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The Confederation of Indian Industry has said the provisions relating to regulation of mergers in the Competition Act 2002 could lead to regulatory and procedural hurdles, thereby altering the country’s growth momentum.
“The move is ill-timed given the present economic environment and regulatory and procedural obstacles may cause the country’s growth trajectory to get affected,” the Confederation of Indian Industry said in a release today.
Any mishandling of the competition law could have far-reaching economic implications for the country, it said.
The industry body also asserted that overseas global transactions should be liable to scrutiny only where both parties have some territorial nexus.
Some of the provisions in the new draft guidelines include raising the threshold limit by 50 per cent; a pre-merger consultation process; an endeavour to reduce the response time and fees ranging from Rs 10 lakh to 40 lakh.
Indian industry seems to be satisfied with the increased merger thresholds, although some concerns remain over what would appear to be an unduly long 210-day period which is statutorily available to the Competition Commission to review mergers, even though it would endeavour to do so in 180 days, the chamber said.
Without being adequately manned, the review time at the commission could go up to 210 days in some cases, leading to a situation where the Indian regulator is holding up a worldwide transaction, it added.
Moreover, under the draft regulations, any person aggrieved can file an appeal against the order of the Competition Commission, thereby causing further delay and uncertainty.
Besides, since no asset transaction thresholds have been prescribed as of now, every asset — current assets or fixed asset — that is acquired after June 1, 2011, would have to be notified to the Competition Commission.
“This would not only conflict with the provisions of the SEBI’s Takeover Code and preferential allotment guidelines but also burden the Competition Commission with large chunks of unnecessary technical filings of transactions which do not raise any competition law concerns,” the release said.
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