After a gap of over three months, the Competition Commission of India (CCI) has resumed assessing mergers and acquisition deals, invoking the ‘doctrine of necessity’. At a marathon meeting on Thursday, as many as six M&A deals were approved, sources close to the development said. 

Both the Attorney General of India and the Corporate Affairs Ministry (MCA) had recently given their nod for the Competition watchdog to invoke the ‘doctrine of necessity’ to get around the lack of quorum in the CCI for over three months, which had put various PE/VC and FDI deals besides insolvency resolutions in limbo. Around 20 M&A deals worth $ 1.5 billion are on hold since October 26 last year when Ashok Kumar Gupta, the then Chairperson demitted office leaving CCI without adequate numbers to operate. 

Currently, CCI has only two members with one of them doubling up as Acting Chairperson. The quorum for approval of M&A deals requires a minimum of three members.

On Thursday, the proposals that got CCI nod are Ardor Holdings II subscription of Compulsorily Convertible Preference shares of  Hero Future Energies (HFE), an IPP and the renewable energy arm of the Hero Group; acquisition of upto 25 per cent shareholding in HPPL by National Investment and Infrastructure Fund and proposed merger of HIPL into HPPL;  acquisition of 20 per cent equity share capital of Shobhana Kamineni through Prime Time Logistics Technologies; internal restructuring involving certain subsidiaries of Keimed Private Ltd and acquisition of 100 percent equity and preference shares of Lanco Anpara Power Limited by Megha Engineering and Infrastructure Limited.

It maybe recalled that apex industry chambers had written to the government recently, highlighting that delays in M&A approvals was having significant impact on investor confidence in India. 

They had highlighted that time is of the essence for these transactions and that timely completion of transactions had been jeopardised on account of approval delays from CCI, with some cases running the risk of potentially getting abandoned.

Legal experts pointed out that it is not uncommon for regulatory and adjudicatory bodies to be without the requisite quorum as the Governments often delay appointments to such bodies. 

To overcome the vacuum created by vacancies, constitutional courts have invoked ‘doctrine of necessity’ to enable regulators to carry out essential regulatory and adjudicatory functions, they had submitted.

To resolve the absence of quorum, the Centre had also received multiple representations from stakeholders calling for promulgation of an Ordinance to amend competition law to dispense with quorum requirement. 

Acquisition approval

The CCI also on Thursday approved the acquisition of the textile effects business of Huntsman International by Archroma Operations S.à.r.l. Archroma is incorporated under the laws of Luxembourg. It manufacturers (i) dyes, (ii) pigments, (iii) emulsions and (iv) surface active chemicals used in the textile, paper, coatings, construction and adhesive industries.