The amendment of the Competition Commission Act - which aims to regulate mergers, amalgamations and acquisitions of Indian enterprises - will adversely affect the growth of industry, says a leading business chamber.
"M&A (merger and acquisition) activity in today's context is an engine for economic growth. Any law that restricts the present status will result in loss of transactions, deny the opportunities for absorption of advanced technologies and impede growth," the Confederation of Indian Industry (CII) said in a statement.
The Competition Commission might take up to 210 days for approving such a proposal and a waiting period of so many days may not augur well for a specific deal, CII said.
It also said the mandatory notification requisite should not be based on the turnover criteria, as envisaged in the amended version of the act.
"The asset/turnover criteria is coupled with the concept of 'Group' covering within the ambit of regulation business conglomerates without having regard to the commonality of the product market being serviced by the members of such conglomerates," CII said.
The chamber is also against the extension of the provision for cross-border combinations.
"The merger control notification provision does not require any nexus between notification and potential harm to competition in India," it said.
Unlike developed economies, regulating M&As is not justified for a developing country like India for whom it is imperative to achieve economies of scale to be globally competitive, CII said.
The Competition Commission of India aims to protect the interest of consumers, ensure freedom of trade and promote and sustain competition in India.
It was set up as a regulatory and quasi-judicial body by the government in October 2003 under the Competition Act 2002. It, however, got entangled in numerous legalities after being challenged by a writ petition due to certain provisions.
Finally, the Competition (Amendment) Bill, 2007 was passed by the government in August this year after the Supreme Court addressed the petition followed by a subsequent go-ahead by the parliamentary standing committee.