M&As: Anticipated ‘deal value threshold’ norms Imminent, says CCI chief Ravneet Kaur 

The Competition Commission of India (CCI) is set to notify new merger control regulations that would require certain offshore digital transactions with a value of more than ₹2,000 crore (about $242 million) to obtain its prior approval before heading towards combination, a top official said.

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“We are now in the process of notifying new merger control regulations,” Ravneet Kaur, Chairperson, CCI, said in her address at the 15th Annual Day event of the CCI in the Capital.

Her remarks are significant as it indicated that the Corporate Affairs Ministry (MCA) would soon issue the widely expected revised and updated merger control rules under the Competition (amendment) Act 2023. 

The Ministry will issue the rules after the end of the Model Code of Conduct for the ongoing general elections, sources said. 

The CCI regulation would spell out the necessary implementing framework for the amendments to the merger control regime introduced in 2023, which has so far not been brought into effect. It is expected to specify the procedure around ‘deal value threshold’ provision implementation.

This deal value threshold provision —introduced in the Competition (amendment) Act 2023 — is expected to have the most impact on high profile transactions in the evolving digital industry, as well as new age enterprises involved in M&A transactions. 

The Competition (amendment) Act 2023 had received Presidential assent on April 11 last year.

Last September, the CCI had come up with draft regulations that sought stakeholders views on how ‘India nexus’ (Significant Business Operations) be determined for trigger of the ‘deal value threshold’ provisions.

To determine SBO in India, the CCI’s draft regulations had outlined three key criteria: the number of users, subscribers, customers, or visitors; gross merchandise value; and turnover. If any of these criteria exceed 10 per cent of the global figures during the twelve months preceding the relevant date, the transaction is considered to have SBO in India, necessitating merger control reporting.

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Industry is keenly awaiting the final norms on how the parameters and perimeters on which “India nexus” will be determined. 

Digital markets 

Kaur highlighted the challenges posed by digital markets to competition authorities including Issues like algorithmic collusion, where algorithms might implicitly coordinate prices or market strategies without explicit human direction. 

On dynamic pricing, Kaur said: “While dynamic pricing can increase efficiency, it also raises concerns about potential consumer exploitation, price discrimination, and the erosion of consumer trust”.

There is also growing concern over digital platforms potentially favouring their own services or products over those of competitors, leading to unfair competition practices, she noted.

“Addressing these challenges requires a nuanced approach, blending traditional competition analysis with a deep understanding of digital market dynamics. It necessitates regulatory agility, the development of new analytical tools, and possibly, novel regulatory frameworks specifically tailored to the digital context,” she said.

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Speaking at the event, R Venkataramani, Attorney General of India, said privacy and data have now assumed greater importance in the competition discourse. Establishing the contours of privacy from a competition perspective is important and it is therefore imperative that a regulator always keeps up with the times, he said.

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