Streamlining M&A: Government Raises Thresholds for Competition Scrutiny in India

Author(s): Dipak Rao, Nishita Arora
Date: 18-Apr-2024

Recently, the Government of India through the Ministry of Corporate Affairs, vide a series of notifications, revised the thresholds for transactions qualifying as “combinations” as well as the de minimis target exemptions available to such “combinations” under The Competition Act, 2002 (the “Act”).

Threshold for qualifying as “combination”:
Under Section 5 of the Act, acquisition of one or more enterprises by one or more persons or merger/amalgamation of enterprises shall be considered a combination of such enterprises/enterprises and persons upon breaching the threshold specified thereunder.

Enterprise is defined in the Act to include, inter alia, an individual, company, firm, Association of Persons, or a department of the Government, engaged in any economic activity relating to production, storage, supply, distribution, acquisition, or control of articles/goods/services.

Section 20(3) of the Act requires the Central Government to reduce/enhance/keep at the same level, in accordance with the wholesale price index or fluctuations in the exchange rate of currency, or any other relevant factors, the thresholds with respect to the value of assets and the value of turnover, for the purposes of Section 5, in consultation with the Competition Commission of India (the “CCI”), at regular intervals.

The effect of this provision is that every such change in the thresholds of the assets/turnover are in relation to the original thresholds of the assets/turnover mentioned in Section 5 of the Act.
In 2016, the Central Government revised the Section 5 thresholds of assets and turnover by 100%.

Recently, in exercise of its powers under Section 20(3), the Central Government vide notification no. S.O. 1130(E) dated March 07, 2024 (“Notification 1”), has enhanced the value of assets and the value of turnover specified under Section 5 by 150%.