Need to encourage M&As for business size: Jaitley

Mergers and acquisitions have to be encouraged to promote the size of domestic companies but there is also a need to understand when to draw the red line while implementing the competition law, corporate affairs minister Arun Jaitley said on Monday.

Mergers and acquisitions have to be encouraged to promote the size of domestic companies but there is also a need to understand when to draw the red line while implementing the competition law, corporate affairs minister Arun Jaitley said on Monday.

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He also underlined the need for applying the "principle of proportionality" while taking into consideration the consequences of competition norms. "People learn from global experience. When our own corporates are of moderate size, mergers, acquisitions and consolidation need to be encouraged to promote size.

So when it is that we draw the red line (in implementing competition law)," Jaitley said. According to him, Competition Commission of India (CCI) is becoming "extremely mature". M&As involving significant business activities and those meeting a certain threshold under competition norms are required to get clearance from CCI.

Jaitley was inaugurating the International Competition Network (ICN) Merger workshop here, organised by CCI. "Another issue, what are the kind of consequences and penalties that we impose in the larger implementation of the law. Do we look at the evil sought to be curbed (or) the capacity of our own economy and therefore apply the principle of proportionality," the minister said.