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Kochhar & Co. Merger Control Regulations, Indian Competition Act - Revised
 
Area
Competiton Law 
Author
Piyush Gupta | Partner
Date
13 July, 2015


The Competition Commission of India (“CCI”) has revised the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (Combination Regulations). The revisions have been made in line with some of the best practices in other jurisdictions and to simplify and clarify the processes. This is the fourth instance in the four years since the introduction of the merger control regime in India, that the regulations have been revised / amended.

 This article compares the proposed revisions with the incumbent provisions under the Competition Act (‘Act’), and reviews the impact that the revisions seek to have.

S.No.

Incumbent Provision(s)

Revision

(a)

Previously, the trigger events for a notification to the CCI were restricted to passing of board resolutions, execution of definitive documents or any other document for an acquisition. In cases where no binding document conveying an intention or decision to acquire had been executed, the term “other document” encompassed any communication of the intent to acquire to the Central Government or State Government or a Statutory Authority. The erstwhile definition of “other document” had the potential to trigger the notification requirement upon any communications to statutory authorities, including the Insurance Regulatory and Development Authority, Department of Industrial Policy and Promotion and /or the Foreign Investment Promotion Board, at a stage when parties were yet to finalise the details of the transaction in question, let alone its potential effect on competition.

A key change brought in the amendments is in relation to the definition of the
term “other document”. To bring in more certainty, the scope of the term “other document” has now been limited to a specific communication conveying the intention to make an acquisition to a statutory authority.

(b)

Only the managing director was permitted to verify the contents of a notification on behalf of the relevant party, unless the company authorized a director or a company secretary to do so by way of a specific board resolution. This restriction, in turn, gave rise to practical difficulties, due to the absence in certain jurisdictions, of designations that were the equivalent of a ‘managing director’ or ‘company secretary’.

Under the revised Combination Regulations, the CCI has provided flexibility to the board of directors of companies to authorize any person to sign the notice seeking CCI’s approval.

(c)

The timeline provided for a first phase of review under the Act, was for the same to be completed within thirty (30) “calendar” days.

Under the revised Combination Regulations, the CCI has modified the timeline for the first phase of review to thirty (30) “working” days.

(d)

Currently, three (3) copies of the notice are to be filed with the CCI – two hard copies, and an electronic version thereof.

Per the revised Combination Regulations, the number of copies of the notice to be filed will be reduced to two – one hard copy and one electronic version of the same.

(e)

New Provision

The revised Combination Regulations provide that a brief summary of every combination that CCI is reviewing will be put up on the CCI’s website to ensure greater transparency.

Such an initiative will also allow stakeholders to submit their comments on the same to the regulator.

(f)

New Provision

The CCI has decided to give fifteen (15) days to third parties to comment on proposed deals in the first phase of review.

Such a move provides a clearly identifiable timeline for collation of third party comments to proposed combinations, thereby making it easier for the enterprises to determine the timelines involved with the merger notifications under the Act.

(g)

New Provision

The CCI will revise Form-I that is required to be filed for notifying a combination. Notes to the forms will soon be published to provide guidance to the notifying parties regarding the information required to be filed in a notice.

 

Final Words

The revisions to the Combination Regulations are a seemingly welcome addition to the M&A filings made to the CCI. The fair trade watchdog's move would help in avoiding undue delays as well as usher in greater transparency into its decision-making process.

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