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The proposal to reduce timelines for processing M&A filings by CCI from existing 210 days to 150 days came in for intense scrutiny and heated discussion during meetings of Parliamentary Standing Committee on Finance, which examined the Competition Amendment Bill 2022.
This is reflected in the Parliamentary Panel’s report that was tabled in Lok Sabha on December 13.
It also comes at a time when CCI is fighting (with its back to the wall) a lonely battle on stricter timelines being imposed in law on the competition watchdog.
It is interesting to note that the slew of reforms in the competition law is not being backed by measures to empower CCI to have adequate manpower and get infrastructure issues sorted, economy watchers said.
The competition watchdog is still faced with staffing and infrastructure issues. CCI will not be going to deliver on better timelines if it is not going to have quorum, desired expertise in taxation (NAA recently got merged with CCI) and a full-fledged chairperson, Competition law experts said.
Working Day vs Calendar Days
Justifying the rationale for the amendment, Ministry of Corporate Affairs (MCA) informed the House Panel that the proposal is to provide regulatory certainty to the businesses.
“In view of making the assessment for combinations time-bound and swift, the overall time-limit for such assessment is sought to be reduced to 150 days from the existing 210 days,” an MCA official said. The MCA is of the view that revised timelines with mention of days[calendar days] in place of working days, will serve the purpose of approval of combinations (M&As) in time”
What added discomfiture to CCI was the submission of MCA to the Panel (when MCA argued before the Panel) that “The Commission has maintained that approval is accorded generally within 17-18 days”.
This invited a rebuttal from CCI and the Acting Chairperson of CCI pointed out to the Committee that “…it was 17 average working days and average included something knows as Green Channel, which we introduced through regulation which is now coming in through the Bill.
“It is the deemed approval on the date of filing. Including that and removing the stop clocks, this was an average time period of 17 working days…, Yes, it would be difficult to do it in 20 calendar days because the parties also require time to respond appropriately... that requires more than 20 days. Let us say it is a foreign company acquisition, it takes some time. There are time factors. There are holiday factors at the end of the world. So, the 20-day calendar limit then becomes very tight for even the parties to respond”.
On this issue, stakeholders supported CCI stance by pointing out that “Whilst the intent of this proposed amendment (i.e. to facilitate expeditious approval of combinations) is laudable, such significantly compressed timelines could give rise to certain issues. For instance, this could significantly increase the pressure on the CCI in terms of their resources and bandwidth. It could also lead to issue of several Request For Information (RFIs) from the case team(s) simply in order to stop the clock and to buy more time — which would, in turn, add to the parties’ burden and could subsequently also lead to a greater number of combination filings being invalidated.”
ALL EYES ON FM
The Ministry of Corporate Affairs headed by Finance Minister Nirmala Sitharaman would now examine the recommendations of the Committee and the revamped Bill is likely to be taken up for consideration and passage in the Budget Session only, as lot of tweaks and legal vetting may be required, if recommendations are finally accepted by the government.
The Committee, finally, agreed with CCI and stakeholders and noted that the reduced timelines will put the authority in a difficult and onerous position. The Committee accordingly was of the opinion that reducing the timeline can be burdensome for an already understaffed Commission. “The current prima facie opinion timeline and that of passing the order for approval of combinations, should remain unchanged,” the Committee had concluded in its report.
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