The Competition Commission of India (CCI) stands ready to usher in a new era of merger regulation, which came into effect on September 10. The recent Competition Amendment Act, 2023, represents a strategic shift which is set to redefine our regulatory landscape. At the heart of these reforms is the deal value threshold (DVT), a key measure that requires mergers and acquisitions with transaction values exceeding ₹2,000 crore and substantial business operations in India to seek CCI’s prior approval. The newly introduced Combination Regulations 2024 outline criteria for identifying substantial business operations, with parameters specific to digital services, such as user base thresholds.

This change addresses the growing complexity of modern markets and empowers CCI to scrutinise mergers that have the potential to influence competition adversely. By applying these new rules, CCI aims to safeguard market integrity while enabling businesses to operate with greater clarity and predictability.

Efficiency lies at the heart of the new merger regime. The Competition Amendment Act, 2023, has streamlined the merger review process, reducing the overall timeline from 210 days to 150 days. This is a critical reform, as it ensures that businesses can move forward with their strategic transactions without undue regulatory delays. Additionally, the introduction of an automatic approval route for certain non-complex transactions is a game-changer. M&A involving parties with no horizontal, vertical or complementary overlaps are now deemed approved upon notification. This reduces the regulatory burden on businesses and enhances India’s attractiveness as a global investment destination.

Moreover, the exemptions from pre-notification requirements, provide businesses with much needed legal certainty. Transactions such as open market share purchases on regulated stock exchanges, bonus issues, and stock splits are exempt from prior notification upon meeting certain requirements. These measures embody a regulatory philosophy that supports ease of doing business while maintaining the necessary safeguards against anti-competitive M&As.

Spurring inorganic growth

One of the most transformative aspects of these reforms is their potential to spur inorganic growth across sectors. By reducing compliance burdens and expediting approval timelines, the new merger control framework provides a conducive environment for strategic M&A. This is particularly significant for businesses aiming to scale quickly, enter new markets, or leverage synergies through acquisitions. At the same time, CCI remains vigilant in ensuring that M&As do not harm competition or consumer welfare.

The new Combination Rules provide comprehensive exemption criteria, ensuring that routine transactions do not face unnecessary scrutiny. Acquisitions of less than 10 per cent of shares or voting rights, under specified conditions, are exempt from notification. Similarly, incremental share acquisitions and intra-group mergers are also covered under clear exemptions, simplifying compliance for businesses.

Recognising the unique dynamics of digital markets, the new merger framework includes tailored rules that are crucial for regulating this fast-evolving sector. The CCI has established thresholds based on metrics relevant to digital businesses, such as user numbers and GMV (gross merchandise value), ensuring that digital transactions with significant implications for competition are appropriately reviewed.

This tailored approach ensures that CCI will be in a position to examine the M&A activity in digital markets, where data and platform dominance are critical concerns. The focus on user metrics and GMV is a strategic move that aligns India’s competition law framework with global best practices, reflecting CCI’s proactive and future-oriented regulatory stance.

The CCI’s efforts to implement Merger Control Regime 2.0 have not been limited to legislative changes, as it has laid a strong emphasis on advocacy and outreach. Through workshops, seminars, and training programmes, CCI has engaged with industry stakeholders to foster a culture of voluntary compliance.

The journey to the new combination regulation regime marks a paradigm shift in how India approaches mergers and acquisitions. The reforms brought by the Competition Amendment Act, 2023, and the new Combination Regulations 2024 signify India’s commitment to a modern, transparent, and market-friendly regulatory framework.

The writer is Chairperson, Competition Commission of India. Views are personal