Rudresh SinghPartner
Reshabh JunejaCounsel
Divye SharmaCounsel
Key Developments
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Major changes made to the merger control regime in India to streamline the merger review process
India’s antitrust regulator, the Competition Commission of India (CCI), in its attempt to tackle the changing dynamics of the Indian markets and industries, has recently revamped the merger control regime. This came in tandem with the notification of certain rules and remaining provisions of the Competition (Amendment) Act, 2023 by the Ministry of Corporate Affairs.
In particular, the CCI notified the Competition Commission of India (Combinations) Regulations, 2024 effective from 10 September 2024. These regulations provide guidance on the Deal Value Thresholds (DVT) introduced through amendments to the Competition Act, 2002 (Act). Under the new DVT regime, all transactions with a value exceeding INR 2,000 crore/INR 20 billion (approx. USD 238 million) including direct, indirect, immediate and deferred consideration, and where the target has ‘substantial business operations’ in India, now mandatorily require prior approval from the CCI, even if they can otherwise benefit from the de-minimis exemption.
Additionally, the timelines for the CCI to complete merger reviews have been reduced to expedite the approval process, and stock market acquisitions, open offers, and public acquisitions no longer require prior approval of the CCI, subject to certain conditions. The existing concepts of de minimis exemption and deemed approval under the Green Channel route have now been codified.
These developments represent progress in streamlining the merger control regime, making it more comprehensive by capturing transactions that previously qualified for exemptions under the financial threshold test.
(To read our detailed update on these developments, click here.)
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Competition Commission of India’s general regulations revised to increase transparency, compliance and monitoring
On 17 September 2024, the CCI notified the amended Competition Commission of India (General) Regulations, 2024 (General Regulations). The key amendments are:
- The Director General (DG) is now required to offer an opportunity of cross-examination to the party against whom evidence is being given, if the DG is relying on the evidence led by way of oral submissions in the investigation.
- In addition to digital signatures, electronic signatures are now accepted while filing documents before the CCI and the practice of serving documents over emails has been formalised.
- Interlocutory applications, i.e., applications filed during the pendency of a matter, and miscellaneous applications, i.e., applications filed after passing of final order in a matter under Section 19 of the Act, have been introduced.
- The CCI is now empowered to appoint a third-party agency to monitor and scrutinise non-compliance of the CCI’s orders, such as in matters of settlement, commitment or modifications imposed in combinations.
- The timeline for passing a final order where an interim relief has been granted has been increased to 180 days from the previous 90 days timeline, along with revised timelines for submission of the investigation report, submission of objections or comments to the investigation report, etc.
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Director General directed to recall investigation reports due to confidentiality concerns
In an unusual development, CCI has directed the DG to recall investigation reports (DGR) issued to the parties in an investigation into Apple’s alleged abuse of dominance in the app marketplace. This order was passed after Apple complained that the DGRs contained Commercially Sensitive Information (CSI) related to revenue and market share, which was leaked to news agencies.
The DGRs were submitted by the DG in the investigation based on the information filed by Together We Fight Society in 2021 alleging abuse of dominant position by Apple in the app marketplace space due to its App Store policies. On 31 December 2021, the CCI had ordered the DG to conduct an investigation after it found Apple to be prima facie dominant in the market for App Stores for iOS in India and imposing restrictive conditions on developers through App Store Review Guidelines, charging excessive commission, mandating in-app purchases and tying App Store to in-app purchases.
The CCI will likely provide fresh DGRs to the parties after redacting CSI. This may prolong the investigation period which has been ongoing since 2021.
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High Courts increase scrutiny of antitrust investigations to ensure procedural compliance
This quarter observed an increasing trend of High Courts intervening in or scrutinising antitrust investigations ordered by the CCI due to procedural lapses and non-compliance with the principles of natural justice. In three separate cases, High Courts have analysed the conduct of the CCI and the DG and have quashed investigations or issued interim stays.
- Investigation against Flipkart and Amazon stayed: On 27 September 2024, the Karnataka High Court issued an interim stay in the investigation against Flipkart and Amazon. Sellers on Amazon and Flipkart had approached the High Court after the DG altered their status from third parties to opposite parties in the investigation report without seeking necessary permission from CCI, as required under the scheme of the Act.
- Cartel investigation against cement companies quashed: On 30 August 2024, the Gauhati High Court quashed CCI’s investigation into three cement companies (Calcom Cement India Limited, TOPCEM India and Star Cement Limited) for alleged cartelisation and abuse of dominance. The companies were being investigated by the DG after the CCI formed a prima facie view that the companies had indulged in cartelisation. CCI had also imposed a penalty of INR 5,00,000 on Star Cement Limited for not providing complete information to the DG during the investigation. On an examination of the information, the High Court found that there was no uniform increase in the prices of cement and simultaneous increase in prices did not necessarily mean ‘meeting of minds’ or ‘existence of an agreement’, which is essential in cases of cartelisation. Accordingly, the High Court opined that the information on the basis of which the CCI order directing the DG to investigate was passed did not contain evidence to form a prima facie opinion of contravention under the Act.
Investigation against JCB India quashed in light of mediation settlement: On 14 August 2024, the Delhi High Court quashed the DG investigation against JCB India Limited (JCB) in light of the mediation settlement reached between the parties.
JCB and Bull Machines Private Ltd. (BMPL) were engaged in an intellectual property (IP) suit, initiated by JCB. During the pendency of the suit, BMPL alleged before the CCI that the IP suit initiated by JCB was mala fide, and a case of predatory litigation to deny market access to BMPL. The CCI had passed a prima facie order directing an inquiry into JCB’s conduct and its alleged abuse of dominance by denying BMPL market access. Challenging the lack of due process before the High Court, JCB contended that CCI could not consider a suit as sham or predatory litigation before such suit has been decided on its merits. The High Court noted that mediation processes and settlements have to be recognised and acknowledged by all courts/fora where disputes are pending and regulatory authorities such as the CCI are no exception. If the CCI’s inquiry was allowed to continue after the settlement had been reached, the settlement itself could be jeopardised, dissuading parties from opting for mediation in the first instance. The High Court set aside the prima facie order and terminated the CCI proceedings.
With the overhaul of the provisions of the Act and the regulations under it, short term uncertainty with respect to merger activity is expected in the near future as parties will be required to reassess the notifiability of ongoing transactions and revisit how transactions in the pipeline are to be evaluated. Further, the amendments to the General Regulations aim to streamline the procedural aspects of contentious and non-contentious proceedings before the CCI and appellate authorities. Overall, the amendments introduced codify the existing decisional practice of the CCI.
