The Hindu Business Line : Pre-notification of M&As will be counter-productive: CII

The Confederation of Indian Industry CII has protested against some of the provisions of recently amended Competition Act including a provision that mandates prior approval from the Competition Commission for mergers and acquisitions (M&As).

The CII has stated that procedural hurdles such as pre-notification of all mergers could prove counter-productive and thwart India’s economic growth.

In a press release, it stated: this amendment has come as a surprise to the industry as the Act (prior to the recent amendments) had a voluntary notification regime and the same was changed, rather surreptitiously, to introduce a mandatory notification regime.

The recently amended Competition Act has introduced a mandatory notification requirement for all enterprises meeting certain asset/turnover thresholds entering into mergers, amalgamations or acquisitions. This entails a requirement of seeking prior approval from the Competition Commission of India (CCI), which may take up to 210 days to grant such approvals.

On this provision, the CII said M&A transactions in the present-day global context do not admit of a 210 days’ waiting period as envisaged by the amended Act. In the global M&A arena, there are multiple suitors for every worthwhile target, and target companies will be extremely reluctant to wait for 210 days, a period exceptionally long by the international standards.

The CII has also protested against extending the mandatory notification requirement to cross-border ‘combinations’ merely because they meet certain asset/turnover thresholds.

Moreover, the CII stated that the mandatory notification requirement should be imposed on companies taking into account their asset/turnover threshold and dominance in the market rather than just the ‘asset/turnover’ criteria (as is the case now).

The Act says any company with assets of Rs 1,000 crore or more and a turnover of Rs 3,000 crore or more has to seek CCI approval for any “combination”. It also has the same approval requirements for smaller sized companies that belong to Groups with assets of Rs 4,000 crore or a turnover of Rs 12,000 crore.

The Competition Act can be enforced in phases, starting with regulation of ‘anti-competitive agreements’ and ‘abuse of dominant position’, and in the third stage, regulation of ‘combinations’, it stated

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Pre-notification of M&As will be counter-productive: CII

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