A question often vexing private equity players in the Indian market is whether their investments are subject to clearance from the antitrust regulator, the Competition Commission of India (CCI).
One particularly tricky area is with respect to the exemption for purchases of minority stakes characterized as “solely for investment” under item 1 of schedule I of the CCI (Procedure in regard to the Transaction of Business Relating to Combinations) Regulations, 2011 (regulations).
Partner
Samvad Partners
Regulation 4 of the regulations states that certain categories of transactions listed in schedule I are “ordinarily not likely to cause an appreciable adverse effect on competition (AAEC)” and hence notifications for these transactions “need not normally be filed”.
Item 1 to schedule I lists out a category of transactions falling under regulation 4 – the acquisition of shares or voting rights solely as an investment, i.e. less than 25% of the total shares or voting rights of the target, as long as it does not result in the acquisition of control in the target.
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Arjun Krishnan is a partner and Kavita Jitani is a senior associate at Samvad Partners.
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