CCI issues draft norms on combinations under amended competition law

CCI issues draft norms on combinations under amended competition law

Fair trade regulator CCI has issued draft rules pertaining to value of transactions for combinations under the new competition law.

Earlier this year, various provisions of the Competition Act were amended.

As per the draft norms issued by the Competition Commission of India (CCI), the value of transaction shall include "every valuable consideration, whether direct or indirect, immediate or deferred, cash or otherwise".

These could also be in the form of covenant, undertaking, obligations or restrictions imposed on seller or any other person, other than acquirer, in the nature of non-competition or otherwise.

It could also be for arrangements that are made as part of the transaction within two years from the date when the transaction is set to come into effect.

These arrangements can cover a wide range of elements such as technology assistance, licensing of intellectual property rights, usage rights to any product, service or facility, supply of raw materials or finished goods, branding and marketing as well as any options and securities to be acquired at a later date, as per the draft rules.

According to CCI, an enterprise could be deemed to have substantial business operations in India on the basis of various factors, including that its gross merchandise value for the 12-month period preceding the relevant date is 10 per cent or more of its total global gross merchandise value.

In case the number of its users, subscribers, customers, or visitors, at any point in time during the 12-month period preceding the relevant date is 10 per cent or more of its total global number of users, subscribers, customers or visitors, respectively, then that could also be a factor in assessing an enterprise's substantial business operations.

Further, CCI said that substantial business operations could be decided if an enterprise's turnover during the preceding financial year, in India, is 10 per cent or more of its total global turnover derived from all the products and services.

Stakeholders can submit their comments on the draft regulations by September 25, as per a communication issued by the regulator on September 5. PTI HG RAM