Industry lobbying for leniency in the Competition Commission of India?s (CCI) all-important regulations on mergers and acquisitions (M&As) has yielded some results. The CCI has decided to slash the notification fee that parties to M&A deals above the defined thresholds need to pay the regulator by half.
It would also vow to clear the deals that are ?apparently innocuous? ? those with little potential to mar competition in the relevant markets ? ?almost immediately? after the filings. This would ensure that regulatory intervention doesn?t dent the commercial value of the deals falling under Schedule 1 of the Competition Act which include creeping acquisitions or routine share acquisition by promoters or intra-group transactions.
According to draft M&A regulations issued by CCI in March, for any acquisition by a company or party that has total valuation of R500 crore or less, the total notification fees would be a flat R10 lakh irrespective of the nature of the transaction. Between R500 crore and R1,000 crore, the acquiring party would have to pay R40 lakh and anything beyond R1,000 crore would fetch total notification fees of R40 lakh. Now, the CCI would cut these rates by 50% in all cases, sources said.
Industry bodies had staunchly opposed the high notification fees. ?We are going to reduce fees by more than 50%. The sharp cut is because the industry had voiced concerns on it,? a CCI official privy to the final draft told FE. He said that final notification would be issued next week.
Apart from cutting notification fees, the commission is also set to pass almost immediately the ?innocuous? merger notification applications it receives. According to the official, the commission had taken a majority view that cases arising out creeping acquisitions or intra-group transactions would be cleared in less than a week. ?The industry had been hoping that deals that are listed under Schedule 1 should not be required to get notified. While that is not possible, we have decided to almost immediately pass the merger without any delay whatsoever,? the CCI official added.
FE had reported on February 28 that the committee of secretaries headed by KM Chandrasekhar had vetted the much-awaited notifications to Sections 5 & 6 of the Competition Act 2002, that would give CCI power to investigate any M&A deal beyond a certain threshold for any possible breach of the competition law. Once the CCI starts using the new powers from June 1, it would also probe any global merger deal that could have an impact on competition in India.
Last month, corporate affairs minister Murli Deora and secretary DK Mittal had met industry representatives in Mumbai to address the industry?s concerns over M&A fees.
Taking cognisance of industry fears, MCA had passed notifications in March to increase the threshold limit for M&As. According to the notifications, only those proposals would require the CCI approval where the total value of combined assets is R1,000 crore or more, or combined turnover of R3,000 crore or more. MCA has also set a minimum threshold limit for the acquiree firms which have to be of a minimum R200 crore or turnover of R600 crore.
Apart from these changes, it also decreased the total time taken for M&A approval to 180 days instead of 210 days set earlier.