Big corporate houses in India may not have to live under fear of having to seek the competition watchdogs approval for every small merger and acquisition (M&A) in India or abroad.
The Competition Commission of India (CCI) is now planning to set a turnover limit of Rs 600 crore and asset size limit of Rs 200 crore separately for both the acquiring and target company in an M&A deal. The Competition Act prescribes the minimum India presence or territorial nexus only for the combined entityRs 500 crore assets and Rs 1,500 crore turnover.
The separate thresholds for the acquiring and target companies are now being specified by the Commission under the M&A regulations to be notified shortly. This would help big corporates but would bring all mid-sized M&A deals under the regulatory ambit.
The Act, as it stands now, does not specify separate limits. This had led to big corporate houses such as Tatas, Mahindras and Bharti, among others getting jittery about delays and bureaucratic hassles because the Act allows the regulator as many as 210 days for clearing an M&A proposal.
The competition regulator has, over the last several months, assured the industry that companies with asset value or turnover lower than the limits that are set, would be cleared through a faster clearance route. Having decided on these limits, the government is now finally set to notify the sections that will lay the ground rules for mergers and acquisitions and combinations.
Strong lobby by India Inc had ensured that the government did not notify Section 5 and Section 6 of the Competition Act that relate to M&As and combinations. Sources in the ministry of corporate affairs told The Indian Express that putting such limits will quell the apprehensions of the industry.
The government had last May notified Section 3 and Section 4 of the Act that pertain to abuse of dominance and anti-competitive practices. All major industry chambers such as the Confederation of Indian Industry and Ficci had voiced concerns against the sections 5 and 6 in their original form, terming these as regressive.