The Competition Commission of India (CCI) on February 24, 2012 notified the amendments to the merger control regulations. CCI had notified the merger control regulations last year on June 1, 2011..The Competition Commission of India (CCI) on February 24, 2012 notified the amendments to the merger control regulations. CCI had notified the merger control regulations last year on June 1, 2011..Some of the key changes are set out below:.The shareholding limit for exempt acquisitions has been raised from 15% to 25%, bringing it in line with the new SEBI takeover regulations..The acquisition of shares or voting rights pursuant to buy-backs, so long as such an acquisition is not leading to control, would not require filling with the CCI..Intra-group mergers and amalgamations involving wholly owned subsidiaries have been exempted..There is a substantial increase in the filing fees for both Form I and Form II. The filing fee for form I has been increased from Rs.50,000 to Rs. 10 lakh and the fee for form II has been increased from Rs.10 lakh to Rs. 40 lakh..Prior to the amendment, Form I had two parts; Part A and Part B. Part A dealt with transactions, which did not lead to any competition concerns such as an acquisition over an enterprise by liquidator or an acquisition by inheritance/gift. In Part A of Form I only basic details were required to be submitted by the parties such as name, address, brief details of the transaction. However, CCI has now removed Part A from Form I, therefore, parties will now be required to file Part B of Form I..Bar & Bench spoke to Amarchand Mangaldas Senior Partner and Head of the Competition/Antitrust Practice, Pallavi Shroff on the amendments to the Merger control regime. .Amendments are a mixed bag; with some good and some not so good..Increase in filing fee.The first not so good amendment is the increase in the fees from Rs. 50,000 to Rs. 10 lakh, which is quite steep. Originally I believe similar fee structure was proposed by CCI but when objections were raised, they had brought it down to Rs. 50,000. However, not even a year has gone by and the CCI has jacked it up again to Rs. 10 lakh..Slump Sales .CCI has clarified that if you are selling a unit or a division and you put it as a wholly owned subsidiary in a group company and then you invite investors to invest in the new company (like what people do when they hive off the businesses) then, in such a scenario, one has to notify if the prescribed thresholds are crossed because one would not look at new entity alone but will compute the assets and turnover of the seller. In a way it provides clarity because there was lot of uncertainty on what needs to be computed, while determing thresholds, but that is not in line with how internationally it is viewed..In most competition law regimes, the assets and turnover of seller (which is hiving off its business) are irrelevant and the competition law assessment is restricted to the assets, turnover and market power of the businesses being acquired and the acquirer. .Intra-group Mergers .Another big change is with regard to Intra Group mergers. The attempt was to give relief but they have only given limited relief in only wholly owned subsidiaries. But, the way the CCI has drafted the new exemption is bit unclear and it leads to certain anomalous situations where some companies can be allowed and some cannot be allowed. It could have been better worded. They wanted to make it liberal but the way it has come out, it is not entirely clear. But yes, there is some relief..Increase in shareholding limit for exempt acquisitions.CCI has raised the shareholding limit from 15% to 25%. The original regulation says when somebody acquires not more than 15% but new regulation says “does not entitle the acquirer to hold twenty five per cent (25%)”. This word “entitle” would mean that put and call options, convertibles etc. that gives you entitlement also needs to be calculated in that 25%..That is a very big and important change. In a way CCI is trying to expand its base and the scope of work coming to them..Other suggestions .CCI could have done a lot more to give clarity to the industry. The most important thing that CCI should come out with is how to compute assets and turnover. In some cases, that are on the borderline, it makes a lot of difference on how compution is to be done.
The Competition Commission of India (CCI) on February 24, 2012 notified the amendments to the merger control regulations. CCI had notified the merger control regulations last year on June 1, 2011..The Competition Commission of India (CCI) on February 24, 2012 notified the amendments to the merger control regulations. CCI had notified the merger control regulations last year on June 1, 2011..Some of the key changes are set out below:.The shareholding limit for exempt acquisitions has been raised from 15% to 25%, bringing it in line with the new SEBI takeover regulations..The acquisition of shares or voting rights pursuant to buy-backs, so long as such an acquisition is not leading to control, would not require filling with the CCI..Intra-group mergers and amalgamations involving wholly owned subsidiaries have been exempted..There is a substantial increase in the filing fees for both Form I and Form II. The filing fee for form I has been increased from Rs.50,000 to Rs. 10 lakh and the fee for form II has been increased from Rs.10 lakh to Rs. 40 lakh..Prior to the amendment, Form I had two parts; Part A and Part B. Part A dealt with transactions, which did not lead to any competition concerns such as an acquisition over an enterprise by liquidator or an acquisition by inheritance/gift. In Part A of Form I only basic details were required to be submitted by the parties such as name, address, brief details of the transaction. However, CCI has now removed Part A from Form I, therefore, parties will now be required to file Part B of Form I..Bar & Bench spoke to Amarchand Mangaldas Senior Partner and Head of the Competition/Antitrust Practice, Pallavi Shroff on the amendments to the Merger control regime. .Amendments are a mixed bag; with some good and some not so good..Increase in filing fee.The first not so good amendment is the increase in the fees from Rs. 50,000 to Rs. 10 lakh, which is quite steep. Originally I believe similar fee structure was proposed by CCI but when objections were raised, they had brought it down to Rs. 50,000. However, not even a year has gone by and the CCI has jacked it up again to Rs. 10 lakh..Slump Sales .CCI has clarified that if you are selling a unit or a division and you put it as a wholly owned subsidiary in a group company and then you invite investors to invest in the new company (like what people do when they hive off the businesses) then, in such a scenario, one has to notify if the prescribed thresholds are crossed because one would not look at new entity alone but will compute the assets and turnover of the seller. In a way it provides clarity because there was lot of uncertainty on what needs to be computed, while determing thresholds, but that is not in line with how internationally it is viewed..In most competition law regimes, the assets and turnover of seller (which is hiving off its business) are irrelevant and the competition law assessment is restricted to the assets, turnover and market power of the businesses being acquired and the acquirer. .Intra-group Mergers .Another big change is with regard to Intra Group mergers. The attempt was to give relief but they have only given limited relief in only wholly owned subsidiaries. But, the way the CCI has drafted the new exemption is bit unclear and it leads to certain anomalous situations where some companies can be allowed and some cannot be allowed. It could have been better worded. They wanted to make it liberal but the way it has come out, it is not entirely clear. But yes, there is some relief..Increase in shareholding limit for exempt acquisitions.CCI has raised the shareholding limit from 15% to 25%. The original regulation says when somebody acquires not more than 15% but new regulation says “does not entitle the acquirer to hold twenty five per cent (25%)”. This word “entitle” would mean that put and call options, convertibles etc. that gives you entitlement also needs to be calculated in that 25%..That is a very big and important change. In a way CCI is trying to expand its base and the scope of work coming to them..Other suggestions .CCI could have done a lot more to give clarity to the industry. The most important thing that CCI should come out with is how to compute assets and turnover. In some cases, that are on the borderline, it makes a lot of difference on how compution is to be done.