Changing the M&A game: issues for foreign investors

The Competition Act, 2002, stipulates that the formation of “combinations”, i.e. mergers, acquisitions and amalgamations is to be regulated by the Competition Commission of India (CCI). It also prohibits anti-competitive agreements and abuse of dominant positions. This raises some interesting issues for foreign investors seeking to acquire assets, shares or voting rights in India.

While discussing the procedure for regulation of combinations, this article analyzes the factors that determine whether a combination is prohibited under the act and offers suggestions for foreign investors. While the sections of the act dealing with combinations will come into effect on 1 June 2011, the draft CCI (Combination) Regulations have not yet been finalised.

Regulation of combinations

The Competition Act prohibits combinations that are likely to cause an “appreciable adverse effect on competition” on a relevant market in India. All combinations that are being proposed must be notified to the CCI and approval must be obtained before they take effect.

Simran Dhir and Palash Ranjan Gupta are associates at S&R Associates, a law firm based in New Delhi and Mumbai. They can be contacted at sdhir@snrlaw.in and pgupta@snrlaw.in respectively.