CCI amends rules to speed up Mergers and Acquisitions approval
CCI amends rules to speed up Mergers and Acquisitions approval

CCI amends rules to speed up mergers and acquisitions approval for the companies. The Competition Commission of India is vested with the power to regulate the activities of companies. The role of the CCI is very pronounced in business relationships such as mergers and to acquisition and related transaction between companies in India.

The major challenge faced by businesses seeking to combine by way of merger and acquisition in India is the duration of time spent seeking approval from the CCI.

To resolve the issue of unnecessary delay in the grant of approval by the CCI, the CCI regulation governing mergers and acquisition or any form of business combination in India has been reviewed and consequently amended.

The key feature of the amended CCI regulation is the introduction of the “green channel” and the “simplified summary forms”.

The above-mentioned innovations will be briefly discussed in the succeeding headings of this article.

The Green Channel-

The CCI regulation mandates the transacting companies’ i.e. companies seeking to undertake a merger and acquisition to seek and obtain the approval of the CCI once the proposed merger and acquisition is beyond a given benchmark. A prior application for approval in this regard is made to the CCI under a specified form by the companies.

It is conceded that time is of great essence in transactions bothering on mergers and acquisition in India, hence the need to address the issue of unnecessary delay in the procedure.

The Green Channel/Route which is the invention of the recent amendment to the CCI regulation seeks to grant some level of concession to entities seeking to merge where such merger or acquisition involves companies with lesser degree or likelihood of competition.

The concession under the green channel will be extended to companies seeking to merge if:

  1. The companies seeking merger are not involved in the production or provision of similar goods and services.
  2. The companies seeking merger are not involved in any form or stage of production or service in the same production chain.
  3. The companies are not engaged in any form of production or service-based process which complements each

The Simplified Summary Format-

This is the second innovation in the amended CCI regulation. In this regard, the information expected to be supplied and filed by companies seeking to merge or to be acquired is reduced and are to be supplied in summary.

This instant innovation is an outright departure from the provisions in the erstwhile regulation which requires the companies to file a long summary.

The Simplified Summary format merely requires the companies to file a summary which will state as follows:

  1. The nature and purpose of the merger and acquisition,
  2. The name of the parties’ i.e. the companies involved in the merger and acquisition.
  3. The products, services and business undertaking of the companies seeking to combine by way of merger and acquisition.

The introduction of the green channel and the simplified summary format in mergers and acquisitions in the corporate sector of India will ultimately solve the issue of unnecessary delay in the approval stage by the CCI.

It is believed and as stipulated by the amended regulation that once the CCI as the regulatory agency acknowledges the receipt of the application which satisfies the requirement s above it is deemed as approval.

 

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