'Sectors wanting exemption from M&A norms of CCI can approach MCA ministry'

Sectors seeking exemption from merger and acquisition scrutiny provisions under the Competition Act can approach the Corporate Affairs Ministry directly, a senior government official said on Sunday.

Some sectors, like banking and shipping, had been lobbying for long for exempt from the freshly notified provisions of the Competition Act 2002 that mandate companies beyond a certain threshold limit to take the Competition Commission’s approval before initiating a merger.

“We have not granted immunity to any sector as of now from the purview of the CCI’s merger norms, but if any sector wants exemption, they can approach us directly with the formal request. We are open to considering their case,” Corporate Affairs Secretary Mr D K Mittal told PTI.

Section 54 of the Competition Act 2002, grants the government the power to exempt a sector from the purview of the Competition Commission of India (CCI), not only relating to mergers and acquisition norms, but also immunity from any probe into allegations of anti-competitive agreement and abuse of dominant position.

The government can exempt any enterprise or agreement, “if such exemption is necessary in the interest of security of the State... (it) arises out of...any obligation assumed by India under any treaty, agreement or convention with any other country... (if it) performs a sovereign function on behalf of the Central..or a State Government”, the Act says.

When asked if the RBI has moved any request to grant banking sector mergers exemption from CCI’s purview, Mr Mittal said the ministry has not received any such communication yet.

According to sources, it is likely that banking sector mergers will be kept out of CCI’s purview, especially if the Banking Amendment Bill, which proposes such exemption, is passed by Parliament.

Late Friday evening, the MCA notified sections 5 and 6 of the Competition Act that give the CCI powers to scrutinise and vet high-voltage mergers and takeovers.

Now, companies beyond the threshold limit of Rs 1,500 crore will need to approach the CCI for approval. Besides, only those proposals would need CCI’s approval which have combined assets of Rs 1,000 crore or more or combined turnover of Rs 3,000 crore or more.

Also, the target company’s net assets have to be a minimum of Rs 200 crore or turnover of Rs 600 crore for a CCI intervention.

The CCI would take a prima facie view on proposals within a month of filing by companies, addressing a major concern of industry. The maximum time limit CCI would take to vet mergers has been reduced to 180 days, from the earlier 210 days, after facing opposition from industry.

The Commission became fully functional in 2009, with the appointment of a chairman and six members. It has the power to check anti-competitive agreements and abuse of dominant position.

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