The Competition Commission of India (CCI) has notified the regulations for mergers and acquisitions that require corporate houses to seek its approval before going in for high-value deals.
As per the notification, the CCI will take a view on the proposed deal within 180 days of the filing of notice by the companies. The commission can approve the merger proposal, reject it or modify it. Companies with a turnover of over Rs 1,500 crore will have to approach the CCI for approval before merging with another firm. Only those proposals involving companies having combined assets of Rs 1,000 crore or more, or a combined turnover of Rs 3,000 crore or more, will need to approach the CCI for approval. Also, the target company's net assets have to be a minimum of Rs 250 crore, or it should have a turnover of Rs 700 crore. These regulations will come into force from June 1, 2011. Rationale behind the move Dhanendra Kumar, Chairman, CCI explains that they had to undertake a very intensive consultative process in order to notify these regulations. According to Kumar the rationale behind the move is: "This is because we wanted to make sure that all the legitimate concerns of industry are taken on board so that the growth of Indian industry in Indian economy is not anyway retarded. India is on a fast trajectory of economic growth. We were very keen that it should not be in anyway be impacted. After an exhaustive consultative process, we have come out with these regulations which have a number of features which were not there before in the draft. For example, a huge category of transactions have been notified which are the routine transactions and those kind of transactions which are not likely to raise any competitions concerns. They have been kept out of it. We have introduced a very simple form, Form-I which is probably the simplest in the world so almost 90-95% transactions would be covered by that. In fact, people have choice to file all transactions in Form-I. But, only certain transactions which could raise legitimate concerns on competition have the option to file Form-II also if they wish to. The fee has also been drastically reduced from proposed Rs 40 lakh to 50,000 for Form-I and FormDiscover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
