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Combination Regulations Amended - Are You Affected?
The Competition Commission of India ("CCI") has announced CCI (Procedure in regard to the transaction of business relating to combinations) Amendment Regulations, 2012. Combination Amendment Regulations seek to amend certain provisions of The CCI Regulations, 2011, which are in force since 1 June 2011; and were introduced to supplement the existing Competition Act, 2002. Taxand India provides an analysis of key amendments brought in by Combination Amendment Regulations.
Combination Amendment Regulations clarify certain aspects and have also introduced various procedural changes. Amendments have been made in the following key areas:
Exemption/ Relaxation from applicability of Combination Regulations
1. Direct/ indirect acquisition of non-controlling stake - Increase in limit from 15% to 25%
2. Buyback of shares, amendment to rights issues
3. Intra-group reorganisations (mergers/ demergers)
1. Value of assets/ turnover in a series of transactions followed by a combination
2. Second stage notice (Form II) to be the basis for calculating timelines for passing order
3. Upfront Form II filing "preferable" in certain situations
4. Substantial increase in filing fees
5. Other amendments
Taxand India discusses the amendments and exemption provisions
Combination Amendment Regulations have been released eight months after the introduction of Combination Regulations and seek to plug certain gaps identified during this period. Amendments are basically in the nature of additional exemptions, procedural changes or rectification of minor errors in existing Combination Regulations. The amendment regarding calculation of assets/ turnover for chain transactions is a debatable one, and would need to be analysed in detail, especially by large companies looking to divest non-core/ smaller businesses.
The exponential increase in fees would not be welcomed by corporates (since this fee level had been challenged earlier also during the initial drafting of Combination Regulations), and would result in substantial restructuring costs, even for certain "harmless" combinations, wherein filing is a mere formality, and there is no adverse impact on competition.
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