India: Merger Control 2019

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1.1 Who is/are the relevant merger

1. Relevant Authorities and Legislation authority(ies)?

The relevant authority for looking into

mergers, acquisitions and amalgamations
(collectively, Combinations) in terms of the Competition Act, 2002 (Act) is the Competition
Commission of India (CCI).

1.2 What is the merger legislation?

The relevant merger legislation for combinations in India is the Competition Act, 2002. Along with
the Act, the Competition Commission of India (Procedure in regard to the transaction of business
relating to combinations) Regulations, 2011 (Combination Regulations) governs the procedures
relating to combinations.

1.3 Is there any other relevant legislation for foreign mergers?

The Act is the relevant legislation for regulating all combinations including notifiable foreign
mergers in India. The CCI can examine foreign mergers which breach the threshold limits
prescribed under the Act.

1.4 Is there any other relevant legislation for mergers in particular sectors?

A few legislations which regulate mergers / acquisitions other than the Act are: the Companies
Act, 2013; the Reserve Bank of India Act, 1934; Telecom Regulatory Authority of India Act, 1997;
Electricity Act, 2003; Foreign Exchange and Management Act, 1999; Insurance Regulatory and
Development Authority of India Act, 1999; and Securities and Exchange Board of India, 1992.

2.1 Which types of

2. Transactions Caught by Merger Control Legislationtransaction are caught –
in particular, what
constitutes a “merger”
and how is the concept
of “control” defined?

While the Act does not define mergers per se, a merger is when two or more entities combine into
one; the effect being not just the accumulation of assets and liabilities of the distinct entities, but
organisation of such entities into one business and a single corporate identity. Apart from the
same, other transactions covered under the Act are acquisitions and amalgamations.

As per Section 5 of the Act, “control” includes the control of affairs or management by: (i) one or
more enterprises, either jointly or singly, over another enterprise or group; or (ii) one or more
groups, either jointly or singly, over another group or enterprise. Control, as defined under the
Act, refers to sole as well as joint control. Sole control exists when only one entity or group
exercises control over the target enterprise. Joint control is deemed to exist in a situation where
two or more enterprises or groups exercise decisive influence over the affairs or management of
the target. While imposing a penalty in Piramal / Shriram,the CCI observed that as matters, for
which consent of the Acquirer was required, that included strategic commercial decisions and not
merely minority protection rights, the same amounted to joint control.

Control has been interpreted in several merger control orders decided by the CCI:

In Century Leasing / Tata Capital the CCI held that affirmative rights with respect to
approval of business plan, commencing a new line of business, discontinuing any existing
line of activity and any strategic business decisions envisages control.
In Alpha / Tata Capital theCCI held that affirmative rights for which consent of the acquirer
is required include strategic commercial decisions of the company and, thus cannot be
considered as mere minority protection rights but reflect acquirer’s control over the
company.
In Jet / Etihad, theCCI held that the right to nominate two out of six shareholder directors
(including the Vice Chairman), its acquisition of 24% equity stake and its right to
recommend candidates for senior management constituted as Etihad’s ability to participate
in the managerial affairs of Jet and constituted control.
In MSM / SPE, theCCI held that “joint control over an enterprise implies control over the
strategic commercial operations of the enterprise by two or more persons. Each of the
persons in joint control would have the right to veto / block the strategic commercial
decisions which could result in a deadlock situation. Joint control over an enterprise may
arise as a result of shareholding or through contractual arrangements between the
shareholders”.
In Standard Life / HDFC, theCCI held that the right to approve or amend any business plan,
dispose of or dilute its interest in any of its subsidiaries and approve any renumeration of
full-time directors and managers / CEO, constitutes control.

Lastly, the CCI’s order in Piramal / Shriram suggests thatto ascertain control, an enterprise must
show that it has the possibility to “exercise decisive influence” on the target with respect to its
“strategic business decisions”.

2.2 Can the acquisition of a minority shareholding amount to a “merger”?

Combination Regulations (Item 1 of Schedule I) exempts acquirers from notifying if the acquisition
of shares or voting rights: (i) does not entitle the acquirer to hold 25% or more shares in a target
company; (ii) takes place “solely as an investment” or “in the ordinary course of business”; and
(iii) does not result in the acquisition of control over the target company.

However, where the acquirer acquires minority shareholding but has affirmative voting rights /
veto rights, they may be deemed to be acquiring control in light of the CCI’s precedents. The
explanation to the Item 1 of Schedule I of the Combination Regulations clarifies that the
acquisition of less than 10% of the total shares or voting rights of an enterprise qualify “solely as
an investment”. However, such acquisitions must fulfil two criterion as per the proviso to such
explanation:
 the acquirer can exercise only such rights as are exercisable by the ordinary shareholders
of the enterprise whose shares or voting rights are being acquired to the extent of their
respective shareholding; and
the acquirer must not be a member of the board of directors of the enterprise whose shares
or voting rights are being acquired, does not have a right or intention to nominate a director
on the board of directors of the enterprise whose shares or voting rights are being acquired,
and does not intend to participate in the affairs or management of the enterprise whose
shares or voting rights are being acquired.

2.3 Are joint ventures subject to merger control?

As a “greenfield” joint venture only involves the establishment of a new company which is used to
build operations from the group up, it does not ordinarily meet the jurisdictional thresholds and is
exempted under the de minimis exemption. However, Regulation 5(9) of the Combination
Regulations states that when the assets, or a business unit or division, of one enterprise are
transferred to another enterprise which subsequently enters into a combination with a third
enterprise, the entire value of assets / turnover of the enterprise to which the said assets originally
belonged, will be clubbed with the assets and turnover of the transferee enterprise for calculating
if the thresholds are breached. Based on the same, there have been cases whereby greenfield
joint ventures have been notified to the CCI, since there was a transfer of assets by one of the
joint venture partners to the joint venture entity. A “brownfield” joint venture entails transfer of pre-
established assets / divisions and to the extent that the jurisdictional thresholds are met, require
notification.

2.4 What are the jurisdictional thresholds for application of merger control?

Before looking at jurisdictional thresholds prescribed under the Act, the test laid down to qualify
the assets to be considered needs to be set out. In an acquisition for calculating thresholds, the
value of assets and turnover of the acquirer or of the group to which the acquirer belongs, as well
as the target being acquired, are considered. The “size of the business” test adopted by the
Ministry of Corporate Affairs vide its notification of March 29, 2017, mandates that in cases where
a portion of an enterprise or division or business is being acquired, the value of assets and
turnover of such portion or division or business attributable to it are the relevant assets and
turnover to be considered. In case of a merger or amalgamation of a portion of an enterprise or
its business with another enterprise, assets and turnover of the said portion of the enterprise or its
business and that of the other enterprise are taken into account for the purpose of calculating the
thresholds under section 5 of the Act.

Section 5(b) of the Act sets out that in case of an acquisition of control, when the acquirer already
has direct / indirect control over a third enterprise engaged in production, distribution or trading of
a similar or identical or substitutable goods or service, the value of assets and turnover
considered for calculating jurisdictional thresholds are those of the target enterprise, or its target
business, whose control is being acquired along with the third enterprise over which the acquirer
already has direct or indirect control. For calculating group-level thresholds, the target’s group
assets / turnover should be considered. In case of mergers or amalgamations, the value of
assets and turnover of the merged or amalgamated entities should be considered.

The present threshold limits are:

 Assets Turnover

Enterprise India > INR 2,000 crore OR > INR 6,000 crore
level (approx. USD 286.53 (approx. USD 859.60
million) million)

Worldwide >USD 1 billion with at >USD 3 billion with at

(with India least INR 1,000 crore in least INR 3,000 crore
component) India (approx. USD in India (approx. USD
143.27 million) 429.80 million)

OR

Group India > INR 8,000 crore OR > INR 24,000 crore
Level (approx. USD 1.15 billion) (approx. USD 3.44
billion)

Worldwide > USD 4 billion with at > USD 12 billion with

(with India least INR 1,000 crore in at least INR 3,000
component) India (approx. USD crore in India (approx.
143.27 million) USD 407.53 million)

(Exchange spot rate on October 18, 2018, i.e. an average of the last six months, was USD 1 =
INR 69.80.)

The Ministry of Corporate Affairs issued a notification on March 29, 2017 which provides for a de
minimis exemption to certain transactions from being notified. While up until 2016 the de minimis
exemption only applied to acquisitions, now it has been extended to mergers and amalgamations
as well. Any enterprise whose control, shares, voting rights or assets are being acquired, that
has either assets of no more than INR 3,500 million (approx. USD 50.14 million) in India or
turnover of INR 10,000 million (approx. USD 143.26 million) in India is exempted from notifying
the CCI.

In terms of the provisions of the Act, the value of assets is determined by taking into account the
book value of assets shown in the audited books of accounts of the enterprise for the financial
year immediately preceding the financial year in which: (a) the proposal relating to merger /
amalgamation was approved by the Board of Directors of the enterprises concerned; or (b) any
agreement or other document for acquisition was executed. Value of turnover is also determined
by applying the same principle.

2.5 Does merger control apply in the absence of a substantive overlap?

Yes, the parties to a Combination are mandated to file a notification with the CCI if the
jurisdictional thresholds stand breached.
2.6 In what circumstances is it likely that transactions between parties outside your
jurisdiction (“foreign-to-foreign” transactions) would be caught by your merger control legislation?

Any merger, acquisition or amalgamation which breaches the threshold provided under the Act
requires to be notified with the CCI, even if the same is a foreign-to-foreign transaction. However,
the exemptions are required to be checked and in case they are available, a notification need not
be filed.

2.7 Please describe any mechanisms whereby the operation of the jurisdictional thresholds
may be overridden by other provisions.

Under Section 54 of the Act, the Central Government may exempt any class of enterprise, by way
of notification for a given period of time from the application of the combination governing
provisions of the Act, if such exemption is necessary (i) in the interest of State security or the
public interest, or (ii) any practice or agreement which arises out of any obligation assumed by
India under any international treaty or convention with other country(ies), or (iii) if the enterprise is
performing any sovereign function.

Vide various notifications, the Central Government has clarified that the merger control provisions
will not be applicable in respect of the following:

Loss-making and failing banks in respect of which the Central Government has issued a
notification under Section 45 of the Banking Regulation Act, 1949.
Regional rural banks for which the Central Government issued a notification under Section
23A(1) of the Regional Rural Banks Act, 1976.
All cases of reconstitution, transfer of whole or any part thereof and amalgamation of
nationalised banks under the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1970 and Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1980.
Central Public Sector Enterprises (CPSEs) operating in the Oil and Gas Sectors under the
Petroleum Act, 1934 and the rules made thereunder or under the Oilfields (Regulation and
Development) Act 1948 and the rules made thereunder, along with their wholly- or partly-
owned subsidiaries operating in the oil and gas sectors.

2.8 Where a merger takes place in stages, what principles are applied in order to identify
whether the various stages constitute a single transaction or a series of transactions?

Regulation 9(4) of the Combination Regulations requires that where a transaction is achieved by
a series of smaller individual transactions which are inter-connected or linked, a single notification
is required. This amendment to the Combination Regulations was brought about in 2016. For
instance, in the case of AXA India / Bharti AXA, where one term sheet was executed in relation
totwo combinations, they were found to be interconnected. Further, in Blue Star / BSIL, it was
noted that a condition precedent to the scheme of amalgamation, the transfer of the IT business
of the BSIL’s subsidiaries to another company, was an interconnected step. In CCI / Thomas
Cook (India), the Supreme Court of India in its judgment, inter alia,held that when a series of
transactions is envisaged to accomplish a combination, all the transactions have to be taken into
consideration by the CCI and not just an isolated transaction. It further held that, while the parties
were open to structure the transaction any particular way, the substance of the transactions would
be more relevant to assess the effect on competition irrespective of whether such transaction was
pursued through one or more steps. Thus, the Supreme Court has made the notion of
“interconnectedness” subjective and open to interpretation.

3.1 Where
3. Notification and its Impact on the Transaction Timetablethe jurisdictional
thresholds are
met, is notification
compulsory and is
there a deadline for notification?

As per the provisions of the Act, parties cannot close / consummate a transaction without the
approval of the CCI, in case the assets and turnovers of the parties breach the jurisdictional
thresholds and the transaction requires notification.

3.2 Please describe any exceptions where, even though the jurisdictional thresholds are met,
clearance is not required.

Under the Act, certain transactions have been exempted from being notified. Under the merger
control regime, the parties may avail these exemptions which are provided under Schedule Iof
theCombination Regulations. Furthermore, the Government of India may separately prescribe
exemptions for certain enterprises from time to time by way of notifications.

Schedule I of the Combination Regulations treat certain categories of transactions as being not
likely to cause an appreciable adverse effect on competition (AAEC), and hence exempts them
from being notified:

1. An acquisition, solely as an investment or in the ordinary course of business insofar as the

total shares or voting rights held by the acquirer, directly or indirectly, do not entitle the
acquirer to hold 25% or more of the total shares or voting rights of the company, not leading
to acquisition of control of the target enterprise.
2. An acquisition of additional shares or voting rights of an enterprise by the acquirer or its
group, where the acquirer or its group, prior to acquisition, already holds 25% or more
shares or voting rights of the enterprise, but does not hold 50% or more of the shares or
voting rights of the enterprise, either prior to or after such acquisition, provided that such
acquisition does not result in acquisition of sole or joint control of such enterprise by the
acquirer or its group.
3. An acquisition of shares or voting rights where the acquirer, prior to acquisition, has 50% or
more shares or voting rights in the enterprise whose shares or voting rights are being
acquired, except in cases where the transaction results in transfer from joint control to sole
control.
4. An acquisition of assets not directly related to the business activity of the party acquiring
the asset, or made solely as an investment or in the ordinary course of business, not
leading to control of the enterprise whose assets are being acquired, except where the
assets being acquired represent substantial business operations in a particular location or
for a particular product or service of the enterprise, of which assets are being acquired,
irrespective of whether such assets are organised as a separate legal entity or not.
 5. An amended or renewed tender offer where a notice to the CCI has been filed by the party
making the offer, prior to such amendment or renewal of the offer.
6. An acquisition of stock-in-trade, raw materials, stores and spares, trade receivables and
other, similar, current assets in the ordinary course of business.
7. An acquisition of shares or voting rights pursuant to a bonus issue or stock splits or
consolidation of face value of shares or buy-back of shares or subscription to rights issue of
shares, not leading to acquisition of control.
8. Any acquisition of shares or voting rights by a person acting as a securities underwriter or a
registered stockbroker of a stock exchange on behalf of its clients, in the ordinary course of
its business and in the process of underwriting or stockbroking, as the case may be.
9. An acquisition of shares or voting rights or assets, by one person or enterprise, of another
person or enterprise within the same group, except in cases where the acquired enterprise
is jointly controlled by enterprises that are not part of the same group.
10. A merger or amalgamation of two enterprises where one of the enterprises has more than
50% shares or voting rights of the other enterprise, and/or merger or amalgamation of
enterprises in which more than 50% shares or voting rights in each of such enterprises are
held by enterprise(s) within the same group, provided that the transaction does not result in
transfer from joint control to sole control.
11. Acquisition of shares, control, voting rights or assets by a purchaser approved by the CCI
pursuant to, and in accordance with, its order under Section 31 of the Act. This will be
applicable in cases where structural commitments are issued by the CCI (discussed below).

Under Section 6(4) of the Act, there is no requirement of a notification to the CCI in case of any
financing, acquisition or subscription of shares undertaken by foreign institutional investors, bank
or venture capital funds pursuant to any covenant of a loan agreement or investment agreement.
However, under Section 6(5) of the Act, the aforementioned entities are required to provide the
details prescribed in Form III. These details include control, the circumstances for exercising
such control and the consequences of default arising out of such loan agreements or investment
agreements to the CCI within seven days from the date of acquisition.

3.3 Where a merger technically requires notification and clearance, what are the risks of not
filing? Are there any formal sanctions?

Under the Act, a failure to notify / belated filing of a combination before the CCI can result in a
monetary penalty of up to 1% of the total turnover or the assets of the enterprises involved,
whichever is higher.

For instance, the CCI penalised Eli Lilly INR 10 million (USD 143,266) for not notifying its
acquisition of the global veterinary pharmaceutical business of Novartis despite the thresholds
being breached. Similarly, Schulke & Mayr was fined INR 2.5 million (USD 35,816) for failing to
notify the acquisition of the healthcare antisepsis solutions business of Johnson & Johnson Pvt.
Ltd.

3.4 Is it possible to carve-out local completion of a merger to avoid delaying global

completion?

The Act does not provide for a carve-out of local completion of a merger to avoid delaying global
completion.
3.5 At what stage in the transaction timetable can the notification be filed?

As stated above, the parties are required to notify to the CCI any proposed combination before its
consummation. In case of any financing, acquisition or subscription of shares undertaken by
foreign institutional investors, or venture capital funds registered with SEBI, public financial
institutions and banks pursuant to an agreement of an investment or a loan, details prescribed in
Form III are to be notified within seven days from the date of acquisition.

3.6 What is the timeframe for scrutiny of the merger by the merger authority? What are the
main stages in the regulatory process? Can the timeframe be suspended by the authority?

Initially, the CCI is required to form a prima facie opinion as to whether the combination is likely to
cause or has caused an AAEC within the relevant market in India within 30 working days of
receipt of the notification. This excludes discussions with the parties on remedies, etc. If the CCI
is of the view that a transaction does not cause an AAEC, then it will approve the transaction.
The CCI may direct the parties to the combination to file additional information in terms of its
inquiry under Section 20(2) of the Act. However, the clock stops from the time of the CCI’s
direction till such additional information is furnished.

Under Section 29 (1) of the Act, if the CCI forms a prima facie opinion that the combination will
cause an AAEC, it can issue a “show cause” notice asking why a detailed investigation should not
be commenced. The parties to the combination have to respond within 30 days.

Despite the parties’ responses, where the CCI is of the prima facie opinion that the combination
has caused or is likely to cause an AAEC within the relevant market in India, the CCI can
commence a detailed investigation process, as a part of which the CCI may call for a report from
the Director General, CCI to investigate the combination. The CCI will direct the parties to the
combination to publish details of the transaction for bringing information to the knowledge of the
public and persons affected or likely to be affected by such combination, the CCI may invite any
person or member of the public to file objections, if any. The CCI can also ask the parties for
additional or other information.

The CCI has to pass an order within 210 days of the notification; however, the clock is stopped
where time is taken by the parties to provide any additional information sought by the CCI.

3.7 Is there any prohibition on completing the transaction before clearance is received or any
compulsory waiting period has ended? What are the risks in completing before clearance is
received?

Please refer to the response to question 3.3 above.

3.8 Where notification is required, is there a prescribed format?

The information required for preparing a notification with the CCI depends upon the nature of the
Form (Form-I or Form-II) to be filed. Form-I is filed with the CCI when the combined market share
of the parties at the horizontal level (in the same market) does not exceed 15%. However, a
Form-II may be filed with the CCI, in case the combined market share of the parties at the
horizontal level exceeds 15% or the combined market share of the parties at the vertical level
exceeds 25%.
Both types of Forms require extensive details, however, the details required in a Form-II are much
more granular. The information requirement ranges from financial details, details of the affected
markets, business details, details of products, etc. Moreover, the Combination Regulations also
mandate the parties to submit notarised and apostilled documents. The Forms have to be filed in
English language and in case of documents in other languages, the parties are required to file
translated copies of all documents.

Further, the CCI provides for a pre-filing consultation whereby the parties to the proposed
combination have an option to consult with the officers of the CCI prior to making a filing. It is
pertinent to note that the views of the CCI at such consultations are not binding on the CCI.

The CCI also encourages the parties to show informal draft filings before the formal filings are
made in order to remove any difficulties and expedite the merger clearance procedures.

3.9 Is there a short form or accelerated procedure for any types of mergers? Are there any
informal ways in which the clearance timetable can be speeded up?

Only in cases where the combined market share of the parties in the horizontal markets does not
exceed 15%, can a short form be filed. However, there is no formal mechanism which exists for
an accelerated procedure for any type of combination. Requests for expeditious disposal of
combination cases can be made to the CCI by the parties. Further, the Act provides for a
mechanism for a pre-filing consultation (PFC) where the parties to the combination can consult
with the officers of the CCI prior to making a filing in respect of queries which may arise.
Discussions with the officers of the CCI at a PFC are informal and without any legal
consequence.

3.10 Who is responsible for making the notification?

As to who is responsibile for notifying a combination to the CCI, depends on whether it is a

merger and amalgamation or acquisition. While in cases of an acquisition, it is the responsibility
of an acquirer to file; in cases of mergers or amalgamation, the parties are jointly responsible to
notify.

3.11 Are there any fees in relation to merger control?

In case of a Form I, the filing fee to be paid is INR 1.5 million (approx. USD 21,490) and for a
Form II, the filing fee to be paid is INR 5 million (approx. USD 71,633).

3.12 What impact, if any, do rules governing a public offer for a listed business have on the
merger control clearance process in such cases?

There is no impact.

3.13 Will the notification be published?

In terms of Regulation 13(1A) of the Combination Regulations, a short summary of the

combination (excluding any confidential information) is to be submitted by the parties which is
published on the CCI’s website.
In the case where the CCI initiates an investigation in terms of Section 29 of the Act, it can direct
the parties to the combination to publish the details of the combination. These details are then
published by the parties in Form IV, as specified in Schedule II of the Combination Regulations.
Under Regulation 22(5) of the Combination Regulations, the parties are required to publish the
details of the combination not only on their respective websites, but also in all India editions of the
four leading daily newspapers, including at least two business newspapers within four working
days of the CCI’s decision that the combination is likely to cause or has caused AAEC. Under
Regulation 22(3), the CCI may also post the details of the combination on its website. Further,
the public version of the final decision is published on the website of the CCI.

4. Substantive Assessment of the Merger and Outcome of the Process

4.1 What is the substantive test against which a merger will be assessed?

Under Section 6 of the Act, a combination is assessed on the ground as to whether it causes an
AAEC within the relevant market in India. Once the jurisdictional thresholds are breached, the
parties are supposed to file a notification with the CCI. Post the same, the CCI under Section
20(4) of the Act assesses if the combination causes any anti-competitive effects or not. The
criterion to assess the same is enshrined in Section 20(4) the Act. These include factors such as
the extent of barriers to entry, countervailing buying power, level of combination in the market, the
extent of effective competition likely to sustain in the market, countervailing buying power,
availability of substitutes, incremental market shares and the likelihood of the parties being able to
significantly and sustainably increase their prices, etc. While certain factors such as those
aforementioned are negative, a few factors are positive, such as the relative advantage by way of
contribution to economic development, nature and extent of innovation, and whether benefits of
the combination outweigh the adverse impact. A general factor considered before making an
assessment of AAEC is whether the parties have any overlaps, horizontally or vertically. In case
of the absence of overlaps, the CCI is likely to not look at other factors.

In case of overlaps, incremental market share is one of several factors considered while looking
at effects on the market. For instance, in Tata / Bhushan Steel as well as Tata / Bhushan Power
and Steel, the CCI cleared the transaction despite the parties having market shares in the range
of 30–40% for different product markets. This was due to several factors such as competitors not
functioning at optimum capacity, presence of ample imports, presence of larger and numerous
competitors and new entrants. Further, a deciding factor is the presence of sufficient competition
in the market which would pose a competitive constraint on the parties, post the combination.

4.2 To what extent are efficiency considerations taken into account?

In terms of Section 20(4) of the Act, the CCI analyses factors such as the nature of innovation,
contribution to economic development, and benefits resulting from the combination as well as
certain negative factors. These positive factors are indicative of synergies in the market. Notably,
in the Jet / Etihad order, the CCI observed that the acquisition of stake in one airline by another
was to generate synergies in terms of network efficiencies, cost savings and capacity addition
while approving the said transaction. In one of the largest deals in the country, while approving
Bayer / Monsanto,the CCI while ordering several remedies, noted that the same would strengthen
the agricultural input suppliers in India, by enabling the innovation and launch of new products for
the benefit of the farmer.

4.3 Are non-competition issues taken into account in assessing the merger?

Under Section 6 of the Act, a combination is assessed by the test of whether it causes an AAEC
in the relevant market in India which involves an economic assessment to determine the effects of
the combination. The CCI examines the economic factors prescribed under Section 20(4) of the
Act such as extent of barriers to entry, countervailing buying power, level of combination in the
market, and the extent of effective competition likely to be sustained in the market. These factors
are economic and do not account for other considerations.

4.4 What is the scope for the involvement of third parties (or complainants) in the regulatory
scrutiny process?

Once a combination is notified to the CCI, and a short 500-word summary of the combination
containing details of the combination, parties and the relevant market are published on the CCI’s
website due to which third parties become aware of the combination which can then provide
comments on the combination to the CCI. Thereafter, under Regulation 19(3) of the Combination
Regulations, the CCI may call for information from any other enterprise as to whether the
combination has caused or is likely to cause an AAEC in India. Under Regulation 34 of the
Combination Regulations, the CCI may seek the opinion of any other agency or statutory
authority about the combination.

Further, during its detailed investigation, once the details of the combination have been published,
in terms of Section 29(3) of the Act, the CCI may invite any person or member of the public
affected or likely to be affected by the said combination to file his written objections. Such
objections have to be filed with 15 days of the publication.

4.5 What information gathering powers (and sanctions) does the merger authority enjoy in
relation to the scrutiny of a merger?

In addition to the response provided in question 4.4 above, the CCI has been empowered under
Section 36 of the Act to regulate its own procedure for discharging its functions. Specifically,
under Section 36(3) the CCI has the power to invite experts or direct persons to assist in the
conduct of an inquiry. The CCI has been given broad powers under the Act, inter alia, to require
discovery and production of documents, information, production of books of account, etc.
However, as parties to a combination are usually compliant in furnishing information, such harsh
powers have never been used in respect of a combination. Further, the CCI has entered into
various Memoranda of Understanding (MoU) with several anti-trust authorities in many other
jurisdictions such as the competition authorities of Russia, Brazil, China and South Africa, etc.,
which would permit it to seek information in cases of multi-jurisdictional combinations. In terms of
the ability to penalise, Section 45 of the Act empowers the CCI to impose penalties upon persons
who wilfully supress and / or furnish false information.

4.6 During the regulatory process, what provision is there for the protection of commercially
sensitive information?
Section 57 of the Act, read with Regulation 35 of the General Regulations and Regulation 30 of
the Combination Regulations, provide a right to the parties to seek confidentiality on documents /
information which qualify as commercially sensitive. Confidentiality in combination cases is
sought by way of a separate application and supported by an affidavit by way of which the
applicant needs to satisfy the CCI that making the document or parts thereof public would result
in disclosure of trade secrets, or destruction or appreciable diminution of the commercial value of
any information or would cause serious injury.

Once the CCI grants confidentiality on certain information, the same is excluded in the final
decision published on its website. However, the CCI may occasionally require the parties to be
heard on why confidentiality should be granted on certain items.

5.1
5. The End of the Process: Remedies, Appeals and EnforcementHow
does the

regulatory process end?

The regulatory process ends when the CCI passes an order approving the Combination under
Section 31(1) of the Act or disapproving the same under Section 31(2) of the Act. Further, in
cases where the CCI, after having formed the opinion that the Combination is likely to have AAEC
in India, proposes modifications, the regulatory process ends if the parties accept the
modifications under Section 31(4). Alternatively, the parties can propose amendments to the
modification under Section 31(6), which if accepted by the CCI leads to termination of the process
under Section 31(7) of the Act. However, under Section 31 (11) of the Act, there is a deemed
approval in case the CCI does not pass any order under Section 31(1) or (2) within a period of
210 working days. The CCI publishes the final order on its website and supplies a copy of the
order to the notifying parties.

5.2 Where competition problems are identified, is it possible to negotiate “remedies” which
are acceptable to the parties?

As per Section 31(3) of the Act, where the CCI is of the opinion that the combination has, or is
likely to have an AAEC but such adverse effect can be eliminated by suitable modification to such
combination, it may propose appropriate modification to the combination and the parties who
accept the modification proposed by the CCI are mandated to carry out such modification within
the time period specified by the CCI. In the case of failure to carry out the accepted
modification(s) proposed by the CCI within the stipulated time, the combination shall be deemed
to have an AAEC, and will be dealt with in accordance with the provisions of the Act.

As per Section 31(6) of the Act, if the parties to the combination do not accept the modification(s)
proposed by the CCI, then such parties may submit amendments to the modification proposed by
the CCI. If the CCI agrees upon the amendment(s) submitted by the parties, the CCI shall
approve the combination by an order. As per the recent amendment to the Combination
Regulations brought about on October 9, 2018, the parties to a combination can now alternatively
offer remedies in response to the CCI’s notice.
In case the CCI does not accept the amendment(s) proposed by the parties, then the parties will
be given additional time to accept the modification(s) proposed by the CCI and in case the parties
to the combination fail to accept the modifications, the CCI has the power to reject the
Combination by stating that the same causes AAEC.

5.3 To what extent have remedies been imposed in foreign-to-foreign mergers?

There have been remedies which have been imposed upon parties in various Combinations;
however, remedies have been imposed in only those cases where there is a substantial presence
of the parties. Remedies have been imposed in several foreign-to-foreign transactionsas well.

5.4 At what stage in the process can the negotiation of remedies be commenced? Please
describe any relevant procedural steps and deadlines.

The process of negotiation can commence in either Phase I or in Phase II of the approval
process. As per Regulation 19(2) of the Combination Regulations, the CCI may ask the parties to
the combination to accept modifications for forming its prima facie opinion.

Further, as per the amendments to the Combination Regulations dated October 9, 2018, the
parties to a Combination can now submit remedies voluntarily in response to the notice issued
under Section 29(1) of the Act (“show cause” notice to the parties where the CCI is of the prima
facie opinion that a combination is likely to cause or has caused AAEC). If such remedies are
considered sufficient to address the perceived competition harm, the combination can be
approved.

Detailed steps in relation to the process of negotiation have been detailed in response to question
5.2 above.

5.5 If a divestment remedy is required, does the merger authority have a standard approach
to the terms and conditions to be applied to the divestment?

The CCI in its recent orders, for instance in Linde / Praxair, Bayer / Monsanto, Agrium / Potash
has ordered divestment remedies with an aim to eliminate substantial overlaps of the parties in
markets which are affected by the said Combination. Moreover, the same has been done to
establish a competitor(s) or strengthen the existing competition in the markets.

The CCI in practice also lays down purchaser requirements to ensure that the purchaser of the
divestment package has the resources to effectively compete in the market.

Furthermore, as per Regulation 27 of the Combination Regulations, where the CCI believes their
proposed modification requires supervision, it may appoint agencies to oversee the modification.
The agencies must be independent, having no conflicts of interest. The agencies are mandated
to carry out responsibilities as specified by the CCI and the payment to the agencies shall be
borne by the parties by depositing it with the CCI or as directed by the CCI.

5.6 Can the parties complete the merger before the remedies have been complied with?

Closing of a transaction wherein remedies have been imposed can take place only after the
approval of the CCI. However, on a case-by-case basis, the CCI may allow the parties to close
and direct simultaneously, to comply with the remedies imposed.
5.7 How are any negotiated remedies enforced?

The remedies which are ordered by the CCI must be enforced by the parties to the Combination
within certain timelines granted by the CCI. Also, the CCI in many cases can appoint a
“Monitoring Agency”, which is obligated to collate information and oversee the divestment
process. The agency is mandated to present a report on the status of the divestment to the CCI
periodically.

5.8 Will a clearance decision cover ancillary restrictions?

While reviewing a notification, if the CCI is of the opinion that certain ancillary restrictions exist in
the transaction documents, the CCI can direct the parties to the Combination to modify such
restrictions. The CCI has passed orders wherein parties have been directed to amend the scope
of the non-compete obligations.

5.9 Can a decision on merger clearance be appealed?

Yes, as per Section 53A of the Act, an appeal can be preferred before the National Company Law
Appellate Tribunal (NCLAT) by any person aggrieved by such an order passed. The NCLAT
decision can be appealed thereafter before the Hon’ble Supreme Court of India.

5.10 What is the time limit for any appeal?

As per Section 53B of the Act, any appeal from the order of the CCI in Combination cases has to
be filed within a period of 60 days from the date of receipt of the order. Further, in cases where
an appeal is to be filed before the Supreme Court of India, the same needs to be filed within 60
days from the date of communication of the decision or order of the NCLAT to the parties to the
combination.

5.11 Is there a time limit for enforcement of merger control legislation?

As per the proviso to Section 20(1) of the Act, the CCI shall not initiate any inquiry into a
combination after the expiry of one year from the date on which such Combination has taken
effect.

6.1 To what extent does the merger authority in your jurisdiction liaise
6. Miscellaneouswith those in other jurisdictions?
The CCI has entered into MoUs with six competition authorities until March
31, 2017, namely US DOJ, EC, FAS Russia, ACCC, and CB Canada. In
the year 2016–17, MoUs were signed with competition authorities of BRICS countries and the
CCI also initiated the process for signing three MoUs i.e., MoUs with KFTC Korea, JFTC Japan
and CADE Brazil and is a part of the International Competition Network (ICN). Moreover, the CCI
hosted the ICN conference in March, 2018.

6.2 What is the recent enforcement record of the merger control regime in your jurisdiction?
An approach of providing expedited approvals with minimum delay has been adopted by the CCI,
while looking at acquisitions of insolvent and defaulting companies. Several acquisitions of
insolvent companies have been approved by the CCI of late. Notably, the average approval time
taken by the CCI for approving a combination has gone down from 25 days to 17 days.

Recently, the CCI directed the implementation of remedies into two large deals. In its order in
Linde / Praxair,the CCI directed the acquirer to sell all of its shareholding in a subsidiary which
was present in the overlapping market for industrial gases encompassing tonnage, bulk and
cylinder business. In its order in Bayer / Monsanto,theCCI directed the appointment of an
independent monitoring agency to supervise the modifications, which related to the impact on
business operations in India. This agency was made responsible for reporting a work plan,
overseeing the management of divestment business, ensuring the non-exchange of confidential
information, etc. Apart from this, Bayer was asked to divest certain portions of its vegetable seed
business whereas Monsanto was asked to divest its shareholding in subsidiaries present in
overlapping business.

In smaller transactions, it is seen that despite the parties having significant market shares for
certain overlapping products, the CCI has provided unconditional approval in light of the prevalent
conditions in the market such as the onslaught of new entrants, presence of several competitors,
a lack of optimum capacity utilisation of existing players and fragmentation. Thus, it is seen that
the CCI has begun to take a practical effects-based approach, which is particularly needed in
insolvency cases.

Further, from a governmental standpoint, the current regime in India has a focus towards
facilitating the ‘ease of doing business in India’ and the same can be seen in the changes brought
about in the Combination Regulations. For instance, parties can now submit remedies voluntarily
in response to the CCI’s notice. If such remedies sufficiently address the harm to competition, the
combination would be approved. Further, it has been made permissible for the parties to
withdraw and refile instead of facing an invalidation in case the notice suffers from informational
gaps. In 2017, in a bid to exempt smaller deals from scrutiny, the Ministry of External Affairs
introduced the “size of the business” test and made the de minimis exemption applicable only to
the assets being acquired.

6.3 Are there any proposals for reform of the merger control regime in your jurisdiction?

As indicated above, there were certain amendments which were incorporated on October 9,
2018. Further, keeping in mind the changing economic scenario, the Government of India has
recently set up a review panel to suggest amendments to be made to the Act.

6.4 Please identify the date as at which your answers are up to date.

These answers are up to date as of October 30, 2018.

The authors would like to thank Arjun Nihal Singh and Chandramauli Dwivedi for their assistance
with the preparation of this chapter.