CCI has today notified the final merger control regulations

The Competition Commission of India (CCI) has today issued the much awaited merger control regulations (The Competition Commission of India (Procedure in regard to the transaction of business relating to combination) Regulations, 2011). The regulations are a welcome step as India joins a club of 100 other countries that have a merger control regime..The Competition Commission of India (CCI) has today issued the much awaited merger control regulations (The Competition Commission of India (Procedure in regard to the transaction of business relating to combination) Regulations, 2011). The regulations are a welcome step as India joins a club of 100 other countries that have a merger control regime..Under the Indian Competition Act 2002 (the Act) dealing with mandatory notification to the CCI of combinations which exceed prescribed thresholds based on assets or turnover will be in effect from June 1, 2011..Accordingly, once the proposed combination is notified to CCI awaiting period of maximum 210 days will be triggered under the Act during which the parties will be prohibited from implementing the proposed combination until the CCI endorses it by passing an order or the 210 days waiting period expires at which time the transaction is approved..Speaking with Bar & Bench, on the notification of the combination regulations, Senior Partner and Head of the Competition/Antitrust Practice, Pallavi Shroff of Amarchand & Mangaldas said, “The regulations issued today are a very welcome step. The regulations are a substantial improvement from the previous draft. The ball is now in the court of the CCI for their implementation. We sincerely hope that they will follow ‘file, smile, fly’ approach which the CCI Chairman has been stating. It is a very welcome draft”..The final regulations are a marked improvement on the earlier draft regulations, which had been published by the CCI in March, 2011. The regulations issued today provide significant changes from the draft version and provide more clarity on several issues of concern..The first most important change is on the transitional provisions which now provide that Indian merger control will apply only to transactions where binding documents are executed on or after June 1, 2011 or, in the case of mergers and amalgamations, the boards of directors approve the proposal on or after June 1, 2011. Therefore, all the pipeline transactions and those transactions that were signed but not concluded are not notifiable. This is a very welcome change..Second important change is that old schedule 1 provided that certain transactions were notifiable, those are no longer notifiable. There is a whole bunch of transactions that are not notifiable. These include transactions where people are going to acquire below 15 percent just for purposes of investment and where there is no control, those are exempt. If you already have 50 percent share and if you are acquiring more shares unless its resulting in any change in control, otherwise it is not notifiable. Transfer internally within the same group is not notifiable. All other transactions where stocks split, bonus shares, right shares, all of those are no longer notifiable which earlier were..There is another group of transactions where you only have to file a short form and pay a nominal fee of Rs. 50,000. These and all other routine transactions will be reviewed by the CCI in two phases. Phase one would be within 30 days and phase two could go up to 210 days but CCI will endeavour to clear them within 180 days. Even in phase one the regulations have provided, if the company during the investigation realises that there could be problem with the transactions, the parties to the transaction can offer any modification upfront which is a very good move as it saves lot of time. It is a very pragmatic approach..Another major change is that the fees have been reduced substantially. For Form I, it is Rs. 50,000 and for Form II, it is Rs. 10 lakhs. Originally, it was starting from Rs. 10 lakhs and going up to Rs.4o lakhs..In addition, the regulations move a step backwards in terms of dropping provisions relating to pre-merger consultations with the CCI which were present in the March, 2011 draft – this would have assisted both the CCI and filing parties in ensuring that a complete form, which addresses concerns the CCI may have, is filed..Pallavi Shroff added, “What I do expect is that I hope we will come out in the future with something that will tell us how to compute turnover, how to compute assets, what foreign exchange rates will be used, where the conversions are to be done, all those things I think we are still awaiting and I hope we can come out with these guidelines and clarifications quickly”.