Register to Subscribe

Home arrow News arrow Business News arrow Competition Comm Releases Regulation of Combinations for Corporate Sector
Competition Comm Releases Regulation of Combinations for Corporate Sector Print E-mail
Written by Anand   
Thursday, 12 May 2011
New Delhi: The Competition Commission of India (CCI) today released the regulation of Combinations related with the implementation of provisions of Section 5 & 6 of Competition Act (the Combination Provisions, which have been envisaged to prevent creation of anti competitive environment in Indian economy), which are coming into effect from 1st June, 2011.

Elaborating the modalities of new rules, Shri Dhanendra Kumar, Chairman CCI said that as per the scheme of the Act regulation has been prepared by the Commission in a highly participatory process.

The Commission consulted various stake holders which included consumers, industrial/business associations, statutory bodies, Government departments, law firms, professional institutions, experts in law, economics, financial services, trade associations etc. Also, detailed consultations were held through inviting suggestions on Draft Regulations, which were put on the web site inviting the suggestions from various stake holders. The open houses were also held in New Delhi, Mumbai, Hyderabad and Bangalore to take into account aspirations of the Indian industry and consumer. The consultation was also held with international business firms and law firms through various methods including video conferencing. He said due care has been taken to ensure that regulation lead to certainty in regulatory frame work and become a tool to economic growth of our economy.

Chandrajit Banerjee, Director General CII

The Industry has been eagerly awaiting the notification of the Merger Regulations by the Competition Commission of India (CCI), since the content of the earlier drafts had received a lot of opposition from the Members of CII. CII is happy to note that the CCI has taken cognizance of CII’s representation and made a number of changes to the Regulations including exempting “normal” transactions from filing requirement, specifying a list of transactions, which may “ordinarily” be filed in the short form, reducing the filing fee, providing clarity to transitional provisions among others. However, CII still remains concerned about the fact that transactions which were not intended to be covered by the Act e.g. transactions where control is not being acquired remain subject to the notification requirement. Also, transactions which qualify for the short form filing do not benefit from a shorter review process. CCI could have provided a quick clearance commitment in relations to these types of transactions, as otherwise there is a risk that the review process could take upto 210 days. CII had also expected that there would be a ‘deemed approval’ provision if the CCI does not form its prima facie opinion in 30 days or fails to communicate such decisions to the parties. CII is hopeful that the CCI and the Ministry of Corporate Affairs (MCA) would consult industry before finalising these provisions and bring them to effect by 1st June 2011.

Stakeholders concerns/issues on Draft Combination Regulations and How they were addressed

- Category in which no need to file notice
Introduction of a category of transactions (annexed) where no notification is needed to be filed. This includes the categories about which the industry had concerns, like acquisition of stock in trade, raw materials, assets / investments in ordinary course of business, bonus issues, stock splits, combinations with insignificant nexus with markets in India etc.

- Transitional arrangements
Clear provision that the Regulation / Act will cover only cases where board resolutions regarding final decisions, or execution of binding documents, takes place on or after 1st June, 2011. All cases where decisions have been taken earlier will be exempted even if the combination has not been fully consummated / implemented.

- Interconnected transactions
Regulation 9(4) provided that where ultimate intended effect of a business transaction is achieved by way of a series of steps or smaller individual transactions which are inter-connected or inter-dependent on each other, one or more of which may amount to a combination, a single notice covering all these transactions may be filed by the parties to the combinations.

- User friendly form
Introduction of a very simple and user friendly form (Form-I) in which all filings would be made, with option to file in Form-II to those who prefer to do so. Even in this simple form Form 1, in a large number of cases, only part I needing basic information about the filing parties is required.A vast majority of the cases so filed will be cleared in less than 30 days.

- Reduction in fees
Filing fees have been reduced to Rs.50,000/- from earlier Rs.40 lakhs for Form-I in which all notices are required to be filed. Even for Form-II the fee has been reduced from Rs. 40 lakhs to Rs. 10 lakhs.

- Transaction nexus to India

Regulation 4 read with Schedule I also provides that the combinations taking place entirely outside India with insignificant local nexus and effect on markets in India need not file notification.

- Confidentiality
Elaborate arrangements are being made for ensuring tough confidentiality standards with both physical and electronic security measures.

- Pre-merger consultations and their confidentiality concerns
As regards pre-merger consultation, the Commission shall make adequate provisions for the same on their website in keeping with international practices.

- Calculation of turnover and assets
The clarification with respect to calculation of turnover and assets for the purposes of filing notice is provided in instructions for filling up Forms of notification.

The Competition Act of India was enacted in 2003 and commission commenced its functioning w.e.f. 20th May, 2009 with enforcement of Section 3 & 4 (Anti Competitive Agreement and Abuse of Dominance Provisions) of the Act coming into effect. The objectives of the Act are sought to be achieved through the Competition Commission of India (CCI), which has been established by the Central Government with effect from 14th October 2003. CCI consists of a Chairperson and 6 Members appointed by the Central Government.

Shri Dhanendra Kumar said An attempt has been made to address the various concerns expressed by stake holders during different stages of framing of these regulations and the final outcome is the result of marathon exercise of consultation with all the stakeholders. To that extent, it represents the collective wisdom of all stakeholders, achieved through a unique process of consultation and transparency between the regulator and other stakeholders.

Last Updated ( Thursday, 12 May 2011 )
Related news
More recent
Earlier on
< Prev   Next >


Mazak - The world's largest machine tool builder
JYOTI - India's most dynamic machine builder
TaeguTec - Cost effective tooling solutions





Subscribe to MACHINIST by Email


RSS 1.0
This site is best viewed with Firefox 2.0 or higher at a minimum screen resolution of 1024x768