The Competition Commission of India (CCI) could initiate a suo moto probe into a merger and acquisition (M&A) deal if the parties concerned fail to intimate the commission about it. On Tuesday the CCI issued the draft notifications on the much-awaited Sections 5 and 6 of the Competition Act 2002 which would give the commission the power to scrutinise major M&As for any breach of the competition law.
FE had reported on Monday that the committee of secretaries (CoS) headed by Cabinet secretary KM Chandrasekhar had vetted the notifications which would now be sent for the Cabinet?s approval. As per one of the recommendations made by the draft notifications, if the total cost of acquisition exceeds R1,000 crore then the acquirer would have to pay the CCI a sum of R40 lakh as fees.
In fact, once the notifications come into effect then the regulations would have an overriding effect over any other regulation mentioned in the Competition Act. ?The provisions of these regulations shall have effect in all matters relating to combinations notwithstanding anything inconsistent therewith contained in any other regulations framed under the Act,? the provision said.
The commission has also stated that after conducting a thorough probe into an M&A, if the CCI orders modifications of the deal agreement, then it would be binding upon the companies to follow suit within a specified time-frame, failing which the deal could stand rejected. The concerned parties could appeal against the CCI?s order to the higher appellate body the Competition Appellate Tribunal.
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, as outlined in the Competition Act. The Act provides a maximum time period of 210 days to approve an M&A deal. The government has also set a limit on the target company as well. As per the revised norms, the target company?s net assets have to be a minimum of R200 crore or turnover of R600 crore for a CCI scrutiny.