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NEW DELHI :  

The reduced strength at the top of the Competition Commission of India (CCI) may impact the adjudication process in the short term, said a person familiar with the development.

The minimum number of members required for adjudication and approving mergers and acquisitions (M&As) has reduced since Ashok Kumar Gupta demitted the chairman’s office on 25 October after completing his four-year term, the person said requesting anonymity.

The anti-trust regulator now has two whole-time members, including Sangeeta Verma, who was appointed as the acting chairperson for three months or till a full-time chairperson takes office. In addition to the chairperson, the CCI needs two members to have sufficient quorum to take key decisions, according to existing rules.

With a diminished top brass, CCI’s decisions could take longer considering that the search for a new chairperson is still on.

Experts said that timely M&A approvals by CCI are key for foreign direct investment inflows and unless urgent appointments are made, such approvals may remain on hold.

The future of National Anti-Profiteering Authority is also uncertain, as its term ends next month, and the roadmap for a proposed merger with the CCI is still not clear.

Emailed queries to CCI and a corporate affairs ministry spokesman remained unanswered till press time.

“In terms of the Competition Act, the CCI shall consist of a chairperson and not less than two other members. So, CCI’s functioning will come to a stand still and only routine work, which does not involve rights of parties, can take place," said Subodh Prasad Deo, partner at law firm Saikrishna and Associates, and a former additional director general of CCI.

“The stipulated provision regarding appointment of a chairperson and members must be followed. Any ad hoc administrative arrangement to constitute CCI will be open to legal challenges," said Deo.

Experts said Section 22 of the Competition Act stipulates how CCI meetings must be conducted, detailing the rules and procedures regarding the transaction of business during meetings, and mandates the presence of at least three members, the person cited above said.

“Any delay in appointing a new chairman is likely to put on hold the merger control regime. In the absence of quorum, CCI cannot examine the merger notifications," he added. A government-appointed committee has already interviewed candidates for the chairperson’s post. The government had invited applications in July.

According to the monthly update on the corporate affairs ministry’s website, over 100 competition-related cases are pending at various stages, including investigations and hearings. The average time taken for CCI to clear M&As is now down to 17 working days, Mint reported on 29 August.

A set of amendments proposed to the Competition Act, which is presently with a Parliamentary standing committee, seeks to fast-track clearance for M&As within 20 days of being informed of the deal, if the watchdog does not form an adverse first impression. Besides, businesses could face stiff penalty for suppressing information, according to the proposals.

ABOUT THE AUTHOR

Gireesh Chandra Prasad

Gireesh has over 22 years of experience in business journalism covering diverse aspects of the economy, including finance, taxation, energy, aviation, corporate and bankruptcy laws, accounting and auditing.
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