CCI to check mergers and acquisitions leading to monopolies: Corporate Affairs Minister
April, 23rd 2011
The government today said it will keep an eye on those merger and acquisition deals that create monopolies and impede economic growth.
"The Competition Commission of India (CCI) will check mergers that end up creating monopolies or abuse of dominance harmful to consumers and small producers and impede orderly economic growth," Corporate Affairs Minister (MCA) Murli Deora said at a FICCI event here.
The minister, however, assured the industry that the CCI will "speedily clear" deals that increase efficiencies due to economies of scale, combined production plants, integrating procurement and pooling of R&D resources.
The CCI has notified sections 5 and 6 of the Competition Commission Act, 2002, dealing with mergers and acquisitions (M&A) last month, but it is yet to finalise the rules.
Later on the sidelines of the meet, MCA Secretary D K Mittal said his ministry would finalise rules for corporate mergers and acquisitions by the first week of May, following which it will be mandatory for companies to seek the Commission's approval for M&A deals.
"The notification will be finalised in the first week of May and would be implemented from June 1, 2011," he said.
The norms when implemented from June 1 would require companies to seek CCI's approval for domestic and cross-border M&As.
The CCI is already working with corporate law experts and industry representatives to get their feedback on the draft merger regulations.
According to the Act, companies with a turnover of over Rs 1,500 crore will have to approach the CCI for approval before merging with another firm.
Among other things, CCI would take a prima facie view on the proposed combinations within a month of filing by companies, addressing a major concern of industry about the time limit the body would take to vet mergers.
Also, the maximum time limit the CCI would take to vet mergers has been reduced to 180 days from the earlier 210 days, after facing opposition from the industry.
Only those proposals would need the CCI's nod where the companies have combined assets of Rs 1,000 crore or more, or a combined turnover of Rs 3,000 crore or more.
Also, the target company's net assets have to be a minimum of Rs 200 crore or it should have a turnover of Rs 600 crore for CCI intervention.