The Ministry of Corporate Affairs has notified a significant amendment on 29 June 2017 (Notification) regarding the time-period within which a transaction is to be notified to the Competition Commission of India (CCI). Parties to a combination are now exempt from filing a notification within 30 days of the execution of the relevant trigger document (Exemption). The Exemption however, remains subject to gun-jumping provisions of the Competition Act, 2002 (as amended) (Act). Gun-jumping refers to the part or complete consummation of a transaction prior to receiving the CCI’s approval. This Exemption is available to parties for a period of 5 years from the date of the Notification (i.e., 29 June 2022) and is not available retrospectively.
Previously, Section 6(2) of the Act required parties to a combination to file the notification before the CCI within 30 calendar days of the “triggering” event. If a party(ies) “failed to provide” the notification within the stipulated time-period, such party(ies) would be penalised upto 1% of the total assets or turnover of the combination, whichever is higher under Section 43A of the Act.
The CCI considered belated filings as a “failure to furnish information on combination” under Section 43A and did not distinguish (explicitly or implicitly) between belated or delayed filings and true “gun-jumping” (i.e. closing the transaction without the CCI approval). The most notable instance of a penalty in case of belated filing is GE/Alstom (C-2015/01/241), wherein the acquirers (General Electric Company, GE Industrial France SAS and GE Energy Europe B.V.) were penalised INR 5 crore.
The Exemption reduces the burden on parties to ensure strict adherence of the 30-day time-period, allowing them to provide comprehensive, and complete notifications to the CCI. This will also be helpful for the CCI’s case teams, requiring lesser time and resources to examine various aspects of the transaction and its impact (actual or potential) in the relevant market in India. The Exemption is also beneficial in case where the precise triggering event is not clear.
The implication of the Exemption in case of pending matters or matters in appeal is not clear. Since the Notification is not retrospective in nature, it is not clear how the CCI would treat belated filings in this light. It is likely, however, that the Notification may be used for persuasive value.
Indeed, this is a welcome step as it aligns the Indian merger control regime with internationally accepted best practices. This will reduce the pressure faced by transacting parties in attempting to adhere to the strict 30-day time period. This will also help parties to submit more comprehensive notifications to the CCI, ultimately leading to fewer invalidations, reducing the burden on the CCI case teams, and faster approvals (hopefully!). In any case, the CCI had been quite accommodating in allowing the notifying parties to supply outstanding information on a later date where the details were not readily available with them on the date of notifying the CCI by way of an undertaking.