CCI to get more teeth to regulate tech M&As
NEW DELHI: The Competition Commission of India (CCI) is set to get more powers to oversee mergers and acquisitions involving technology companies, which are currently out of its purview. The regulator may also see changes in its structure and functioning to ensure fair practices when it comes to scrutinizing business processes.
The ministry of corporate affairs on Friday sought public comments on the proposed Competition Amendment Bill, 2020, saying the primary idea was to make substantive and procedural changes to the law. It has given a two-week window for comments.
Experts said the Bill also seeks to streamline CCI’s administration, give faster clearance to M&A deals and fill certain gaps in the statute.
According to the proposed Bill, the Centre will also have the option to prescribe new criteria for mergers, other than the asset size and revenue of companies—so far the only criteria for competition scrutiny. The existing rules, according to the ministry, were not adequate as newage technology companies have huge valuations, but their assets and turnover in India keep them out of the purview of the competition law.
Mint reported on 12 January quoting CCI chairman Ashok Kumar Gupta that the government is likely to insert an enabling provision in the Competition Act to regulate global M&As among technology giants.
Facebook’s $19 billion acquisition of WhatsApp in 2014, for instance, escaped CCI assessment.
The fulfilment of the new criteria to be specified “shall cause any acquisition of control, shares, voting rights or assets, merger or amalgamation to be deemed to be a combination under this section,” says the proposed Bill. Such deemed combinations have to seek CCI’s clearance.
According to Charanya L., partner, Lakshmikumaran and Sridharan Attorneys, the Bill proposes a clearer definition of the word ‘control’.
“It is a forward-looking amendment. The Bill also proposes that it is mandatory for the Commission to give parties to a combination an opportunity for being heard in case any adverse order is going to be passed. This is a positive development. The Bill also seeks to reduce the deemed approval period of transactions to 150 days from 210 days earlier, which is beneficial for businesses entering into mergers and acquisitions.”