Competition Commission of India Implements Deal Value Threshold
The long-awaited deal value threshold provision, which brings large acquisitions under the purview of the Competition Commission of India (CCI), has finally been notified by the Ministry of Corporate Affairs. This provision, introduced through the Competition Amendment Act 2023, comes into effect from September 10, 2023.
The enabling regulations will be notified by the CCI soon and will give effect to the deal value threshold (DVT) of Rs 2,000 crore. This provision aims to keep a check on high-value transactions, especially in the digital space. Under the provision, all merger and acquisition-related transactions, including acquisitions, mergers, and amalgamations, exceeding Rs 2,000 crore and involving a target enterprise in India with a substantial business presence in India, would require approval from the CCI.
Nisha Kaur Uberoi, Partner & Chair Competition Law at JSA, commented on the merger control amendments, stating that they represent the single largest overhaul of the Indian merger control regime. The introduction of the DVT of Rs 2,000 crore for companies with substantial business operations in India brings the CCI on par with global regulators like the US, Germany, and Austria. However, she emphasizes that the devil lies in the details, and the enabling regulations and the need for the CCI to enhance capacity to maintain their efficient track record of clearing M&A deals will be key to ensuring ease of doing business remains unimpacted.
Anisha Chand, Partner at Khaitan & Co, noted that deals yet to be signed or signed on or after September 10 must re-examine their reportability status to the CCI. She highlights that the existing de minimis (asset and turnover thresholds) and DVT are mutually exclusive. As a result, several transactions that were benefiting from the de minimis exemption will now require prior clearance from the CCI if they meet the DVT criteria.
In addition to the DVT provision, the Ministry of Corporate Affairs also notified several other provisions around the Competition (Minimum Value of Assets or Turnover) Rules, 2024, as well as the criteria for combinations.