CCI to enforce stricter M&A disclosure requirements starting May 1

Cos to disclose "complimentary linkage" between them and their impact on market, provide data of past 5 yrs on market size, market share of parties and also of competitors

Companies planning for merger and acquisition (M&A) will have to disclose the extent of “complimentary linkages” between them and their impact on the market under the revised reporting requirement of the Competition Commission of India (CCI). The changes will come into effect from May 1.

The entities may also have to provide market facing data of the past five years with respect to their market size, market share of the parties and also the competitors along with customers and suppliers. At present they seek data for only one year.

The anti-trust watchdog has amended the Form-II--typically for cases requiring detailed examination to assess the likely effect of the combination on competition in India.

In the case of less significant deals, Form-I, or short form, is filed that seeks basic information of mergers and queries are lesser and generic.

"The amendment to the form-II is aimed to remove duplicity and limit the information requirement so that they remain focused and relevant to the objective of assessment of a merger, suitably clustering the information on common subject, streamlining the flow of information for better navigation and appreciation of material furnished in the notification,'' CCI said on Monday.

Welcoming the move, Vaibhav Choukse, partner (head of practice) – Competition Law, said that this is likely to make the merger filing procedures more time efficient and less cumbersome for the parties as well as for the CCI.

Talking about the key changes, Choukse pointed out the concentration analysis based on four-firm concentration index (CR-4), and said that the concentration ratio for the top four firms in a given relevant market has also been introduced.

The amendment has come at a time when CCI having a legal tussle in the Amazon-Future deal, where it had suspended the deal for non-disclosure of information Industry bodies learnt to reach out to the competition watchdog to seek clarity on disclosures to ensure M&A transactions do not face such issues.

The competition regulator said the amendment revises the content and format of information that the parties to a combination used to file under section 6(2), where the post-combination market share exceeds 15 per cent in cases of horizontal overlap and 25 per cent in cases of vertical interface.

Noting that the revision in the long form has been undertaken without sacrificing the cause of merger regulation, the CCI said the revision is intended to strike a balance between facilitation and enforcement functions and create a culture of compliance.