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Competition Commission of India

Zomato and Swiggy Deny Antitrust Violations Amidst CCI Investigation Claims

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In response to recent media reports suggesting antitrust violations, food delivery giants Zomato and Swiggy denied any wrongdoing, labeling the claims “misleading.” The reports indicated that the Competition Commission of India (CCI) had initiated an investigation into the business practices of both companies. In a statement to the Bombay Stock Exchange (BSE), Zomato clarified that while the CCI began a preliminary inquiry in April 2022, no final findings or penalties had been issued. According to Zomato, the investigation followed a CCI “Prima Facie Order” from April 2022 that raised concerns regarding platform practices, such as preferential listings of restaurant partners and price parity requirements across platforms. Zomato’s Company Secretary, Sandhya Sethia, emphasized that these practices are in compliance with the Competition Act of 2002 and do not disrupt market competition. Swiggy echoed a similar sentiment, calling the media reports “misleading” and clarifying that the CCI’s inquiry is still in a preliminary stage. Swiggy, which filed details of the investigation in its September 2024 DRHP (Draft Red Herring Prospectus), emphasized that no conclusions have been drawn. The CCI’s Director General is still examining aspects of Swiggy’s operations, including business conduct, and Swiggy expects to submit further responses before a final decision is made. Both companies reaffirmed their dedication to transparency and regulatory compliance. Zomato assured stakeholders that there have been “no further reportable events” since the preliminary inquiry began, while Swiggy pointed out that the investigative process has yet to yield any determinations or actionable orders. This scrutiny follows a 2022 complaint by the National Restaurant Association of India, which alleged that Zomato and Swiggy’s practices restricted competition by requiring price parity from restaurants, impacting both restaurant margins and competitive market conditions. As Swiggy nears the close of its $1.4 billion IPO bids, both companies await further developments from the CCI’s review. Source: Business Standard Photo Credit: Business Standard

Competition Commission of India to Soon Introduce New Merger Regulations

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The Competition Commission of India (CCI) will soon release a new set of merger regulations following the amendments to the competition law enacted last year. These regulations are expected after the model code of conduct is lifted post-elections, as certain provisions of the amended law need to be notified by the government. According to the amendments, CCI approval is required for any transaction valued over ₹2,000 crore. CCI Chairperson Ravneet Kaur announced on Monday that the regulatory framework under the Competition (Amendment) Act, 2023, is in the final stages. This framework incorporates global best practices to address emerging market competition challenges. The new regulations will cover negotiated settlements on anti-competitive practices, merger and acquisition regulations based on deal value, and an expanded leniency scheme to encourage cartels to come forward. The upcoming focus is on merger regulations. The new merger regulations will detail how to assess the transaction value for CCI approval and expedite the merger regulation process by reducing the maximum decision time from 210 days to 150 days. These regulations aim to clarify and streamline the merger approval process, particularly for transactions exceeding ₹2,000 crore, even if they do not meet the traditional asset and sales thresholds. Kaur emphasized that the digital economy’s rise has prompted a global revamp of competition laws. The Ministry of Corporate Affairs is working on a Digital Competition Bill to address systemic digital economy firms’ issues. Public consultations on a draft bill are complete, and inter-ministerial consultations will follow before presenting it to parliament. In addition, CCI is initiating a market study on artificial intelligence (AI) to understand its impact on competition. Kaur highlighted the need to regulate digital markets to prevent dominance by a few companies and address data dominance concerns. Attorney General R. Venkataramani, speaking at an event marking CCI’s 15th foundation day, underscored the importance of regulating data as a new currency. He noted the global regulatory actions against data gatekeepers and the ongoing debate in India over the draft Digital Competition Bill, which will determine CCI’s approach to regulating digital markets.  

Centre Raises Threshold for Merger and Acquisition Vetting by Competition Commission of India

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The Corporate Affairs Ministry has announced revisions to the thresholds for mergers and acquisitions (M&As), altering the criteria for exemption from Competition Commission of India (CCI) approval. Under the new regulations, companies are not obligated to notify the CCI if the target entity’s assets, including subsidiaries, amount to less than Rs 450 crore, with a turnover below Rs 1,250 crore. This represents an increase from the previous thresholds of Rs 350 crore for assets and Rs 1,000 crore for turnover. The Ministry has concurrently revised the ‘de-minimis’ or small target exemption threshold, which absolves certain M&As from CCI scrutiny. This exemption now applies to transactions where the asset value in India does not exceed Rs 350 crore or the revenue from India does not exceed Rs 1,000 crore. Vaibhav Choukse, partner and head of competition law at JSA Advocates and Solicitors, hailed the move as a significant step towards facilitating M&As in India, aligning with the government’s agenda of promoting ease of doing business. He noted the 150% increase in the existing thresholds under Section 5 of the Competition Act and the adjustment of De Minimis thresholds. Amit Agarwal, partner at Nangia & Co LLP, echoed Choukse’s sentiments, emphasizing the positive impact of the revisions on the ease of doing business and the M&A landscape in India. However, analysts caution that raising exemption limits may present challenges, particularly for startups in their initial years, which may not meet the asset or revenue criteria but could contribute substantially to acquiring companies post-deal. The example of Facebook’s acquisition of WhatsApp in 2014, which escaped CCI scrutiny due to threshold limitations, highlights the potential implications for competition in relevant markets. While the revisions aim to streamline M&A processes and foster business growth, they also underscore the need for vigilant oversight to ensure healthy competition and market dynamics are preserved, particularly in the digital sphere where transformative deals can have far-reaching consequences.

RBI Approves Merger of Fincare Small Finance Bank with AU Small Finance Bank

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The Reserve Bank of India (RBI) has given its approval for the merger of Fincare Small Finance Bank Ltd with AU Small Finance Bank Ltd, effective from April 1, 2024. Following the merger, all branches of Fincare Small Finance Bank Ltd will operate as branches of AU Small Finance Bank Ltd. This decision from the RBI comes after the Competition Commission of India (CCI) had previously approved the merger of the two banks. As per the CCI statement, the merger involves Fincare and AU, with AU being the entity resulting from the merger. Shareholders of Fincare will receive shares in the merged entity following the combination. AU Small Finance Bank offers a range of personal and commercial banking services, including deposits, loans, debit and credit card services, institutional banking, and digital banking services. Headquartered in Jaipur, AU Small Finance Bank operates under the AD-II bank category for foreign exchange transactions and provides ancillary services such as the distribution of insurance and investment products like mutual funds. On the other hand, Fincare Small Finance Bank offers deposit services like savings and current accounts, fixed deposits, and recurring deposits, along with lending services such as retail and microfinance loans. Additionally, Fincare provides digital banking services and distributes insurance products. The merger between Fincare Small Finance Bank and AU Small Finance Bank is expected to streamline operations and enhance the range of services offered to customers across the country.