Notification of Merger Review Provisions under Competition Law

(The following post has been contributed by Rahul Singh, Assistant Professor, National Law School of India University, Bangalore (on leave) and Senior Associate, Trilegal) The Ministry of Corporate Affairs (MCA), Government of India has recently notified the provisions for regulation of combination (commonly known as "merger review provisions") under the Competition Act, 2002. The Competition Act, 2002 was partially enforced on 20 May, 2009 whereby the provisions relating to anti-competitive agreements and abuse of dominant position were notified (and yet merger control provisions were not notified). The Ministry of Corporate Affairs, Government of India has now notified that sections 5, 6, 20, 29, 30 and 31, dealing with merger control, will come into force on 1 June, 2011. With the enforcement of these sections, all mergers, amalgamations and/or acquisitions falling within the thresholds indicated in section 5 of the Competition Act, 2002 ("Combination") will require prior approval of the Competition Commission of India. Four separate notifications relating to different aspects of merger control have been issued. The salient features of the notification are the following: I. Effective Date: Appointment of June 1, 2011 as the date on which sections 5, 6, 20, 29, 30 and 31 of the Competition Act, 2002 will come into force; II. Monetary Threshold Requirements: Enhancement, on the basis of the wholesale price index, of the value of assets and the value of turnover, by 50% for the purposes of section 5 of the Competition Act, 2002; III. Target entity: Exemption for an enterprise, whose control, shares, voting rights or assets are being acquired has assets of the value of not more than Rs 250 crores (USD 55 million approx) or turnover of not more than Rs 750 crores (USD 165 million approx) from the provisions of section 5 of the Competition Act, 2002 for a period of five years; IV. Group: Exemption for the 'group' exercising less than 50% of voting rights in other enterprise from the provisions of section 5 of the Competition Act, 2002 for a period of five years. The notifications are available on MCA website. The notifications issued by MCA, however, are unsigned and undated. Hence there is a prevailing confusion about the exact legal status of the notification. The notifications have also been uploaded on CCI website. – Rahul Singh

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