Merger Control in India


  • The Competition Act, 2002 was enacted with an objective of promoting competition and protecting the interest of consumers.
  • It is mainly concerned with promoting competition and providing protection to the Indian market by prohibiting any practices causing appreciable adverse effect. The act is mainly concerned with prohibiting three kinds of agreement that includes anti-competitive agreements, abuse of dominant position and the regulation of combinations (mergers and acquisitions).
  • The Competition Commission of India (CCI) is the central authority that ensures the enforcement of Competition Act. The decisions of CCI can be appealed to the Competition Appellate Tribunal (COMPAT) and subsequently to the Supreme Court.
  • Sections 5 and 6 of the Competition Act prohibit persons or enterprises from entering into combinations which have or are likely to have an Appreciable adverse effect on Competitionin the relevant market in India.
  • Section 5 of the Competition Act encompasses three broad categories of combinations within its fold:
    • The acquisition by one or more persons of control, shares, voting rights or assets of one or more enterprises, where the parties, or the group to which the target will belong post-acquisition, meet the specified assets/turnover thresholds.
    • The acquisition by a person of control over an enterprise where the person concerned already has direct and indirect control over another enterprise with which it compete, where the parties, or the group to which the target will belong post-acquisition, meet the specified assets/turnover thresholds.
    • Mergers or amalgamations, where the enterprise remaining, or enterprise created, or the group to which the enterprise will belong after the merger/amalgamation, meets the specified assets/turnover thresholds.
  • According to the act, these combinations are void.
  • Section 20(4) of the act sets out the factors that the CCI will consider when assessing whether a combination has or is likely to have an Appreciable Adverse Effect(AAE) on competition in India.
  • Transactions which exceed the specified jurisdictional thresholds for assets and turnovers are caught by the legislation. These thresholds are set out in Section 5 of the Competition Act, as amended by the relevant government notifications.Asset and turnover-based thresholds apply to determine whether a transaction is caught by the legislation. These are set out below.
  • Parties test: The parties have combined assets in India of INR 2,000 crores (INR 20 billion) or a combined turnover in India of INR 6,000 crores (INR 60 billion); or The parties have combined worldwide assets of USD 1 billion, including combined assets in India of INR 1000 crores (INR 10 billion) or a combined worldwide turnover in excess of USD 3 billion, including a combined turnover in India of INR 3,000 crores (INR 30 billion).
  • Group test: The group has assets in India of more than INR 8,000 crores (INR 80 billion) or a turn¬over in India of INR 24,000 crores (INR 240 billion); or The group has worldwide assets of USD 4 billion, including assets in India of INR 1,000 crores (INR 10 billion), or a worldwide turnover of USD 12 billion, including turnover in India of INR 3,000 crores (INR 30 billion).
  • In this context, ‘group’ means two or more enterprises which are directly or indirectly in a position to:
    • Exercise 50% or more of the voting rights in another enterprise;
    • Appoint more than 50% of the board of directors in another enterprise; or
    • Control the management or affairs of another enterprise.
  • The government of India, through a Notification dated 4 March 2016, renewed the de minimis target-based filing exemption for five years until March 2021, under which transactions where the target has either Indian assets of less than 3.5 billion rupees or Indian turnover of less than 10 billionrupees are exempted from the CCI notification requirement (target exemption).However, it should be noted that this exemption is only applicable foracquisitions and not for mergers or amalgamations.
  • Other than CCI, there are sectoral regulators like
    • Reserve Bank of India (for the banking sector),
    • Department of Telecommunications (for the telecommunications sector),
    • State Electricity Regulatory Commissions (for the electricity sector),
    • Securities and Exchange Board of India (SEBI) (for publicly listed companies), and
    • Insurance Regulatory and Development Authority (for the insurance sector) which can look into mergers/acquisitions in those specific sectors.
  • The CCI is yet to require remedies in foreign-to-foreign transactions.
  • Through the first Notification, the Central Government has increased thresholds, both assets and turnover, for any transaction to qualify as a combination under Section 5 of the Competition Act, 2002 (Act)by 100%. Consequently, the following shall be the revised thresholds under the Act to trigger the filing requirement for any transaction before the Competition Commission of India (CCI):
Threshold for proposed combination (acquirer + target) Threshold for group post acquisition
In India In or outside India In India In or outside India
Assets Assets Assets Assets
Jointly worth more than INR 3,000 Crores (INR 30 billion) Jointly worth more than USD 1500 million (including assets worth at least INR 1500 Crores (INR 15 billion) in India) Jointly worth more than INR 12,000 Crores (INR 120 billion) Jointly worth more than USD 6 billion (including assets worth at least INR1500 Crores (INR 15 billion) in India)
Turnover Turnover Turnover Turnover
Jointly worth more than INR 9,000 Crores (INR 90 billion) Jointly worth more than USD 4.50 billion (including at least INR4,500 Crores (INR 45 billion) in India) Jointly worth more than INR 36,000 Crores (INR 360 billion) Jointly worth more than USD 18 billion (including at least INR 4500 Crores (INR 45 billion) in India)
  • The Indian Competition prohibits any merger which is likely to cause ‘Appreciable Adverse Effects on Competition’.
  • The law does not mention rigid modus operandi (a particular method) for inspection of merger transactions. Nonetheless, it does mention various factors to be considered by the competition authorities while analyzing a merger.
  • These factors provide for consideration of:
    • Actual and potential level of competition through imports.
    • Extent of barriers to entry; the degree of countervailing power in the market.
    • Likelihood of increase in market prices by the merged entities.
    • Possibility of failing business.
    • Nature and extent of innovation.
    • Relative advantage, by way of the contribution to the economic development,by any combination having or likely to have an AAEC
    • Whether the benefits of the combination exceed the adverse impactof the combination, if any.
  • However, the Indian law does not mention about contemplation of factors overtly, such as effects on employment, competition with international counterparts or historical course of the concerned parties before determining fate of a merger.
  • Any person discontented by an order of the CCI approving or prohibiting atransaction may appeal to the Competition Appellate Tribunal (COMPAT)within 60 days. Orders of the COMPAT can be further appealed to theSupreme Court of India.
  • The CCI allows requests for confidentiality by parties, when these requestsare specifically made in writing along with the notification form. Parties are required to submit detailed reason and justifications in favour of their confidentiality claimsto the CCI which may also be ordered by CCI in the form of a sworn affidavit.
  • Once approved, the CCI will not publishinformation on which the parties have requested confidentiality withoutfirst obtaining the permission of the parties.
  • The CCI permits confidentiality for three years.
  • Parties are required to submit a 500-word summary ofthe transaction (not containing any confidential information) which is eventually uploaded on the CCI website.


  • It is mandatory to notify the CCI of the combination in the event that the jurisdictional thresholds are met and exemptions are unavailable. The Competition Act prescribes that notifying parties must file a notification with the CCI within 30 calendar days of:
    • Final approval of the proposal of merger or amalgamation under Section 5(c) of the Competition Act by the board of directors of the enterprises concerned; or
    • Execution of any agreement or other document for acquisition under Section 5(a) or acquisition of control under Section 5(b).
  • The Combination Regulations clarify that the term ‘other document’ means any binding document, by whatever name, that conveys an agreement or decision to acquire control, shares, voting rights or assets.

Time of Filing Notification

  • A combination must be notified to the CCI within 30 days of either:
    • Execution of any binding agreement for acquisition.
    • Passing of the board resolution approving the combination (in the case of a merger/amalgamation).
  • Under the competition act it is provided that no combination will come into effect until 210 days have elapsed since the date of receiving the notice pertaining to combination by the commission or the date of passing of the order whichever is earlier.
  • However, by way of exception, a post facto notification must be filed within seven days from the date of the acquisition for share subscriptions, financing facilities or any acquisition made under an investment agreement or a covenant in a loan agreement by any of the following:
    • Public financial institution (PFI).
    • Foreign institutional investor (FII).
    • Bank or venture capital fund (VCF).

Form of Filing

  • The Combination Regulations prescribe three forms for filing a merger notification. Notifications are usually filed in Form I (i.e., short form). However, the parties can file a merger notification in Form II (i.e., long form). The Combination Regulations recommend that Form II notifications be filed for transactions where the parties to the combination are:
    • Competitors with a combined market share in the same market of more than 15%; or
    • Active in vertically linked markets, where the combined or individual market share in any of these markets is greater than 25%.
  • Form II requires extremely detailed information – far more than that required by the (long form) Form CO under the EU Merger Regulation or a second request pursuant to the US Hart Scott Rodino Act. This information includes detailed descriptions of products, services and the market as a whole, including:
    • The relative strengths and weaknesses of competitors;
    • Estimates of a minimum viable scale required to attain cost savings;
    • The costs of entry; and
    • The impact of research and development
  • No pre-notification procedure exists. It is possible to conduct pre-notification consultations with the CCI on procedural and substantive issues. Consultations are oral, informal and non-binding. The merger control regime has a standstill requirement and no part of a transaction can be implemented until approval has been obtained.


  • At present, the filing fee for notice filed in Form I is Rs 15,00,000 ( Fifteen Lakh India Rupees Only)
  • In Form II is Rs 50, 00,000 (Regulation 11 of the Combination Regulations). (Fifty Lakh Indian Rupees Only)
  • No fee is payable for filing the notice in Form III.
  • The formation of a joint venture (JV) is not specifically covered by Section 5 of the Competition Act.Section 5 covers the acquisition of an "enterprise" and mergers and amalgamations of "enterprises". The term "enterprise" is defined under the Competition Act.
  • It effectively refers to a "going concern" that is already conducting or has previously conducted business.A purely "Greenfield" JV (that is, a new project with no previous work) is unlikely to be considered as an enterprise, and will therefore not fall within the scope of Section 5.
  • However, setting up a "Brownfield" JV (where parents are contributing existing assets or businesses, or conferring control over these assets/businesses to the JV) where the jurisdictional thresholds are met, is notifiable as it relates to the acquisition of an enterprise under the Competition Act.
  • There is presently very little guidance from the CCIin relation to the treatment of JVs or the criteria it applies in determining if a transaction is Greenfield or Brownfield.
  • The exchange control regulations primarily govern foreign ownership of assets in India. These regulations list certain sectors:
    • Where prior approval of the government is required before an investment can be made by a non-resident (e.g., investments in the defense sector);
    • With restrictions on the investment limits that a non-resident can make (e.g., foreign direct investment in infrastructure companies is permitted only up to 26% without having to obtain the government’s prior approval);
    • Which have conditions that must be fulfilled before making foreign investment (e.g., investment in a non-banking financial company is subject to certain minimal capitalisation norms); and
    • In which foreign investment is completely prohibited.

Foreign to Foreign Transactions

  • As per the jurisprudence developed so far from CCI orders, as long as the prescribed thresholds mentioned above are met, and the “de minimis” exemption as well as the possible exclusions mentioned in Schedule I of the Combination Regulations are not applicable, the transaction needs to be notified to CCI for its approval before consummation irrespective of the fact that the transaction is taking place entirely outside India.
  • In this context, it is important to mention that the CCI, by an amendment to Schedule I of the Combination Regulations, has deleted one category which originally provided for exclusion of combinations taking place entirely outside India with insignificant local nexus and effect on markets in India.
  • It is also pertinent to mention that the CCI does not differentiate between combinations taking place in India or outside India in case of any violation of the provisions of the Act, particularly in the matter of adhering to the prescribed timelines.
  • The CCI has signed memorandums of understanding (MOUs) with variouscompetition authorities, including with the Federal AntimonopolyService of Russia, the US Federal Trade Commission and the Departmentof Justice, the Canadian Competition Bureau, the European Commission,and the Australian Competition and Consumer Commission to strengthen cooperation between the authorities.
  • At presentspecial rules under the Competition Act governing merger control review for foreign investment or specific sectors such as telecoms, pharmaceuticals, the media, oil and natural gas are not available.
  • Additionally there are non-competition approvals like those fromthe Foreign Investment Promotion Board (FIPB), which may be required depending on the sector in which the investment is being made.