Govt eases competition norms for speedier M&A clearances

Amendments to competition rules exempt corporates from seeking the Commission's green signal for certain M&A deals

In a significant move aimed at fast tracking clearances for mergers and acquisitions, the government today said it has relaxed norms for seeking approval from fair trade regulator Competition Commission.

Besides easing compliance requirements, the amendments to competition rules exempt corporates from seeking the Commission's green signal for certain M&A deals, like transactions of two entities where one of the enterprises holds more than 50% stake in the other.

At present, all M&A transactions involving Indian companies have to get approval from the Competition Commission of India (CCI), which keeps a tab on anti-competitive practices in the market place.

CCI in a release today said the combination rules have been amended "with a view to further simplify filing requirements and bring about greater certainty in the application of the Act and the Regulations".

The relaxations are with regard to certain filing requirements for corporate entities planning for combinations that are unlikely to raise adverse competition concerns.

According to a notification dated April 4, companies now do not have to file a notice with the CCI for purchasing shares or voting rights in another entity if the acquisition "is less than five percent of the shares or voting rights of the company in a financial year".

The exemption is subject to the condition that the acquirer already holds more than twenty five% but less than fifty% of the shares or voting rights of the target company.

"In a step which would significantly reduce compliance requirements, the provision for giving notice is now dispensed for mergers/amalgamations involving two enterprises where one of the enterprises has more than fifty% (50%) shares or voting rights of the other enterprise.

"Similarly, the requirement of giving notice is also dispensed for merger or amalgamation of enterprises in which more than fifty% (50%) shares or voting rights in each of such enterprises are held by enterprise(s) within the same group," the release said.

Providing clarification in the case of intra-group acquisitions, the Commission has said that relaxation of norms would not be applicable in cases where the "acquired enterprise is jointly controlled".

The provisions of Competition Act related to regulation of combinations have been in force from June 1, 2011.