Deal value threshold for high-value acquisitions comes into force: major overhaul of CCI's regime
The provision, brought in through the Competition Amendment Act 2023, comes into effect from September 10. The enabling regulations will be notified by the CCI soon and will give effect to the deal value threshold (DVT).
- Sep 9, 2024,
- Updated Sep 9, 2024 9:28 PM IST
The long awaited provision of deal value threshold that will bring big ticket acquisitions under the purview of the Competition Commission of India has finally been notified by the ministry of corporate affairs.
The provision, brought in through the Competition Amendment Act 2023, comes into effect from September 10. The enabling regulations will be notified by the CCI soon and will give effect to the deal value threshold (DVT).
The provision was seen as one of the most contentious provisions of the amendments that aims to keep a check on high value transactions, especially in the digital space. Under the provision, all merger and acquisition related transactions including acquisitions, mergers and amalgamations that exceed Rs 2,000 crore and involve a target enterprise in India and have a substantial business presence in India would require approval from the CCI.
Nisha Kaur Uberoi, Partner & Chair Competition Law, JSA on merger control amendments said the newly notified merger control amendments herald the single largest overhaul of the Indian merger control regime – the introduction of the deal value threshold of Rs 2000 crores for companies with substantial business operations in India brings the CCI on par with global regulators like the US, Germany, Austria. However, the devil will lie in the details – the enabling regulations and the need for CCI to enhance capacity to keep up their efficient track record of clearing M&A deals will be key to ensure ease of doing business remains unimpacted.”
Anisha Chand, Partner, Khaitan & Co noted that deals that are yet to be signed or will be signed on or after 10 September must re-examine their reportability status to the CCI. “The existing de minimis (asset and turnover thresholds) and DVT are mutually exclusive. Expect a number of transactions that were benefiting from de minimis exemption to require a prior clearance from the CCI now if they meet the DVT criteria,” Chand said.
Meanwhile, the MCA also notified several other provisions around Competition (Minimum Value of Assets or Turnover) Rules, 2024 as well as the criteria for combinations.
The long awaited provision of deal value threshold that will bring big ticket acquisitions under the purview of the Competition Commission of India has finally been notified by the ministry of corporate affairs.
The provision, brought in through the Competition Amendment Act 2023, comes into effect from September 10. The enabling regulations will be notified by the CCI soon and will give effect to the deal value threshold (DVT).
The provision was seen as one of the most contentious provisions of the amendments that aims to keep a check on high value transactions, especially in the digital space. Under the provision, all merger and acquisition related transactions including acquisitions, mergers and amalgamations that exceed Rs 2,000 crore and involve a target enterprise in India and have a substantial business presence in India would require approval from the CCI.
Nisha Kaur Uberoi, Partner & Chair Competition Law, JSA on merger control amendments said the newly notified merger control amendments herald the single largest overhaul of the Indian merger control regime – the introduction of the deal value threshold of Rs 2000 crores for companies with substantial business operations in India brings the CCI on par with global regulators like the US, Germany, Austria. However, the devil will lie in the details – the enabling regulations and the need for CCI to enhance capacity to keep up their efficient track record of clearing M&A deals will be key to ensure ease of doing business remains unimpacted.”
Anisha Chand, Partner, Khaitan & Co noted that deals that are yet to be signed or will be signed on or after 10 September must re-examine their reportability status to the CCI. “The existing de minimis (asset and turnover thresholds) and DVT are mutually exclusive. Expect a number of transactions that were benefiting from de minimis exemption to require a prior clearance from the CCI now if they meet the DVT criteria,” Chand said.
Meanwhile, the MCA also notified several other provisions around Competition (Minimum Value of Assets or Turnover) Rules, 2024 as well as the criteria for combinations.