Governments Proposed Exemptions to Streamline M&A Approvals

In a move aimed at reducing the regulatory burden on the Competition Commission of India (CCI), the government has proposed exempting certain categories of mergers and acquisitions (M&A) and intra-group transactions from the requirement of CCI approval. Draft rules outlining these exemptions have been issued by the corporate affairs ministry.

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Simplifying M&A Regulations

Vaibhav Choukse, Partner and Head of Competition Law at JSA Advocates & Solicitors, explains that the draft rules identify specific types of M&A transactions that will no longer require CCI approval. These include intra-group transactions, certain minority and creeping acquisitions, and rights issues, as they are deemed to have minimal impact on market competition.

Streamlining the Process

The new rules will replace and modify the existing categories of exempt M&A transactions, further simplifying the regulatory process. Additionally, the affiliate test used to assess overlaps between parties involved in M&A transactions has been revised, reducing the regulatory burden on the CCI and providing relief to parties engaged in M&A activities.

Earlier Developments

In September 2022, draft combination regulations were released for public consultation, but they did not include any mention of exempted transaction categories. The corporate affairs ministry has also issued draft rules pertaining to green channel approvals and De Minimis provisions.

Green Channel Approvals

Avaantika Kakkar, Partner and Head of Competition Law at Cyril Amarchand Mangaldas, comments on the draft norms related to green channel approvals. She notes that following recent increases in the small target exemption thresholds and jurisdictional thresholds under the Competition Act, the ministry has proposed limiting exemptions available to minority investors.

Stringent Green Channel Route

The new rules are set to make the green channel route more stringent and complex to navigate, posing challenges for businesses seeking approvals. The revised regulations aim to strike a balance between promoting competition and facilitating ease of doing business.