The Competition Commission of India (CCI) on 11 May issued the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (combination regulations). These regulations will now govern the manner in which the CCI will regulate combinations which have caused, or are likely to cause, appreciable adverse effect on competition in India (AAEC).
The combination regulations took effect on 1 June and they supplement the notification of sections 5 and 6 of the Competition Act, 2002. Under section 32 of the Competition Act, the CCI has been conferred with extra-territorial jurisdiction to eliminate practices which have an AAEC. This means that every acquisition where the acquirer or target has assets or a turnover in India may be subject to scrutiny by the CCI.
A safe harbour
The combination regulations clarify that the Competition Act applies only to combinations where a) approval of an merger by the board of directors of the enterprises concerned has been granted on or after 1 June; and b) where the execution of an agreement or other document to acquire shares, voting rights, assets or control has been executed on or after 1 June. The term “other document” has been defined to mean any binding document, by whatever name called, conveying an agreement or decision to acquire control, shares, voting rights or assets.
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The legislative and regulatory update is compiled by Nishith Desai Associates, a Mumbai-based law firm. The authors can be contacted at nishith@nishithdesai.com. Readers should not act on the basis of this information without seeking professional legal advice.
