A combination refers to mergers, acquisitions, and amalgamations between enterprises that have the potential to significantly influence market competition. To ensure these combinations do not result in any appreciable adverse effect on competition, the Competition Commission of India is responsible for their oversight. The Commission introduced the Competition Commission of India (Combinations) Regulations, 2024, on September 9, 2024, with implementation commencing on September 10, 2024. These regulations aim to update and streamline the process of assessing combinations, improve procedural clarity, and enhance market integrity. They contain important provisions addressing the scope of transaction value, assessment of substantial business operations in India, and the requirements for filing notices for combinations.
Broader Definition of Transaction Value under Section 5(d) of the Competition Act 2002
Section 5(a) of the Competition Act, 2002, establishes that an acquisition, merger, or amalgamation qualifies as a combination if the transaction involving control, shares, voting rights, or assets exceeds a value of Rs 2,000 crore. For Section 5(d), the definition of transaction value has now been broadened to include all forms of valuable consideration. This change ensures that the valuation of a combination reflects the full scope of its financial components rather than being limited to the price paid for shares or assets. Under the updated regulations, transaction value includes consideration for covenants, undertakings, or restrictions imposed on the seller or other parties, even when agreed separately. It also includes consideration for all interconnected steps and transactions, payments due within two years for technology, intellectual property rights, usage, supply, branding, and marketing arrangements. Additionally, the value of call options and shares is counted assuming full exercise, and any payments based on specified future outcomes described in transaction documents are considered. This broader definition ensures a more comprehensive assessment of the economic significance of a transaction. By adopting a more inclusive interpretation of transaction value, the regulations reduce the likelihood of underreporting the true size of a deal, provide greater regulatory clarity, and strengthen the ability of the Commission to identify and address potentially anti-competitive combinations.
Criteria for Assessing Substantial Business Operations in India under Section 5(d) of the Act
The proviso to Section 5(d) of the Competition Act, 2002, specifies that an enterprise undergoing acquisition, merger, or amalgamation must have substantial business operations in India for the transaction to qualify as a combination subject to scrutiny. The regulations provide clear parameters for this determination. An enterprise is deemed to have substantial operations in India if it meets certain thresholds related to digital services, gross merchandise value, or revenue. For digital services, the criterion is met if at least 10 percent of the enterprise’s global business or end users are located in India. For other sectors, if its gross merchandise value in India during the preceding 12 months constitutes at least 10 percent of its global GMV and exceeds Rs 500 crores, the threshold is satisfied. Similarly, if its revenue from Indian operations in the previous financial year accounts for at least 10 percent of its global turnover and is greater than Rs 500 crores, the enterprise qualifies. These thresholds ensure that only entities with a meaningful presence in the Indian market fall within the ambit of the Commission’s review. The intent is to focus regulatory attention on transactions that could genuinely impact competition in India while reducing unnecessary filings for companies with minimal local operations. This targeted approach promotes efficiency and ensures resources are directed toward monitoring significant transactions that could affect market dynamics.
Streamlining Notice Requirements under Sections 6 and 6A of the Competition Act for Combinations
The updated regulations simplify and clarify the process of filing notices for combinations under Sections 6 and 6A of the Competition Act. A notice must be filed using Form I, along with proof of fee payment. However, if the combined market share of the entities involved exceeds 15 percent in any relevant market or if the entities control more than 25 percent of the market at different stages of the production chain, then Form II must be used. All notices must comply with guidelines issued by the Commission, which are publicly available. For transactions under Section 6A(a), notices must be submitted within 30 days of acquiring shares or securities, accompanied by the required proof of fee payment. Notices under Section 6(4) must also be filed using Form I with the required declaration and fee. If a notice is initially filed in Form I but the Commission determines that details from Form II are necessary, it may direct the parties to submit Form II. In such cases, any fee paid for Form I will be adjusted if Form II is filed within 45 days. This streamlining reduces uncertainty for businesses and ensures that significant transactions are assessed with the appropriate level of detail.
Restrictions on Acquirer’s Influence and Rights During Acquisition under Section 6A(a)
When an acquisition falls under Section 6A(a) of the Competition Act, the acquirer is allowed to receive economic benefits such as dividends, distributions, rights issues, bonus shares, stock splits, and buy-backs. However, voting rights are limited to matters concerning liquidation or insolvency of the target enterprise. The acquirer and its affiliates are prohibited from exercising direct or indirect influence over the management or operations of the enterprise whose shares or securities are being acquired. This provision is designed to ensure that, while economic interests may transfer to the acquirer, operational control and influence remain restricted until the necessary regulatory approvals are obtained. This separation of economic benefit and control promotes fairness, reduces the risk of pre-emptive market influence, and helps maintain corporate independence during the acquisition process.
Commission’s Assessment of Confidentiality Requests During Inquiries
The Competition Commission of India has introduced stringent guidelines for handling requests to maintain confidentiality of information or documents submitted during combination inquiries. Any request for confidentiality must include detailed reasons and justifications, along with a clear explanation of the potential business impact if the information is disclosed. This requirement ensures that the Commission can carefully balance the need to protect sensitive commercial information with the imperative for transparency and thorough review. By demanding precise and well-substantiated confidentiality claims, the Commission safeguards against frivolous or overly broad confidentiality assertions that could hinder effective competition analysis. This approach promotes a transparent inquiry process while respecting legitimate business concerns.
Obligations for Filing Combination Notices
The new regulations clarify the responsibilities associated with filing combination notices. In cases of acquisition or control, the acquirer must submit a notice using either Form I or Form II, signed by an authorized representative. For companies, any authorized signatory may fulfill this role. If an acquisition occurs without the consent of the acquired enterprise, the acquirer is required to provide all available information within ten days of filing the notice. If complete information is unavailable at the time of filing, the Commission may directly request additional details from the acquired enterprise. Time spent gathering this information does not count toward statutory deadlines. In mergers or amalgamations, the parties involved must jointly submit the notice using the appropriate form, with signatures from authorized persons. When a combination results from a series of interconnected steps or smaller transactions, a single notice covering all such transactions must be filed. The regulations emphasize substance over form, meaning that the obligation to file a notice depends on the true nature of the transaction rather than its structural presentation. This prevents parties from circumventing filing requirements through artificial arrangements.
Amendment to the Fee Structure for Filing Notices
The fee structure for filing combination notices has been revised to reflect the enhanced scope and scrutiny of transactions. Notices filed using Form I now require a fee of Rs 30 lakh, increased from Rs 20 lakh. Notices filed using Form II must pay a fee of Rs 90 lakh, representing a substantial adjustment. The fee increase is likely intended to encourage more careful preparation and evaluation before submission. Higher fees may deter frivolous or incomplete filings and promote thorough compliance with regulatory standards. This adjustment also aligns fees more closely with the scale and complexity of the transactions under review.
Scrutiny and Validation of Notices of Combinations
The updated regulations introduce more rigorous processes for scrutinizing and validating combination notices. Notices must be complete and compliant upon submission. Incomplete or defective notices will be returned with a request for missing information, which will be communicated within ten working days. Parties are required to remedy any defects or provide additional information as directed by the Commission within specified timeframes. A notice becomes valid only after full compliance. If additional information is necessary, the Commission will issue instructions to the parties, and the time taken to supply this information will not count toward statutory deadlines. All communications concerning defects and requests for information must be thoroughly documented. Failure to address defects or provide required information will result in invalidation of the notice. However, before invalidation, the Commission typically offers an opportunity for the parties to be heard. The Commission is obligated to inform parties of its decision within seven days of reaching it. If a notice is invalidated, parties may resubmit it. The original fee will be adjusted against the new fee if resubmission occurs within 45 days. Additionally, the Commission has the authority to seek information from external sources regarding the competitive impact of the combination. Time spent gathering such external information is excluded from statutory deadlines. These provisions enhance regulatory rigor, ensuring that only complete and reliable information is considered, thereby facilitating a more effective competition review.
Notice Requirements for Combinations
The recent amendments provide clearer and more precise requirements regarding notice submissions for combinations. Once a notice has been filed, the submitting party is required to inform the Commission of any changes in the information provided within ten working days following the receipt of an acknowledgment from the Secretary. This replaces the previous, less specific obligation to notify the Commission of changes “at the earliest” while proceedings are ongoing. The more structured timeline improves clarity and predictability in regulatory compliance. Additionally, the regulations maintain the existing provision that allows parties to refile invalid notices without incurring additional fees, provided the refiling occurs within 30 days of the Commission’s communication. This policy helps ensure that parties are not unfairly penalized for technical or procedural errors, while encouraging timely and accurate filings.
Hearing Procedures and Statutory Timelines in Combination Inquiries
The updated regulations introduce important procedural provisions regarding hearings during combination inquiries. When the Commission decides to provide parties an opportunity to be heard, the Secretary issues a notice specifying the date and time for the appearance. Notably, the period between the issuance of the hearing notice and the scheduled hearing date, which may be up to ten days, does not count towards the statutory time limits prescribed under Sections 6(2A), 29(1B), and 31(6) of the Competition Act. This exclusion of time ensures that the process of scheduling and conducting hearings does not inadvertently reduce the overall time available for decision-making under the law. Furthermore, if parties request extensions to prepare for their hearings, these additional days are also excluded from the statutory timelines. These provisions introduce greater flexibility to accommodate procedural fairness while preserving adherence to legally mandated deadlines. The amendments strike a balance between the need for thorough examination and the importance of timely resolution in competition matters.
Modifications to Proposed Combinations
The regulations also enhance the procedures for managing modifications to proposed combinations, facilitating clearer communication and efficient resolution. The Secretary must communicate any modification proposals from the Commission to the concerned parties within seven days. The notified parties have five days from receipt to respond. Importantly, both the communication and response periods are excluded from statutory deadlines, allowing sufficient time for careful consideration. Modifications must be formally submitted using Form IV within ten working days of the Secretary’s acknowledgment or concurrently with the response to the communication. Parties are permitted to propose modifications when responding to the initial notice within 15 days of its receipt, enabling them to address concerns raised by the Commission early in the review process. Combinations approved with modifications must be implemented in strict accordance with the Commission’s specified terms and timelines. Failure to comply with the mandated modifications within the designated period may lead to enforcement orders under Section 31(5)(b) of the Competition Act within 30 days of determination of non-compliance. These enhancements to the modification process promote accountability, procedural clarity, and effective regulatory oversight to prevent anti-competitive outcomes.
Compliance and Monitoring of Combination Modifications
The new regulations introduce comprehensive compliance and monitoring requirements related to modifications of approved combinations. Parties involved in a combination must file a compliance report and affidavit with the Secretary within seven days of implementing any modifications ordered by the Commission. This report verifies that the parties have adhered to the Commission’s directives. For modifications that require ongoing compliance, parties must submit periodic reports as scheduled in the Commission’s order. If these reports are not submitted, the Secretary is required to report the non-compliance to the Commission for further action. This process ensures timely verification of compliance and enables proactive enforcement. Strengthening these monitoring provisions reinforces the Commission’s ability to oversee long-term adherence to regulatory requirements. By mandating periodic updates and verification, the framework promotes transparency, accountability, and effectiveness in preventing adverse competitive effects arising from approved combinations.
Enhanced Procedural Clarity and Efficiency
By streamlining notice requirements and establishing clear guidelines for the submission and validation of notices, the regulations improve procedural transparency. The updated rules on notice amendments, fee structures, and timelines foster predictability for stakeholders and encourage careful preparation. The introduction of stricter scrutiny measures and detailed provisions for addressing defects ensures that filings are complete and reliable, which strengthens the Commission’s ability to conduct thorough competition assessments.
Strengthened Monitoring and Compliance
The amendments impose more rigorous compliance and monitoring obligations on parties involved in combinations, particularly concerning modifications ordered by the Commission. The requirement for timely compliance reports and affidavits, coupled with the Commission’s authority to enforce adherence through orders, bolsters accountability. These measures help ensure that approved combinations do not deviate from the terms set to safeguard competitive conditions, supporting market integrity over the long term.
Balancing Transparency, Fairness, and Market Protection
The updated regulations also place significant emphasis on enhancing procedural fairness in the merger control process, ensuring that all parties involved in combinations have adequate opportunities to present their case. By instituting clear mechanisms for parties to be heard, the Commission fosters an environment where stakeholders can engage constructively, address concerns, and provide clarifications on competition-related issues. This participatory approach enhances the legitimacy and acceptance of the Commission’s decisions, mitigating potential disputes and fostering cooperative compliance.
In addition to guaranteeing a fair hearing, the amended regulations introduce greater flexibility in managing hearing schedules. Recognizing the complexities and constraints faced by parties—ranging from coordination challenges among multinational entities to the involvement of multiple stakeholders—the Commission allows for adjustments in hearing dates without compromising statutory deadlines. This pragmatic provision balances the need for thorough examination with the imperative to resolve cases within legally mandated timeframes, thereby promoting efficiency without sacrificing fairness.
A particularly noteworthy feature of the 2024 amendments is the Commission’s refined approach to handling confidentiality requests. In the course of combination reviews, parties often submit commercially sensitive or proprietary information that, if disclosed publicly, could harm their competitive position. The regulations provide a carefully calibrated framework to protect such information, allowing the Commission to accept confidentiality claims while still maintaining transparency in its competition assessments. This balance ensures that sensitive business data remains safeguarded, encouraging candid disclosures by parties, which in turn supports more informed and accurate evaluations.
At the same time, the Commission maintains its commitment to transparency by outlining clear standards and conditions under which confidentiality can be granted or denied. This transparency enhances stakeholder trust in the regulatory process, reassuring businesses and the public that decisions are based on sound evidence while respecting legitimate confidentiality concerns.
Together, these elements of procedural fairness and confidentiality management reflect a thoughtful and balanced regulatory design that recognizes the diverse interests at play. By embedding fairness, flexibility, and transparency into the review process, the Commission strengthens its role as a credible and effective competition regulator.
Overall, the 2024 amendments position the Competition Commission of India to more effectively oversee combinations that could impact market competition. By broadening the regulatory scope, clarifying procedural processes, and reinforcing enforcement capabilities, these changes enhance the Commission’s ability to detect, deter, and remedy anti-competitive practices. Simultaneously, they facilitate legitimate business transactions by providing clear guidance and predictable regulatory outcomes.
Ultimately, these reforms contribute to a healthier, more competitive marketplace that benefits consumers through better choices and innovation, supports businesses by ensuring a level playing field, and promotes economic growth by fostering efficient and fair market structures. The strengthened framework underscores India’s commitment to maintaining robust competition policy in an increasingly dynamic and interconnected economy.
Conclusion
The recent amendments to the Competition Commission of India (Combinations) Regulations, 2024, represent a significant step forward in strengthening the regulatory framework governing mergers, acquisitions, and amalgamations within the country. These changes reflect the Commission’s intent to adapt to evolving market realities, address emerging challenges, and ensure that the process of business combinations does not undermine competitive market dynamics or harm consumer interests. By refining key definitions, setting clearer thresholds, and bolstering procedural mechanisms, the amendments collectively aim to balance efficient regulation with facilitation of legitimate business growth.
A major advancement introduced by the amendments is the expanded and more precise definition of transaction value. This adjustment broadens the scope of what constitutes the value of a transaction, allowing the Commission to capture a wider range of deal structures and financial considerations that were previously difficult to quantify. By doing so, the Commission ensures that larger and more complex transactions, which may have a significant impact on market competition, do not escape regulatory scrutiny due to technical or definitional gaps. This holistic valuation approach reflects global best practices and aligns with the need for comprehensive oversight in an increasingly sophisticated business environment.
Alongside this, the amendments establish clearer criteria for determining what constitutes “substantial business operations” in India. This is particularly important for cross-border transactions where foreign entities acquire or merge with Indian companies. The enhanced thresholds clarify when such transactions fall within the ambit of the Indian Competition Act, thus reducing ambiguity for multinational corporations and local businesses alike. This clarity aids in avoiding unnecessary regulatory filings for transactions with minimal or no real market presence in India, while ensuring robust oversight for those that have meaningful operational footprints.
Procedurally, the amended regulations introduce streamlined notice requirements and enhanced timelines, facilitating faster and more efficient processing of merger filings. These changes aim to reduce administrative delays, improve predictability for the parties involved, and foster a more business-friendly regulatory environment. At the same time, the regulations strengthen the scrutiny process by enabling the Commission to conduct thorough assessments of combinations that raise potential competition concerns, including the power to call for additional information or impose interim measures.
The amendments also reinforce monitoring and enforcement powers by equipping the Commission with stronger tools to ensure compliance with its orders and directives. This includes imposing penalties for non-compliance, mandating corrective actions, and conducting post-transaction reviews. Such mechanisms deter anti-competitive behavior and uphold the integrity of the competitive landscape.