New M&A regime will not derail plans: CCI to industry

Competition watchdog CCI today assured industry that rivals will not be able to derail their takeover plans under the new M&A regime, which would require companies to seek the body's approval before taking up high-voltage mergers and acquisitions.

"It is important for CCI to ensure that competitors are not gaming the system by claiming that a merger of their competitors is anti-competitive when in fact it is pro-competitive and will produce a more efficient player in the market, possibly putting downward pressure on prices," CCI Chairman Dhanendra Kumar said at an Assocham event here.

Kumar's statement comes amid the industry still expressing concern over the effectiveness of the new competition regime, which will come into effect from June this year.

Under the new regime, which would begin with implementation of recently notified Sections 5 and 6 of the Competition Act, 2002, companies beyond a certain threshold turnover would have to seek the CCI's nod before going ahead with takeovers and amalgamations.

Giving global examples, Kumar said the CCI will ensure that vetting is done without unnecessary delays and in a "transparent and efficient manner".

Earlier this week, industry body CII had expressed concern that mishandling of the merger provisions could lead to regulatory and procedural hurdles, thereby altering the country's growth momentum.

According to provisions of the Act, 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.

Among other things, CCI would take a prima facie view on proposed combinations within a month of filing by companies, addressing a major concern of industry about the time limit the body would take to vet mergers.

Also, the maximum time limit the CCI would take to vet mergers has been reduced to 180 days, from the earlier 210 days, after facing opposition from industry.

Besides, only those proposals would need the CCI's approval 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.

The commission became fully functional in 2009 with the appointment of a chairman and six members. At present, it has the power to check anti-competitive agreements and abuse of dominant position, drawn from Sections 3 and 4 of the Competition Act, 2002.