After a lull, the contentious provisions regarding mergers and acquisitions (M&A’s) of the amended Competition Act is back on the discussion table of the Ministry of Corporate Affairs (MCA). The Ministry is planning to hold a meeting with the new anti-monopoly watchdog the Competition Commission of India (CCI) and the stakeholders in the first week of December to discuss the M&A clauses – Sections 5 and 6 – that are yet to be notified, official sources told to leading business newspaper.Interestingly, in the build up to this meeting, November itself has already seen three conferences on Competition Law, where participants included international and Indian experts as well as CCI’s counterparts in other countries. The inputs from these meetings are with the Ministry. The Corporate Affairs Minister, Mr Salman Khursheed, recently said the issues surrounding Sections 5 and 6 of the Act are referred to the Prime Minister even as the Government is considering last minute suggestions from stakeholders. Sections 3 (cartels and anti-competitive pacts) and 4 (abuse of dominant position) of the amended Competition Act have already been notified in May. Section 66 that brought an end to MRTPC, was notified recently.
However, Sections 5 and 6 have been the most controversial. Industry’s worries include the Act shifting to a mandatory notification regime from the earlier voluntary system. The mandatory regime requires companies that enter into M&A’s and meet the stipulated asset/turnover thresholds to seek prior approval from CCI.
Also, the earlier 90 working day timeframe for clearance of M&As by CCI has been enhanced to 210 days, which is considered too long a time by industry. “The time period is long and no deal can wait for such timelines. In addition, although the clearance is expected to happen in two phases, there are no clear guidelines on what kind of cases can get cleared in the first phase,” said Ms Pallavi S. Shroff, Partner, Amarchand & Mangaldas & Suresh A Shroff & Co. Yet another issue is whether sectoral regulators will only give inputs to the CCI on M&As in their sector or if they would have the final say.