Competition Regulator Calls For Rethink On Approval Thresholds For Deals

Competition Commission of India Chairman DK Sikri has said that the existing exemption thresholds that allow dealmakers to not seek prior approval of the regulator has a blind spot.

Under the Competition Act, 2002, CCI's approval is not required when the target enterprise – whose shares, assets, voting rights or control is being acquired – either has Indian assets of less than Rs 350 crore or a turnover in India of less than Rs 1,000 crore.

Transactions involving acquisition of intellectual properties where turnover may be high but assets meet the exemption threshold may cause appreciable adverse effect on competition, Sikri said on Friday at a CII event in Mumbai on Friday. “We may want to look at transaction size thresholds or sector specific threshold.”

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Even Germany in March amended its merger control regime to introduce value of transaction test. So far, only the turnover of the parties determined the requirement of a regulatory filing.

Sikri also emphasised CCI's performance, both quantitatively and qualitatively. He said that the regulator has examined 895 anti-trust cases so far and has passed final orders in 600 cases.

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Sikri also indicated that the CCI may soon notify penalty guidelines.

“After the Supreme Court held that penalty should be calculated based on relevant turnover, and not total turnover, CCI will develop penalty guidelines internally and notify in due course.”