCI will have to be careful about the nature of information given in the summary and also the stage at which they publish such market-sensitive information," Sanghi added.

Confidentiality concerns would be confined to mergers such as a hostile acquisition attempt “in which case the acquirer would naturally not want these details published", said Avaantika Kakkar, a competition lawyer at Khaitan and Co.

“In most other cases, the deal is usually announced post-signing and as such, the limited information that the commission proposes to publish should not be an issue, she added.

Chawla said the move would not lead to disclosure of confidential information.

“The objective of this particular change was to bring in more transparency. Under the amended rule, parties will give a summary of about 700 words on the deal without disclosing confidential details," he said.

CCI also extended the deadline for completion of the so-called Phase I review of merger documents from 30 calendar days to 30 working days.

“I understand that the initial reaction to this change would be that it is a negative and that it will only delay transactions. However, the 30 working-day period for making a Phase I assessment may actually be a positive. It gives both the commission and the parties time to have a meaningful dialogue on the implications of the merger without being distracted by the loud ticking of the clock in the background," Kakkar said.

The Combination Regulations were first introduced in 2011 as the Competition Commission of India (procedure in regard to the transaction of business relating to combinations) Regulations, 2011.

They were amended on 23 February 2012, 4 April 2013 and 28 March 2014.

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Published: 03 Jul 2015, 04:55 PM IST
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