Rivals won't be allowed to delay M&As, assures CCI

Amid industry concerns over some provisions of merger and acquisition rules, the Competition Commission of India (CCI) today gave an assurance that rivals would not be allowed to come in the way of merger plans, to be vetted by the competition watchdog.

“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 event here organised by industry chamber Assocham.

Kumar’s statement assumes importance as industry has expressed concern over the effectiveness of the new M&A regime, to come into force from June.

The new regime will come into operation with the implementation of recently notified Sections 5 and 6 of the Competition Act of 2002 from June.

Under this, companies beyond a certain threshold turnover would have to seek the CCI nod before going ahead with takeovers and amalgamations.

Kumar said the CCI would ensure that vetting was done without unnecessary delays and in a “transparent and efficient manner”.

The Confederation of Indian Industry, another industry body, had expressed concern that mishandling of the merger provisions could lead to regulatory and procedural hurdles, hurting the growth momentum.

According to provisions of the Act, companies with a turnover above Rs 1,500 crore will have to approach CCI for approval before merging with another firm.

Besides, only those proposals would need the CCI 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.

However, the rules have addressed a major concern of industry over mergers getting delayed as they say that the watchdog would take a prima facie view on proposed combinations within a month of filing by companies.

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