India seeks to tighten rules on mergers, acquisitions
NEW DELHI India is aiming to tighten rules around mergers and acquisitions in order to tighten rules around the scrutiny of mergers and acquisitions. It has proposed legislation that could affect global tech firms that do a lot of business there.
The proposal is part of an overhaul of India's competition law in a bill that was introduced in parliament on Friday and could be passed as soon as next week.
The Competition Commission of India CCI reviews mergers and acquisitions that surpass thresholds for assets or turnover.
Many high-value deals between technology firms that have a big presence in India have escaped scrutiny because the companies involved have few assets and low turnover there.
In 2014, Facebook acquired WhatsApp for $19 billion, which required no CCI clearance, even though WhatsApp counted India as a major market, lawyers say.
All deals worth over 20 billion rupees $250 million are subject to antitrust scrutiny if the companies have substantial business operations in India, according to the draft law.
Anisha Chand, a partner at Indian law firm Khaitan Co, said the deal value test seeks to draw scrutiny of transactions where parties do not meet the conventional asset and turnover thresholds.
She said that if passed in the present form, the incoming amendment could result in a jump in the number of transactions in new age markets that require prior clearance.
Public policy consulting firm Koan Advisory said in a note on Friday that the deal value threshold for scrutiny is in line with antitrust regulations in Germany and Austria.
The bill, which was dated August 2, says that the new regulations from the CCI will lay out the process to determine whether an entity has substantial business operations in India.
As part of the revamp of competition law, the government proposes reducing the time limit for approval of mergers to 150 days from 210 days.
The bill says it plans to introduce a mechanism for entities trying to reach a settlement with the CCI.