M&As: Govt notifies deal threshold value under competition law
Companies will be compulsorily required to seek the Competition Commission's approval for mergers and acquisitions beyond certain thresholds. Besides, the clearance of the CCI will be needed if the target company has substantial business operations in India
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New Delhi: The government on Monday notified the provisions related to the deal value threshold under the competition law, wherein companies will be compulsorily required to seek the Competition Commission's approval for mergers and acquisitions beyond certain thresholds. Besides, the clearance of the Competition Commission of India (CCI) will be needed if the target company has substantial business operations in India, according to notifications issued by the corporate affairs ministry.
The latest move will help the fair trade regulator to keep a closer tab on mergers and acquisitions in the digital space. Vaibhav Choukse, Partner -- Competition Law at JSA -- said that among several provisions that have been notified, one of the most significant is the introduction of an additional deal value criterion for assessing whether an M&A deal requires mandatory approval from CCI.
Under the criterion, "a transaction will require approval of the CCI if the deal value exceeds Rs 2,000 crore and if the target has substantial business operations in India. "The decision stems from CCI's inability to review several transactions within the digital and other sectors, which were not subject to reporting requirements due to asset or turnover values falling below the jurisdictional thresholds/ target exemption. CCI, which comes under the corporate affairs ministry, has the mandate to ensure fair business practices in the marketplace.
