As per the threshold limit outlined in the Competition Act 2002, only those M&A cases would require CCI approval which have combined assets of R1,000 crore or more, or combined turnover of R3,000 crore or more. The Act provides a maximum time period of 210 days to approve an M&A deal. However, the CoS has set a threshold limit for target companies as well, the sources said. According to the revised norms, the target companys net assets have to be a minimum of R200 crore or its turnover of R600 crore for a CCI scrutiny. For instance, the revised norms ensure that a large-sized company with total assets worth R950 crore would not have to seek mandatory regulatory approval from CCI for acquiring a company that has assets of only R50 crore, despite meeting the R1,000-crore combined assets threshold.
The matter had gone to the CoS after the Reserve Bank of India had objected to the M&A clause arguing that it could slow down M&A deals in the banking sector due to multiple regulators. Although other regulators such as the Telecom Regulatory Authority of India had not voiced their opposition, they were understood to be against such powers being accorded to CCI as they felt it would lead to duplication of regulatory roles.
Currently, CCI only looks into cases of cartelisation and abuse of dominance under sections 3 & 4 of the Act. Since the Commissions notifications in May 2008, CCI has probed close to 50 such cases. However, once the government notifies sections 5 & 6 of the Competition Act, it would become fully operational. In fact, over the last two years, owing to industry pressure, the government has been forced to delay the notifications. While industry chambers have argued that the 210-day period for an M&A approval is too long, sectors like banking and telecom have been demanding an exception.
Allaying industry concerns, the CCI has repeatedly assured that most M&A deals would be approved within a month and in only rare cases it could stretch beyond that. In fact, former corporate affairs minister Salman Khurshid had also said that information relating to such deals would be kept confidential by the Commission. Following the final notifications, the ministry of corporate affairs under Murli Deora is also likely to meet industry leaders by the end of next month. The notifications should be finalised within another month or so. Industry leaders would be assured that their concerns would be addressed, the source said.