On 9 October 2018 the Competition Commission of India (CCI) issued a notification which further amended the CCI (Procedure in Regard to the Transaction of Business Relating to Combinations) Regulations 2011.
Following strong opposition from industry groups – including the apex chambers of industry, such as the Confederation of Indian Industries – the CCI has dropped a controversial amendment in the explanation to Item 1 of Schedule I of the regulations. It currently exempts minority acquisitions of less than 10% of total shares or voting rights and treats it as solely an investment, provided that the acquirer does not get a position in the board of directors and does not exercise any preferential voting rights. The amendment was proposed to reduce this to 5% with strong caveats.
This article highlights the notification's most important changes.
The newly inserted Regulation 16A(1) enables parties to the combination to withdraw and refile the notice (either filed voluntarily or under directions of the CCI) with the permission of the CCI prior to the issuance of the show cause notice under Section 29(1) of the Competition Act 2002.
Noticeably, this is in addition to the existing provision, under which if any material change in the notice is filed – which, in the opinion of the CCI, is likely to affect the factors for determining the appreciable adverse effects on competition – the CCI had to invalidate the notice that was already filed, after recording its reasons and after giving the parties an opportunity to be heard. With this amendment, the parties can address the material deficiencies in the notice without facing an invalidation by the CCI. The newly inserted Regulation 16A(2) also provides that in case the parties withdraw a notice and file afresh under Sub-regulation (1), the fee already paid in respect of such notice will be adjusted against the fee payable in respect of the new notice, provided that the refiling is completed within a period of three months.
The amended Regulation 19(2) affords an opportunity to parties to offer voluntary modifications to the combination before the formation of the prima facie opinion by the CCI under Section 29(1) of the Competition Act (ie, prior to issuance of the show cause notice). The newly inserted Regulation 25(1A) provides another opportunity to the parties to offer modifications after the issuance of the show cause notice to remove the competition law concerns raised by the CCI in the show cause notice.
Under the scheme of the Competition Act, there is a deemed approval of a combination if the CCI does not approve or block a combination within 210 days from the date of notice given to the CCI. The amended regulations provide that certain time periods (eg, the 15 days taken by the CCI to evaluate the voluntary modifications offered by parties under Regulations 19(2) and 25(1A)) will be excluded from the 210-day timeline.
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