MCA revises assets & turnover value for section 5 of Competition Act 2002

Introduction: The Ministry of Corporate Affairs (MCA) has issued a notification on March 7, 2024, bringing significant changes to the Competition Act, 2002. Through this amendment, the MCA revises the value of assets and turnover thresholds for enterprises involved in acquisitions, control acquisitions, mergers, or amalgamations, as outlined in Section 5 of the Competition Act.

Ministry of Corporate Affairs

Ministry of Corporate Affairs revises threshold limits for value of Assets and Turnover for purposes of combination filings under Competition Act, 2002 as a step towards ‘Ease of doing Business’

Posted On: 08 MAR 2024

The Ministry of Corporate Affairs has revised the existing threshold value of assets and turnover mentioned under Section 5 of the Competition Act, 2002 (the ‘Act’).

Earlier, the threshold limits prescribed under Section 5 of the Act were revised in year 2011 vide notification S. O. No. 480 (E) dated 4^th March 2011. Subsequently, the threshold limits were reviewed and revised in 2016 vide notification S. O. No. 675 (E) dated 4th March, 2016.

The value of assets and turnover after revision is as under:

#: As per the revised threshold, the increase in value is 150% over the original value under section 5 of the Competition Act, 2002.

In exercise of the powers conferred by clause (a) of section 54 of the Competition Act, 2002 (12 of 2003) it has also been decided with regards to de-minimis thresholds that the value of assets and turnover be enhanced from INR 350 crore (rupees three hundred fifty crore) to INR 450 crore (rupees four hundred fifty crore) for assets and from INR 1000 crore (rupees one thousand crore) to INR 1250 crore (rupees one thousand two hundred fifty crore) for turnover.

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MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION

New Delhi, the 7th March, 2024.

S.O. 1131(E).— In exercise of the powers conferred by clause (a) of section 54 of the Competition Act, 2002 (12 of 2003), the Central Government, in public interest, hereby exempts the enterprises being parties to ––

(a) any acquisition referred to in clause (a) of section 5 of the Competition Act;

(b) acquiring of control by a person over an enterprise when such person has already direct or indirect control over another enterprise engaged in production, distribution or trading of a similar or identical or substitutable goods or provision of a similar or identical or substitutable service, referred to in clause (b) of section 5 of the Competition Act; and

(c) any merger or amalgamation, referred to in clause (c) of section 5 of the Competition Act,

where the value of assets being acquired, taken control of, merged or amalgamated is not more than rupees Four hundred and fifty crore in India or turnover of not more than rupees One thousand two hundred and fifty crore in India, from the provisions of section 5 of the said Act for a period of two years from the date of publication of this notification in the Official Gazette.

2. Where a portion of an enterprise or division or business is being acquired, taken control of, merged or amalgamated with another enterprise, the value of assets of the said portion or division or business and or attributable to it, shall be the relevant assets and turnover to be taken into account for the purpose of calculating the thresholds under section 5 of the Act. The value of the said portion or division or business shall be determined by taking the book value of the assets as shown, in the audited books of accounts of the enterprise or as per statutory auditor’s report where the financial statement have not yet become due to be filed, in the financial year immediately preceding the financial year in which the date of the proposed combination falls, as reduced by any depreciation, and the value of assets shall include the brand value, value of goodwill, or value of copyright, patent, permitted use, collective mark, registered proprietor, registered trade mark, registered user, homonymous geographical indications, geographical indications, design or layout- design or similar other commercial rights, if any, referred to in sub-section (5) of section 3. The turnover of the said portion or division or business shall be as certified by the statutory auditor on the basis of the last available audited accounts of the company.

[F. No. 05/7/2013-CS]

MANOJ PANDEY, Addl. Secy.