CCI’s M&A Overhaul: Stricter Scrutiny, Faster Approvals Under New Rules

India’s merger and acquisition (M&A) landscape has undergone a significant transformation with the recent amendments stemming from the Competition (Amendment) Act, 2023. Notified on September 9, 2024, these changes introduce stricter regulatory scrutiny while aiming to enhance ease of doing business. The new framework sets clear deal value thresholds, accelerates decision-making processes, and broadens the definition of control, aligning India’s regime with global standards.

Key Highlights of the Revised M&A Framework:

1. Deal Value Thresholds: Under the revised rules, any M&A valued above Rs 2,000 crore ($240 million) must be notified to the Competition Commission of India (CCI), provided the target has “substantial business operations” in India. This includes if the target’s Indian turnover or gross merchandise value (GMV) exceeds Rs 500 crore ($60 million) or constitutes at least 10% of global figures.
2. Expedited Timelines: The CCI’s timeline for reviewing mergers has been shortened. The initial review period has been reduced from 30 working days to 30 calendar days, and the overall review period has been shortened from 210 to 150 days. This move promises faster clearances, benefiting businesses looking for speedier consolidation.
3. Expanded Definition of ‘Control’: The new framework expands the definition of control to include the “ability to exercise material influence” over the management or strategic decisions of another entity. This change may bring more M&A transactions under CCI’s purview, ensuring that influential stakeholders are properly scrutinized.
4. Exemptions for Minority Acquisitions: Acquisitions involving less than 25% of shares or voting rights that do not result in a change of control are now exempt from pre-merger notifications, easing the regulatory burden for smaller or unsolicited acquisitions.
5. Higher Filing Fees: The filing fee for Form I has increased from Rs 20 lakh to Rs 30 lakh, while Form II fees have gone up from Rs 65 lakh to Rs 90 lakh, reflecting the more stringent review processes.
6. Appointment of Monitoring Agencies: To ensure compliance with CCI’s orders, monitoring agencies such as accounting firms and management consultancies can be appointed. These agencies will be responsible for reporting any non-compliance with CCI directives.

India’s revamped M&A regime signifies a new era of accountability, oversight, and efficiency. The introduction of deal value thresholds, expedited timelines, and enhanced exemptions point to a more sophisticated regulatory landscape. While these changes introduce additional compliance layers, they also promote transparency, making India an attractive destination for global and domestic investments. Businesses must adapt to these new rules, navigating both challenges and opportunities to benefit from the more streamlined M&A process.

Source: Business Standard