Answer ... The CCI is India’s antitrust regulator and is responsible for enforcing the provisions on merger control under the Competition Act. All transactions that breach the thresholds specified in Section 5 of the Competition Act must be notified to the CCI.
Review and approval of transactions: The Indian merger control regime is mandatory and suspensory in nature. Transactions that are notifiable cannot be consummated, either entirely or in part, without the approval of the CCI. The CCI will approve a transaction upon reviewing the information provided in the notification. The CCI can also solicit information from third-party enterprises, and can solicit the views of such parties on the appreciable adverse effect on competition (AAEC) that could be caused as a result of a proposed transaction. If the CCI is satisfied that no AAEC will be caused in the relevant market in India, it will approve the transaction.
In-depth investigations: If the CCI believes that a proposed transaction is likely to cause an AAEC in a relevant market(s) within India, it will issue a show-cause notice (SCN) to the parties, inviting them to explain why a detailed investigation to assess the transaction’s competitive effects should not be conducted. If the parties successfully address the CCI’s concerns in response to the SCN, including by offering voluntary behavioural and/or structural remedies, the CCI may approve the transaction. If the CCI’s concerns persist, it will commence a Phase II investigation.
Where the CCI has started a Phase II investigation, the merging parties must provide certain required information specified in Form IV under Combination Regulations – including:
- a summary of the proposed transaction;
- the names of the parties; and
- details of:
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- the business activities of the parties;
- the relevant market; and
- the competition impact assessment for the proposed transaction.
The CCI may thereafter invite comments from public and any persons affected or likely to be affected by the transaction by asking the parties to publish the details provided in Form IV. Based on the comments received during public consultation, the CCI may require the parties to accept certain behavioural or structural remedies (the parties can also offer a remedy proposal on their own). If the parties accept the remedies proposed by or agreed with the CCI, the CCI may grant conditional approval to the transaction. If the parties do not accept the remedies proposed by or agreed with the CCI, the CCI has the power to block the transaction.
Power to impose penalties: The CCI can impose penalties on parties if:
- they fail to notify a transaction that breaches the statutory merger filing thresholds; or
- the transaction is consummated in part or in totality without obtaining the CCI’s approval.
The maximum penalty for failure to notify the CCI is 1% of the combined assets or turnover, whichever is higher, of the combining parties. Further, under the 2023 amendment act, 1% of the “total value of the proposed transaction” must also be considered to arrive at the highest possible penalty that can be imposed on the parties. However, this provision is not in force as of the time of writing.
Power to examine previous transactions: The CCI can also ‘look back’ at the effects of a transaction that was not notified for a period of one year from the date of its completion, based on its own information or knowledge of the transaction. There is no statutory time limit that prevents the CCI from penalising parties for a failure to notify it.
Power to block transactions: The CCI has the power to block transactions where:
- the proposed combination is likely to cause an AAEC in India;
- the parties to the proposed combination fail to implement the remedies to which they initially committed and such combination is deemed to have an AAEC in India due to non-implementation of the remedies; or
- the parties fail to accept the remedies proposed by the CCI within 30 working days or within a further additional period of 30 working days and the proposed combination is deemed to have an AAEC in India (please see question 5.2 for a detailed overview of the procedure for negotiating remedies with the CCI and timelines, including the changes in the timelines pursuant to the 2023 amendment act).