Competition Act 2002: CCI Merger Control, Combinations and Exemption Thresholds

The Competition Commission of India (CCI) regulates mergers, acquisitions, and amalgamations (collectively "Combinations") under Sections 5-6 of the Competition Act 2002. Any combination that is likely to cause an appreciable adverse effect on competition (AAEC) in India requires prior CCI approval before implementation.

Definition of Combination (Section 5)

Combination includes any acquisition, merger, or amalgamation between enterprises that exceeds the prescribed thresholds. Three types of combinations:

1. Acquisition: Acquisition of shares, voting rights, assets, or control
2. Merger: Amalgamation of two or more companies into one
3. Demerger/Acquisition of Business: Transfer of business divisions

Threshold Limits for Mandatory Notification

All thresholds are revised by CCI every 2 years based on wholesale price index. Current (2024) notification thresholds are higher than the base thresholds listed above after indexation.

Exemptions from Notification

• Intra-group transactions (acquisition within the same group)
• Target assets < Rs.350 crore in India OR target turnover < Rs.1,000 crore in India (de minimis exemption)
• Combinations specifically exempted by Central Government

Green Channel (Automatic Approval)

Introduced in 2019: Combinations with zero competitive overlap can file via Green Channel and receive deemed approval in 1 working day if:

• No horizontal overlap (parties not in same product/geographic market)
• No vertical relationship (parties not in buyer-seller relationship)
• No complementary goods/services overlap
• Self-certification by parties that all above conditions are met

Filing Process

1. Prepare CCI Form I or Form II (for complex cases with market share > 15% overlap) with required annexures
2. File online at cci.gov.in
3. Pay filing fee: Rs.50,000 for Form I; Rs.20 lakh for Form II (revised from 2022)
4. CCI acknowledges and begins clock: 30 working days (Phase I)
5. If CCI identifies concerns: issues show cause notice → parties submit response → Phase II investigation (90 working days)
6. CCI passes order: approval / conditional approval / prohibition

Gun Jumping

Parties must not implement the combination (close the deal) before CCI approval. Gun jumping penalties:

• Section 43A: CCI can impose penalty up to 1% of total assets or turnover (higher of acquirer or target)
• Structural separation may be ordered — CCI can require parties to undo the implemented combination

Assessment of AAEC

CCI evaluates competitive effects using multiple factors (Section 20(4)):

• Level of concentration and change in concentration (HHI delta)
• Likelihood of coordination post-combination
• Entry barriers
• Countervailing power of buyers
• Efficiency gains (consumer benefits)
• Whether failing firm doctrine applies