Industry body the Confederation of Indian Industry (CII) today said competition watchdog CCI's approval should not be made mandatory for mergers and amalgamations between group companies.
"While acquisitions of control or shares or voting rights or assets within the same group have been exempted from the notification requirement, mergers or amalgamations have not been specified, which appears to be an oversight," CII said in a statement.
Such mergers do not change the competitive landscape of a market, and "being incapable of causing an appreciable adverse effect on competition should not be subjected to a pre-notification regime", the industry body added.
The Competition Commission of India recently released the new Combinations Regulations paving the path for a full-fledged merger regime in India.
Accordingly, all high-value merger and acquisitions with combined turnover of Rs 4,500 crore or more will require approval of competition watchdog CCI from June 1.
"The government has displayed in action its forward-thinking consultative approach in finalising the Combinations Regulations by accepting many of the CII recommendations presented during dialogue with industry," CII Director General Chandrajit Banerjee said.
CII, however, said that some concerns highlighted by the industry still remain to be unaddressed.
"While there is clarity now on what would constitute a 'combination', transactions which were not intended to be covered by the Competition Act viz. Transactions where control is not being acquired still remain subject to the notification requirement," CII said.
Further, CII suggested that there should be a short and effective period for determination of whether or not a combination would have an appreciable adverse effect on competition.
It also opined that pre-merger discussions would be quite useful to ensure correct interpretation, completeness of filings and consequent speedy clearance of transactions.
Under the regulations, if the joint asset and turnover of the merging entities exceed Rs 1,500 crore and Rs 4,500 crore respectively, the companies will have to seek approval of CCI. In case the asset and turnover of the target company exceed Rs 250 crore and Rs 750 crore respectively, the merger would come under the purview of CCI.
The regulations follow the notification of Section 5 and 6 of the Competition Commission Act, 2002, dealing with mergers and acquisition (M&A) in March by the government.
