The Competition Commission of India (CCI) has reviewed more than 450 mergers/acquisitions so far under the merger control regime provided in the Competition Act, 2002. Barring a few exceptions, it has maintained a fairly good track-record about the time taken for approvals. However, processes and time-lines followed by the CCI are still wrapped in mystery for the businesses at large. Amending the Competition Act, 2002 time-lines and processes to make them more practical, creation of a transparent evaluation criteria and significant enhancement of communication between the CCI and stakeholders can speed up the merger approval process.
To begin with, unlike antitrust laws in advanced jurisdictions, Indian competition law requires parties to give notice to the CCI within 30 days of the date of the agreement or board resolution of the parties, as the case may be. While the term notice has been used in the law, the form prescribed by the competition regulator for filing the notice is unlike the single-page notice typically filed with the government departments or regulators. These forms are exhaustive documents which require careful preparation and therefore, 30 days often prove too short to provide adequate information. The result is follow-up queries by the CCI, causing significantly delays. Neither the regulator nor the notifying parties need such hurried submission. No harm is done to competitive landscape as long as the transactions are not consummated without the CCI’s approval. The statutory timelines of 210 days, including 30 working days for Phase I review, can be used more effectively if, the notifying parties give all details at one go rather than in bits. Both sides benefit if the law mandates that the notice be filed before consummation, without defining any time-limit for submission of notice.
The repercussions of the time crunch become more apparent in complex cases wherein the CCI, too, doesn’t have the luxury of time. It is required to pass an order within 210 days from the date of receipt of notice. With the CCI trying to reach a definitive view on the impact of the merger, the to-and-fro between it and the parties eats into the time available for inputs from competitors, consumers and sector regulators. A well-informed dialogue with the parties, on the issues identified by the CCI, at an early stage should soothe the nerves of the parties. However, with no time in hand and no guiding principles regarding such dialogue, there are no such discussions and the CCI merely hurtles towards merger approval at the fag end of time-lines. Removing the time-limit for filing the notice would give parties ample time to understand the concerns of CCI and iron out creases.
The law burdens the CCI with tasks which, in any other jurisdiction, are performed by the notifying parties. In other jurisdictions, the regulator has to only identify its concerns and it is the parties’ duty to address these. However, in India, the CCI is required to propose modifications to the merger/ acquisition. Before the CCI rejects a merger/ acquisition for having an anti-competitive effect, it must find ways of making such merger work from the competition law perspective. This is an enormous task, which presumes that CCI is aware of all possible non-competition issues in an industry and is the right authority to make such proposal.While the law should be amended by Parliament at the earliest, certain initiatives by the CCI would help business. At present, businesses are unaware of the rationale followed by the CCI to assess merger/acquisitions. Uncertainties around the processes followed by any regulator are not good for industry as they lead to Chinese whispers and arbitrage opportunities. CCI can take the initiative to publish its principles on substantive assessment of merger, including safe harbours and processes followed for expediting approval processes.
Sharing concerns with the parties at the early stages of the approval process would reduce the trust deficit. The merger approval process is not adversarial in nature and, therefore, if a fairly transparent discussion were to take place between the CCI and the parties, the time taken for grant of approval would reduce significantly. For such discussions to take place, the CCI needs to codify its version of the ‘state of play’ meetings and follow the practice of directly engaging with the stakeholders. With around six years of merger control experience, the CCI should have a relook its merger regulations. Certain non-codified practices such as pull and refile, voluntary commitments post show-cause notices, etc, should be codified at the earliest so that there are no ‘off the book’ processes followed. Guidelines regarding penalty computation in merger cases are also a need of the hour.
The CCI’s merger approval processes have now reached a stage where the government and the regulator need to work together to holistically review the law on merger control. The experience of dealing with more than 450 mergers will now immensely help. An early amendment in Competition Act followed by complete review of merger regulations would align the merger control regime in India with international best practices.
With contributions from Shweta Dubey, director (regulatory services), PwC. Views are personal