Quick CCI appointments bode well for India’s global ambitions, lawyers say

CCI

The appointment of three members to the Competition Commission of India two days after it was reduced to a one-person regulator reflects the importance that India places on the role of the trade watchdog in the global context, lawyers said.

According to the lawyers, the pendency of mergers and acquisitions (M&A) worth millions of dollars for want of the CCI’s approval in the absence of a quorum would not have looked good for India, which aims to become the world’s third-largest economy. These appointments have ensured that M&A transactions are not put on hold due to the lack of a quorum.

“The government has remedied the issue of quorum by prioritising appointments at the CCI,” said Dhruv Rajain, a partner at Cyril Amarchand Mangaldas. He noted that the appointments will go a long way in fast-tracking investments and M&A deals and highlight the importance that the government attaches to the fair market regulator.

Following the retirement of Bhagwat Singh Bishnoi on August 24, member Sangeeta Verma retired on September 17, bringing the strength of the CCI’s decision-making quorum to just chairperson Ravneet Kaur.

The Competition Act 2002 mandates a three-member quorum of the CCI to pass combination orders and the same strength to pass anti-trust orders.

The three new members appointed to the CCI are Anil Agrawal, a former police official, Sweta Kakkad, a former interim chief compliance officer at WhatsApp, and Deepak Anurag, a former official who worked at India's Comptroller and Auditor General, Reuters reported on September 19, citing people with knowledge of the matter.

The three new members were appointed on September 19, people familiar with the matter told Moneycontrol on condition of anonymity, confirming the report.

“The timely appointment of three new members is a welcome development,” said Unnati Agrawal, a partner at Indus Law. “This shows the government’s commitment to ensure seamless working of the CCI. These appointments will lend more certainty to stakeholders.”

The CCI previously went quorum-less from October 2022 to February 2023, after Ashok Kumar Gupta retired as chairman. In January, it was reported that 16 deals valued at over Rs 10,000 crore ($1.2 billion) were pending with the CCI owing to the lack of a quorum.

Subsequently, in February 2023, the government allowed the CCI to clear M&A deals by invoking the doctrine of necessity for approving combination cases. The doctrine permits the administrative authorities to take extraordinary action based on the matter at stake and also allowed the CCI to pass anti-trust orders when it was reduced to a two member quorum in August after Bishnoi retired.

“The government has been conscious and hasn’t allowed it to be like last time, when there was a considerable time gap without quorum,” said KK Sharma, a partner at Singhania and Co.

“The lack of quorum at the CCI last year had severely impacted the M&A activity as well as anti-trust cases... This promptness in making these appointments is very welcome and sends extremely positive signals,” said Kunal Mehra, a partner at DSK Legal.

Varun Jain, head of government affairs practice at Singhania & Partners, noted that the lack of quorum would have sent negative signals for business confidence, given the significance of anti-trust in the global markets. However, such a situation has been averted. “It is an expedient and timely step,” he said.

Utsav Trivedi, a partner at TAS Law, said “these appointments avoid some stalemate vis a vis the multiple inquiries and combination approvals pending before the CCI.”

The CCI performs two broad functions. Under the anti-trust function, it penalises enterprises that abuse their position of dominance. Secondly, under its combination filings function, the CCI can grant or deny permission to companies looking to merge or acquire controlling shares or voting rights in a competing enterprise.

“With the growing tendency of anti-trust violations, the role of the CCI has become very important. The new appointments reflect the concern of the government about preventing such violations,” said Tushar Agarwal, an advocate at the Supreme Court.