Revising the merger control regime in India, the Ministry of Corporate Affairs on September 10 implemented certain provisions of the Competition Act, 2002 and Competition (Amendment) Act, 2023, and the Competition Commission of India (Combinations) Regulations, 2024. This action introduces the concept of a deal value threshold (DVT) in mergers, establishing criteria that determine whether prior approval of the Competition Commission of India (CCI) will be required.
DVT requires the prior approval of CCI for a transaction with a value (including direct, indirect, immediate, and deferred consideration) exceeding INR 2,000 crore (approximately $238 million) where the target has “substantial business operations” in India. CCI approval is required even in cases where the transaction would fall within the de minimis exemption.
A target is considered to have substantial business operations in India if it meets any of the following thresholds:
De minimis exemption is an exemption from obtaining CCI approval for targets with turnover of less than INR 1250 crores (approximately $149 million) or with assets in India less than INR 450 crores (approximately 454 million) in the financial year preceding the transaction.
We expect companies looking to acquire targets in India to face higher regulatory scrutiny. The applicability of the newly introduced rules to companies, particularly companies in the digital space, are yet to be tested and could present challenges.
This article is prepared for the general information of interested persons. It is not comprehensive in nature and should not be regarded as legal advice. We are not permitted to advise on the laws of India, and should such advice be required we would work alongside an Indian law firm.
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*A solicitor of Morgan Lewis Stamford LLC, a Singapore law corporation affiliated with Morgan, Lewis & Bockius LLP