Last September, the Parliament, quietly and that too without much debate, passed the Competition (Amendment) Act 2007 by altering the Competition Act of 2002. As per the new law, it is mandatory to pre-notify all the upcoming mergers whose combined assets or turnover surpass certain specified threshold limits. However, the India Inc. and the industry chambers are up in arms against this new act, and they fear that it could lead to increased interference by the bureaucracy in corporate affairs and unnecessary delays in M&A deals. On the other side, the Ministry of Company Affairs (MCA) contends that, given the widespread cartelization in many industries, India also needs its own version of competition law like many of its Western counterparts. To get the right perspectives and to understand the finer aspects of the law, The Analyst invited a few experts—Amrish Shah, Executive Director, Mergers & Acquisitions (Tax), PwC; Harish HV, Partner, National Management, Grant Thornton; and Hemant Batra, Senior Partner, Kaden Boriss Partners—to share their views.

India has set ambitious growth goals in the last decade or so and has achieved them too. Size has become the theme recently. With the globalization of Indian economy, it is essential to dovetail regulations, keeping in mind similar legislations prevailing in other economies.It is the right time to introduce a governing body which keeps a watchful eye on market happenings, not with the intention of controlling, but with the intention of establishing rules and establishing a competitive environment with relevant freedom of entry and exit.

Small companies of large groups: A small-sized company, which belongs to a group crossing the threshold, will have to go through the same lengthy and expensive process of seeking approval from the CCI if it decides on an acquisition, even if the small company operates in an altogether different industry from that in which its group dominates. Innumerable group companies will come under the CCI lens as a result. Increase in promoter holding: Transactions that constitute an increase in shareholding by a promoter of a listed public company (including intra-group combinations, mergers, demergers, reorganizations and other similar transactions) is also covered. These transactions are exempted under the Sebi Takeover Code.

The Analyst Magazine, Competition Amendment Act, Mergers & Acquisitions, Indian Economy, Globalization, Merger Agreements, Amalgamation process, Indian Economy, Foreign direct Investment, FDI, Federal Trade Commission, MRTP Act, Indian industries, Global Environment.