OECD kpcdb

1. Scope

 

Section 6 (1) of the Act stipulates that no person or enterprise shall enter into a combination which causes or is likely to cause an AAEC within the relevant market in India and such a combination shall be void.

Section 5 of the Act defines combinations by dividing into three categories:

 

a)  Any acquisition by one or more persons of control, shares, voting rights or assets of one or more enterprises, meet specified assets or turnover thresholds.

b)  Any acquisition by a person of control over an enterprise where the person acquiring control already has direct or indirect control over another enterprise engaged in the production, distribution or trading of similar or identical or substitutable goods, or in the provision of a similar or identical or substitutable service, meet specified assets or turnover thresholds.

c)  Any merger or amalgamation, in which the enterprise remaining after merger or the enterprise created as a result of the amalgamation.

2. Notification

Transactions that meet the jurisdictional thresholds are subject to pre-notification to the CCI, and do not take effect until clearance has been granted.

The notification thresholds for the combined assets/turnover of the combining parties are as follows: for individuals and groups in India, notification thresholds for individual is INR 15 billion assets and INR 45 billion turnover. The thresholds for group is INR 60 billion assets and INR 180 billion turnover.

For individual and group in India and outside, the total asset thresholds are USD 750 for individual and USD 3 billion for group, and minimum Indian component for the asset is INR 7.5 billion for individual and INR 7.5 billion for group. The total turnover thresholds are USD 22.5 billion for individual and USD 9 billion for group, while the minimum Indian component for turnover is INR 22.5 billion both for individual and group.

According to the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations 2011, Schedule I contains a list of transactions that are exempted from the notifying requirements of the Act.

3. Procedural rules

Section 6 (2) of the Act prescribes that any person or enterprise, who or which proposes to enter into a combination, shall give notice to the CCI within 30 days of the approval of the proposal or the execution day, or acquiring of control.

The CCI shall form its prima facie opinion on the notice, as to whether the combination is likely to cause or has caused an AAEC within the relevant market in India, within thirty working days of receipt of said notice.

Failure to notify: If any person or enterprise fails to give notice to the CCI, under Section 6 (2) the CCI shall impose on such person or enterprise a penalty which may extend to one percent of the total turnover or the assets, whichever is higher of such a combination.

4. Assessment

To determine whether a merger/ combination exhibit such nature, the CCI considers the factor enlisted in Section 20(4) of the Act, namely:

 

a)  actual and potential level of competition through imports in the market

b)  extent of barriers to entry into the market;

c)  level of combination in the market;

d)  degree of countervailing power in the market;

e)  likelihood that the combination would result in the parties to the combination being able to significantly and sustainably increase prices or profit margins;

f)   extent of effective competition likely to sustain in a market;

g)  extent to which substitutes are available or arc likely to be available in the market;

h)  market share, in the relevant market, of the persons or enterprise in a combination, individually and as a combination;

i)   likelihood that the combination would result in the removal of a vigorous and effective competitor or competitors in the market;

j)   nature and extent of vertical integration in the market;

k)  possibility of a failing business;

l)   nature and extent of innovation;

m)  relative advantage, by way of the contribution to the economic development, by any combination having or likely to have;

n)  whether the benefits of the combination outweigh the adverse impact of the combination, if any.

 

Procedural fairness: There is no formal framework regarding assistance to parties during the course of an investigation. However, it has been the practice of the CCI to clarify its requirements to the parties. The case team of the Division of the CCI interacts with the parties to clarify the information requirement for the purpose of assessment. However, the decision does give pre-filing consultations to parties and there are also guidelines on the same. However, these consultations are not binding on the CCI.

 

Section 29(1) of the Act empowers the CCI to issue a notice to show cause to the parties to combination calling upon them to respond within thirty days of the receipt of the notice, as to why investigation in respect of such combination should not be conducted.

 

The CCI has not yet issued any guidelines on assessment of combination. However, the CCI has taken its best effort to clarify all significant issues raised by the parties through its decision.

5. Remedies and sanctions

The CCI imposes structural and behavioural remedies on or makes prohibition decisions on anticompetitive business combinations. Remedies can also be offered by the merging parties and accepted by the CCI. The decision-makers in India’s jurisdiction has never blocked a proposed merger.

 

Failure to comply: In case a transaction is implemented despite a prohibition decision, such a combination will be considered as void.

 

 

* This information is based on Competition Law in Asia-Pacific: A Guide to Selected Jurisdictions (2018).