The Competition Commission of India (CCI) on Wednesday defined the rules for merger and acquisitions (M&As) to ensure that large firms do not profit unfairly or edge out smaller peers from the market by flexing their monopoly muscles.
The CCI, set up in 2007, is India’s anti-trust regulator mandated to rule on cases of and complaints related to monopolies, unfair competitive practices, abuse of dominance and cartelisation. The notification came nearly two years after the Competition Act 2007 was legislated.
Although the Act stipulates that the regulator will have to rule on all M&A proposals within 210 days, CCI chairman Dhanendra Kumar said the commission would dispose all corporate marriage proposals within six months, with as much as 95% of the proposals expected to be decided in less than a month.
The regulation — Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 — will come into effect from June 1, 2011.All cases where decisions have been taken earlier will be exempted even if the transaction has not been fully consummated.
“The objective is to ensure that consumer and investor interest is protected,” Kumar said.
The regulator has also slashed the fee for filing of M&A applications with the CCI to R50,000 from the earlier proposal of R40 lakh. In exceptional cases, where the merger or the amalgamation could potentially alter the market structure significantly, the CCI will charge an application fee of Rs 10 lakh.
The rules, however, steer clear of any norms for pre-merger consultations, a standard global practice. “We would be open to any informal consultations or guidance for pre-merger processes,” Kumar said.This was a grey area in the new M&A rules, experts said.
“The regulations still do not talk about pre merger consultation, which is a global good practice,” said Vijaya Sampath, group general counsel, Bharti Group and co-chair, corporate law committee, FICCI.