Despite all the noise about the scale of mergers & acquisitions (M&As) involving Indian companies, such deal-making is pretty new to India. While 2007?s figure of $68.3 billion may be a 143% jump over 2006?s $28.2 billion, it is still less than 2% of the total sum of all such deals across the world. The figures are significant in the context of the upcoming spat between the Competition Commission of India (CCI) and India Inc on whether there is any need to report such deals above a threshold level to the CCI. Companies have expressed concerns that the Commission?s powers to enquire into M&As may delay such activities and thus hamper business. The Confederation of Indian Industry (CII), too, has joined the chorus to argue that mandatory CCI clearances would be counterproductive. On its part, the CCI has asked India Inc to rest easy. It has told India Inc that competition-related checks would not come in the way of deals that do not flout competition rules. It has reassured companies that it would process all M&As above the threshold quickly enough to ensure this. To put the debate in context, it may be pointed out that Parliament has recently cleared some amendments to the Competition Act. According to these, any international M&A deal involving assets above $500 million or business revenues above $1,500 million will need the CCI?s prior clearance. For a domestic deal, the prescribed asset base is Rs 1,000 crore or turnover of Rs 3,000 crore. The competition panel claims awareness of the need to be dynamic and market driven, and so it will not ignore corporate concerns. It will therefore give its ruling within a maximum of 210 days from the date of receiving the deal intimation. If it does not do so, the merger will be considered approved.
Despite assurances, CII still feels that the new rules should be delayed by about a couple of years. Instead, it should focus on generating public pressure on the CCI to make sure its power is exercised with as much transparency as possible. India?s competition laws have been modelled on the EU?s anti-trust laws, the purpose of which is to check cartels. In the Indian experience, bureaucracy tends to play the gatekeeper. If cases before the CCI get wide enough publicity, it will be harder for it to misuse its authority.
