Industry for changes in M&A rules, CCI non-committal
The country’s law firms and industry on Friday asked the Competition Commission of India (CCI) to exempt from its scanner any decision taken on mergers and acquisitions (M&As) by March. The fair market watchdog did not commit itself to the demand.
“Law firms and industry had a consensus that any decision taken on M&As on or before March 31 should not come under the purview of CCI,” an industry representative said after a meeting with CCI. The rules are expected to come into force from June 1 and M&As coming into effect on that day or after will fall under the purview of CCI.
Law firms also wanted CCI to clarify whether Rs 250 crore of assets and Rs 750 crore of turnover of target company which are proposed to be exempted from the CCI scanner would imply to turnover and assets in India or worldwide. The draft rules have exempted the M&As from the CCI purview, if assets of the target company is up to Rs 250 crore and turnover up to Rs 750 crore.
The consensus among the lawmakers and industry representatives was that it should be Indian assets and turnover and not global.
Without committing to these changes, CCI Chairman Dhanendra Kumar said, “We will come out with the final draft of regulations in 10-15 days. We have received a good number of response from all stakeholders, including feedback from abroad. We have studied them and are now holding final consultations.”
However, Kumar said the commission would not turn a deaf ear to genuine concerns and was positive for a smooth implementation from June 1.
According to draft M&A rules, companies with a turnover above the threshold of Rs 1,500 crore will have to approach the CCI for approval before merging with another firm. Besides, only those proposals would need the CCI nod where the companies have combined assets of Rs 1,000 crore or more, or a combined turnover of Rs 3,000 crore or more.
Also, the target company’s net assets have to be a minimum of Rs 200 crore or it should have a turnover of Rs 600 crore for CCI intervention.