Understanding the Competition Act and M&A in India
The Competition Act, 2002 replaced the outdated MRTP Act with the goal of fostering
competition and curbing anti-competitive practices. This Act covers three main areas:
Prohibiting Abuse of Dominant Position: Preventing companies from exploiting
their market dominance to the detriment of competition.
Preventing Anti- Competitive Agreements: Addressing agreements that could
limit market competition.
Regulating Mergers and Acquisitions: Overseeing M&A transactions to ensure
they do not negatively impact market competition.
The Competition Commission of India (CCI) is responsible for scrutinising M&A deals to
prevent adverse effects on market competition. Engaging an experienced merger and
acquisition lawyer becomes crucial during this process, as they help ensure compliance
with all regulatory requirements.
Section 5 & 6 of the Competition Act, 2002 (Mergers & Acquisitions)
Section 5: Combination (Threshold for Mergers & Acquisitions)
This section defines "combinations," which include mergers, acquisitions, or
amalgamations that exceed specified financial thresholds.
1. Assets or Turnover Criteria:
- If the total assets or turnover of the merging entities exceed prescribed limits in India
or globally, they fall under the ambit of the Competition Commission of India (CCI).
2. Types of Combinations: It covers -
- Acquisition of control, shares, voting rights, or assets.
- Mergers or amalgamations that cause a significant change in control.
Section 6: Regulation of Combinations
1. Prohibition of Anti-Competitive Combinations:
- Combinations that have or are likely to have an Appreciable Adverse Effect on
Competition (AAEC) in India are prohibited.
The Competition Act, 2002 replaced the outdated MRTP Act with the goal of fostering
competition and curbing anti-competitive practices. This Act covers three main areas:
Prohibiting Abuse of Dominant Position: Preventing companies from exploiting
their market dominance to the detriment of competition.
Preventing Anti- Competitive Agreements: Addressing agreements that could
limit market competition.
Regulating Mergers and Acquisitions: Overseeing M&A transactions to ensure
they do not negatively impact market competition.
The Competition Commission of India (CCI) is responsible for scrutinising M&A deals to
prevent adverse effects on market competition. Engaging an experienced merger and
acquisition lawyer becomes crucial during this process, as they help ensure compliance
with all regulatory requirements.
Section 5 & 6 of the Competition Act, 2002 (Mergers & Acquisitions)
Section 5: Combination (Threshold for Mergers & Acquisitions)
This section defines "combinations," which include mergers, acquisitions, or
amalgamations that exceed specified financial thresholds.
1. Assets or Turnover Criteria:
- If the total assets or turnover of the merging entities exceed prescribed limits in India
or globally, they fall under the ambit of the Competition Commission of India (CCI).
2. Types of Combinations: It covers -
- Acquisition of control, shares, voting rights, or assets.
- Mergers or amalgamations that cause a significant change in control.
Section 6: Regulation of Combinations
1. Prohibition of Anti-Competitive Combinations:
- Combinations that have or are likely to have an Appreciable Adverse Effect on
Competition (AAEC) in India are prohibited.
