The Competition Act aims to prevent anti-competitive practices by regulating anti-competitive agreements, abuse of dominant positions, and mergers and acquisitions (combinations) in India. The term “combination” under the Act broadly covers the acquisition of control, shares, voting rights, or assets; control by one enterprise over another in competing businesses; and mergers and amalgamations that meet certain thresholds.
On Sept 9, 2024, the Ministry Of Corporate Affairs (MCA) notified ๐๐จ๐ฆ๐ฉ๐๐ญ๐ข๐ญ๐ข๐จ๐ง (๐๐ข๐ง๐ข๐ฆ๐ฎ๐ฆ ๐๐๐ฅ๐ฎ๐ ๐จ๐ ๐๐ฌ๐ฌ๐๐ญ๐ฌ ๐จ๐ซ ๐๐ฎ๐ซ๐ง๐จ๐ฏ๐๐ซ) ๐๐ฎ๐ฅ๐๐ฌ, 2024 and ๐๐จ๐ฆ๐ฉ๐๐ญ๐ข๐ญ๐ข๐จ๐ง (๐๐ซ๐ข๐ญ๐๐ซ๐ข๐ ๐๐จ๐ซ ๐๐ฑ๐๐ฆ๐ฉ๐ญ๐ข๐จ๐ง ๐จ๐ ๐๐จ๐ฆ๐๐ข๐ง๐๐ญ๐ข๐จ๐ง๐ฌ) ๐๐ฎ๐ฅ๐๐ฌ, 2024, providing assessment and criterion of โcombinationโ.
๐๐ก๐ซ๐๐ฌ๐ก๐จ๐ฅ๐ ๐๐ฑ๐๐ฆ๐ฉ๐ญ๐ข๐จ๐ง๐ฌ: Under Section 5(e) of the Competition (Amendment) Act, 2023, if the assets or turnover of a company involved in a transaction fall below certain limits, the transaction will not be considered a โcombination.โ According to the Competition (Minimum Value of Assets or Turnover) Rules, 2024, transactions involving assets valued at Rs. 450 crore or less, or turnover of Rs. 1,250 crore or less, are exempt from being classified as combinations.
๐๐ซ๐ข๐ญ๐๐ซ๐ข๐ ๐๐จ๐ซ ๐๐ฑ๐๐ฆ๐ฉ๐ญ๐ข๐จ๐ง๐ฌ: The newly notified Competition (Criteria of Combination) Rules, 2024, outline specific situations where combinations are exempt from certain regulatory requirements. These include:
๐๐จ๐ฎ๐ญ๐ข๐ง๐ ๐๐ฎ๐ฌ๐ข๐ง๐๐ฌ๐ฌ ๐๐๐ช๐ฎ๐ข๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ: Acquisitions of shares in the ordinary course of business, such as unsubscribed shares by underwriters or mutual funds, are exempted, subject to holding limitations.
๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐ก๐ซ๐๐ฌ๐ก๐จ๐ฅ๐๐ฌ: Acquisitions of shares or voting rights that do not exceed a 25% threshold by the acquirer are exempt.
๐๐ง๐๐ซ๐๐ฆ๐๐ง๐ญ๐๐ฅ ๐๐๐ช๐ฎ๐ข๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ: Additional shares acquired by a party that already holds between 25% and 50% of a companyโs shares, without changing control, are exempt.
๐๐ฎ๐ฌ๐ข๐ง๐๐ฌ๐ฌ ๐๐ฌ๐ฌ๐๐ญ๐ฌ: Routine acquisitions of assets like stock or raw materials are excluded from combination definitions.
๐๐๐ฆ๐๐ซ๐ ๐๐ซ ๐๐ซ๐๐ง๐ฌ๐๐๐ญ๐ข๐จ๐ง๐ฌ: Mergers or acquisitions in the context of demergers, where shares are issued proportionally to original shareholders, are exempt.
๐๐ง๐ญ๐ซ๐-๐ ๐ซ๐จ๐ฎ๐ฉ ๐๐๐ซ๐ ๐๐ซ๐ฌ: Mergers or acquisitions within the same group that do not change control are also exempt.
These notifications provide greater clarity, allowing for smoother operational adjustments without triggering regulatory scrutiny of Competition Commission Of India.
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Copy of the Notifications are attached herewith.