Competition Commission of India (CCI) is keeping pace with market evolutions and the growing M&As in digital landscape, constantly reviewing and updating its processes given the experience gained and difficulties faced, its Secretary Jyoti Jindgar said on Friday.
Noting that acquisitions by big tech in digital markets may not only cement their market power, Jindgar highlighted that they may also potentially prevent targets from emerging as a competitive threat.
This may require close scrutiny from competition law assessment perspective, Jindgar said at an Assocham-organised 9th International Summit on “Corporate Restructuring, M&As and Joint Ventures: Recent Trends, Evolving Issues and Opportunities” in the capital.
Deal value threshold
Referring to the proposed introduction of “deal value” threshold for notifying mergers through the Competition (Amendment) Bill, 2022, Jindgar noted that this is one such instance where competition agencies are either weighing or have come out with new jurisdictional norms suitable to modern market realities.
Deal value threshold is one such relevant measure in the digital world where the conventional thresholds may not be sufficient enough to scrutinize combinations that are likely to result in substantial market power, she said.
The deal value threshold mechanism is a contextual need to sustain and promote competition in the modern market environment.
It maybe recalled that the government had recently introduced in the Lok Sabha the Competition (Amendment) Bill that effectively widens the ambit of CCI in scrutinising mega deals – with a deal value threshold of ₹2,000 crore — as part of several amendments in the proposed law.
The ₹2,000 crore transaction value threshold spelt out in the proposed amendments to Section 5—beyond which CCI prior approval is proposed to be mandated—is expected to have the most impact on high-profile transactions in the evolving digital industry as well as new age enterprises involved in M&A transactions.
The proposed amendments are significant developments towards ease of doing business and at the same time empower CCI to sustain and promote competition in the next generation markets, for the good of all stakeholders.
“Digital markets and platforms are of various kinds, so are the nature of transactions. Not all digital markets are alike, not all data are alike, and not all transactions are alike”, Jindgar said.
In some cases, standard metrics and theories sufficed, while in some cases CCI had to augment theories of harm for case assessments to reflect the market realities, she added.
Jindgar said that the legal framework set out in the Competition Act for determination of appreciable adverse effect on competition is broad enough and gives CCI the flexibility to develop and test all such theories of harm that may be relevant in digital markets. “Our interventions are guided by case-specific economic evidence of competition concerns and the same holds true even in digital markets” she added.
Talking of industry-friendly measures taken by CCI, Jindgar highlighted introduction of green channel route by the CCI allowing automatic approval of M&As that have no horizontal, vertical or complementary overlaps.
The Forms for notifying combinations (M&As) have been amended and Guidance Notes have been issued for the benefit of stakeholders. The requirement of providing non-compete information in merger filings has also been dispensed with, giving parties flexibility to negotiate non-compete arrangements besides reducing compliance costs, she added.
M&As landscape in India is witnessing dynamic growth and has seen a paradigm shift in the way the industry functions, giving rise to novel issues and challenges for regulators and policymakers. While assessing M&As, the endeavor of CCI has been to understand the specific circumstances, business models, strategies, rationale of transactions and also the counterfactual scenarios, Jindgar said.
She highlighted various changes made by CCI in merger control regulations during the last few years, which provided certainty to businesses; reduced compliances; made merger filings simpler, besides aligning the extant procedures with international best practises.