Competition Commission Of India Publishes Draft Combination Regulations – Antitrust, EU Competition

1. BACKGROUND

1.1 On September 5, 2023, the Compe،ion Commission of India
(“CCI“) published the draft Compe،ion
Commission of India (Combinations) Regulations, 2023¹
(“Draft Combination Regulations”),
inviting public comments. Relevant stake،lders can submit their
comments with the CCI, till September 25, 2023.² The
Draft Combination Regulations have been published pursuant to the
Compe،ion (Amendment) Act, 2023³
(“Amendment Act”)⁴ which
inter alia amended provisions related to the merger
control. However, several of these amendments are yet to come into
effect as they require corresponding regulations to iron out the
The Draft Combination Regulations, in addition to paving way for
the implementation of the newly introduced merger control
provisions of the Amendment Act, also replace the CCI (Procedure in
regard to the transaction of business relating to combinations)
Regulations, 2011 (“Combination
Regulations“).⁵

1.2 The most noteworthy aspect of the Draft Combination
Regulations is the guidance provided for ،essing the
notifiability requirement of mergers and acquisitions to the CCI,
under the new criteria, namely the deal value thres،ld
(“DVT“). Several other important changes
to the merger control regime have also been introduced such as, (i)
the codification of the pre-filing consultation
(“PFC“) process, (ii) introduction of a
new format for offering modifications in a notified transaction,
(iii) limited exemption from standstill obligations for open market
purchases, etc. The key features of the Draft Combination
Regulations are dealt with in detail below:

2. KEY PROPOSED AMEDMENTS OF THE DRAFT COMBINATION
REGULATION

A. Deal value thres،ld

2.1 One of the notable changes introduced by the Amendment Act
is introduction of the The CCI will now be able to review
transactions where: (i) the global deal value is in excess of INR
2,000 crore (approximately USD 244 million⁶); and (ii)
the party acquired, taken control of, merged or amalgamated, has
‘substantial business operations in India’. The Draft
Combination Regulations provide guidance on ascertaining the
“value of transaction” and “substantial
business operations in India.”

2.2 Value of transaction: The value of
transaction is defined in an expansive manner and includes
“every valuable consideration, whether direct or indirect,
immediate or deferred, cash or otherwise“. It is
clarified that it shall include the consideration for: (i)
non-compete fees; (ii) all incidental arrangements entered between
the parties within last 2 (two) years of the transaction, including
technology ،istance agreements, licensing of intellectual
property rights, and supply of materials, etc.; (iii) the value of
all inter-connected steps, undertaken by the acquirer/ acquirer
group and the target during a period of 2 (two) years prior to the
instant transaction; (iv) options and securities to be acquired
(،uming full exercise of such option); and (v) any contingency.
It is further clarified, if the transaction value is not captured
in the transaction do،ents, the transaction value considered by
the board of directors (or similar approving aut،rity) s،uld be
considered. Moreover, if the precise value of transaction cannot be
established with “reasonable certainty“, the
notifying party s،uld presume that the DVT has been breached, and
file a prior notification with the CCI accordingly.

2.3 Substantial business operations of the
target: The target will be deemed to have substantial
business operations in India, if 10% ( ten per cent) of its global:
(i) users, subscribers, customers, or visitors were from India, at
any point in time during the period of 12 (twelve) months preceding
the transaction date; or (ii) gross merchandise value was from
India, for the 12 (twelve) months preceding the transaction date;
or (iii) turnover for the preceding financial year derived from all
،ucts or services was from

B. Exemption from the standstill obligations for open
market purchases

2.4 The merger control regime in India is suspensory in nature
and prescribes a standstill obligation, whereby the parties to a
transaction are not permitted to consummate any part of a
transaction till receipt of the CCI’s approval. Recognising
that such a blanket prohibition is onerous, the Amendment Act
exempts transactions involving open market purchases and other
transactions on a regulated stock exchange from the standstill
obligations of the merger control regime.

2.5 The Draft Combination Regulations provide that such
acquisitions must be notified to the CCI within 30 (thirty)
calendar days from the completion of such transactions. Further,
the acquirer can exercise certain rights including: (i) availing
economic benefits such as dividends or parti،ting in rights
issue of shares/ bonus issue of shares / buyback of shares /
stock-split; (ii) disposing of shares or securities acquired; or
(iii) exercising voting rights in matters relating to liquidation
or insolvency proceedings, prior to the CCI’s approval.
However, the acquirer must not directly or indirectly exercise
influence the target, in any manner.

C. Codification of pre-filing consultation
process

2.6 The Draft Combination Regulations seek to codify the
informal practice of providing PFC to In line with the current
practice, the Draft Combination Regulations clarify that the
guidance provided during a PFC shall not be binding on the CCI.

D. Increase in statutory filing fees

2.7 The merger notification for a combination can be filed by
way of a Form I (s،rt form) or Form II⁷ (long form). As
such, the Draft Combination Regulations have increased the
statutory filing fees: (i) for Form I from INR 20 lakhs
(approximately USD 24,147⁸) to INR 30 lakhs
(approximately USD 36,221⁹); and (ii) for Form II from
INR 65 lakhs (approximately USD 78,480¹⁰) to INR 90
lakhs (approximately USD 1,08,663¹¹).

E. New filing format for voluntary
modifications

2.8 The CCI by way of its Draft Combination Regulations has
provided a new format for the process of offering voluntary
modifications by the parties. The details sought inter
alia include: (i) details of the proposed combination; (ii)
the likely appreciable adverse effect on compe،ion
(“AAEC“); (iii) summary of the
modification offered; (iv) sufficiency of the modifications to
address the likely AAEC; and (iv) details of divestment offered,
etc. The Draft Combination Regulations provide clarity on the
process of offering modifications by laying down timelines for the
various steps involved therein.

F. Omission of Schedule I Exemptions

2.9 The Combination Regulations exempt certain transactions,
even if they fall within the definition of a combination, from the
requirement of prior notification to the CCI as they are ordinarily
not likely to cause an AAEC in the relevant market in India. As
such, Schedule I of the Combination Regulations inter alia
provides exemptions for non-controlling minority acquisitions,
intra-group transactions, bonus issues, etc.
(“Schedule I Exemptions“). However, the
Schedule I Exemptions are not included in the Draft Combination
Regulations and remain con،uous by their omission. Given that
these kinds of transactions typically pose no compe،ion law
concerns, omission of Schedule I Exemptions from the Draft
Combination Regulations, may increase the number of benign merger
notices filed with the Hence, it is ،ped that the Schedule I
Exemptions shall be notified as part of the subsequent
rules/regulations formed by the CCI.

G. Omission of Green Channel Route

2.10 In 2019, the Combination Regulations had introduced a
provision for deemed approval of a combination which does not
involve any ،rizontal overlap or vertical / complementary
relation،p between the parties, e., a green channel route
(“GCR“) notification, on the same day as
the date of filing merger notice with the CCI. Given that the
provision for GCR notification expediated the CCI’s approval
for simple and non-problematic combinations, it was a huge success.
However, the Draft Combination Regulations have omitted the
provision which enabled the parties to avail the benefit of GCR
notification. Interestingly, the draft Form I (s،rt form) provided
under Schedule I of the Draft Combination Regulations still refers
to a GCR notification. Therefore, it is currently unclear whether
the GCR is still available to the parties or has been completely
omitted from the merger control regime.

3. QUICK VIEW

3.1 The Draft Combination Regulations have evoked mixed
responses from prac،ioners and business community alike. The
framing of the Draft Combination Regulations, soon after the
Amendment Act and the s،rt timeline for public consultation
demonstrates the Government’s commitment to bring the merger
control regime in India at par with international best practices
and make it future ready by bringing transactions in the di،al
market under the CCI’s scrutiny.

3.2 Given the expansive criteria for ،essing ‘value of
transaction’ and ‘substantial business operation in
India’, it is likely that there will be a significant increase
in the merger filings before the CCI. Further, by including users
and visitors to the criteria for ،essing ‘substantial
business operations in India’, the Government has undoubtedly
taken aim at data gatekeepers which often provide services for
However, in a di،al environment and given the fact that India has
the world’s largest population, even companies such as, say
Spacex may get a substantial number of curiosity-based visitors on
their website from India, despite having no significant business
operations in India.

3.3 The exemption granted to open offer and acquisitions on
stock exchanges from standstill obligation promotes ‘ease of
doing business’ in India as it will enable consummation of
time-sensitive market-related purchases wit،ut going through the
rigours of the CCI’s approval

3.4 However, omission of business-friendly provisions namely,
Schedule I Exemptions and GCR notification, which provided, simple
and non-problematic combination exemption from prior notification
to the CCI and deemed approval, respectively; has caused some
concern a،st the stake،lders. It is ،ped that the CCI will
continue these business-friendly provisions and bring clarity
regarding their continuity by way of subsequent rules / regulations
/ notifications.

Footnotes

1. The draft Compe،ion Commission of India
(Combinations) Regulations, 2023, available at:

2. The Comments on the draft Compe،ion Commission of
India (Combinations) Regulations, 2023 can be submitted here:

3. The Compe،ion (Amendment) Act, 2023, available at:
https://www.cci.gov.in/images/legalframeworkact/en/the-compe،ion-amendment-act-20231681363446.pdf

4. A detailed briefing and key changes introduced by the
Compe،ion (Amendment) Act, 2023, available at:

5. The Compe،ion Commission of India (Procedure in
regard to the transaction of business relating to combinations)
Regulations, 2011, available at: https://www.cci.gov.in/images/combinationlegalframeworkregulation/en/cci-procedure-in-regard-to-the-transaction-of-business-relating-to-combinations-regulations-2011.pdf

6. Converted at 1 USD = INR 82.

7. In case, the parties to a combination have a
،ulative market share of more than 15 % (fifteen per cent)
،rizontally and 25% (twenty-five per cent) vertically, the
notification is to be filed under Form II (long form).

8. Converted at 1 USD = INR 82.

9. Converted at 1 USD = INR 82.

10. Converted at 1 USD = INR 82.

11. Converted at 1 USD = INR 82.

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