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๐“๐ก๐ž ๐‚๐จ๐ฆ๐ฉ๐ž๐ญ๐ข๐ญ๐ข๐จ๐ง ๐€๐œ๐ญ: ๐‚๐ฅ๐š๐ซ๐ข๐Ÿ๐ข๐œ๐š๐ญ๐ข๐จ๐ง๐ฌ ๐จ๐ง ‘๐‚๐จ๐ฆ๐›๐ข๐ง๐š๐ญ๐ข๐จ๐ง๐ฌ’

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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 ๐‚๐จ๐ฆ๐ฉ๐ž๐ญ๐ข๐ญ๐ข๐จ๐ง (๐Œ๐ข๐ง๐ข๐ฆ๐ฎ๐ฆ ๐•๐š๐ฅ๐ฎ๐ž ๐จ๐Ÿ ๐€๐ฌ๐ฌ๐ž๐ญ๐ฌ ๐จ๐ซ ๐“๐ฎ๐ซ๐ง๐จ๐ฏ๐ž๐ซ) ๐‘๐ฎ๐ฅ๐ž๐ฌ, 2024 and ๐‚๐จ๐ฆ๐ฉ๐ž๐ญ๐ข๐ญ๐ข๐จ๐ง (๐‚๐ซ๐ข๐ญ๐ž๐ซ๐ข๐š ๐Ÿ๐จ๐ซ ๐„๐ฑ๐ž๐ฆ๐ฉ๐ญ๐ข๐จ๐ง ๐จ๐Ÿ ๐‚๐จ๐ฆ๐›๐ข๐ง๐š๐ญ๐ข๐จ๐ง๐ฌ) ๐‘๐ฎ๐ฅ๐ž๐ฌ, 2024, providing assessment and criterion of โ€˜combinationโ€™.

๐“๐ก๐ซ๐ž๐ฌ๐ก๐จ๐ฅ๐ ๐„๐ฑ๐ž๐ฆ๐ฉ๐ญ๐ข๐จ๐ง๐ฌ: 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 โ€˜combination.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.

๐‚๐ซ๐ข๐ญ๐ž๐ซ๐ข๐š ๐Ÿ๐จ๐ซ ๐„๐ฑ๐ž๐ฆ๐ฉ๐ญ๐ข๐จ๐ง๐ฌ: The newly notified Competition (Criteria of Combination) Rules, 2024, outline specific situations where combinations are exempt from certain regulatory requirements. These include:

๐‘๐จ๐ฎ๐ญ๐ข๐ง๐ž ๐๐ฎ๐ฌ๐ข๐ง๐ž๐ฌ๐ฌ ๐€๐œ๐ช๐ฎ๐ข๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ: Acquisitions of shares in the ordinary course of business, such as unsubscribed shares by underwriters or mutual funds, are exempted, subject to holding limitations.

๐ˆ๐ง๐ฏ๐ž๐ฌ๐ญ๐ฆ๐ž๐ง๐ญ ๐“๐ก๐ซ๐ž๐ฌ๐ก๐จ๐ฅ๐๐ฌ: Acquisitions of shares or voting rights that do not exceed a 25% threshold by the acquirer are exempt.

๐ˆ๐ง๐œ๐ซ๐ž๐ฆ๐ž๐ง๐ญ๐š๐ฅ ๐€๐œ๐ช๐ฎ๐ข๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ: Additional shares acquired by a party that already holds between 25% and 50% of a companyโ€™s shares, without changing control, are exempt.

๐๐ฎ๐ฌ๐ข๐ง๐ž๐ฌ๐ฌ ๐€๐ฌ๐ฌ๐ž๐ญ๐ฌ: Routine acquisitions of assets like stock or raw materials are excluded from combination definitions.

๐ƒ๐ž๐ฆ๐ž๐ซ๐ ๐ž๐ซ ๐“๐ซ๐š๐ง๐ฌ๐š๐œ๐ญ๐ข๐จ๐ง๐ฌ: Mergers or acquisitions in the context of demergers, where shares are issued proportionally to original shareholders, are exempt.

๐ˆ๐ง๐ญ๐ซ๐š-๐ ๐ซ๐จ๐ฎ๐ฉ ๐Œ๐ž๐ซ๐ ๐ž๐ซ๐ฌ: 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.

Readers are welcome to send their views to Regstreet Law Advisors at info@regstreetlaw.com

Copy of the Notifications are attached herewith.

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