This article was first published in The Practical Lawyer

Within a short span of about six years, the Competition Commission of India (Commission) has steadily emerged as an effective merger control regulator. Since 2011, the Commission has approved over 430 transactions in diverse sectors. An overwhelming majority of the approvals have been unconditional in nature; only three transactions have been examined and cleared post a detailed Phase II investigation; and not a single one has been blocked.

Recently, the Commission approved a transaction with structural remedies in Phase I (prima facie investigation stage) itself. While conditionally approving the proposed transaction between Abbott Laboratories and St. Jude Medical, Inc. in the medical devices sector, the Commission noted that the market for small-hole Vascular Closure Devices (VCDs) was highly concentrated, with the combined market share of the parties being in the range of 90-100 percent and the market share of Cardinal Health, the only other competitor, being in the range of 0-5 percent. The Commission accepted a voluntary divestiture offered by Abbott and St. Jude Medical of the entire small hole VCD segment of St. Jude Medical on a worldwide basis to a third party, observing that such modification would eliminate the overlap in the Indian market and enable fair competition.

The Commission’s approach deserves consideration in light of the fact that this case involves a voluntary divestment of assets in Phase I against the ordinary trend of Phase II divestments. Prior to this, the Commission had accepted voluntary modifications on several occasions (such as in Orchid/Hospira, Mylan/Agila and Torrent/Elder) where it conditionally approved those transactions, subject to modifications which were predominantly in the scope of non-compete obligations. A shift in the Commission’s approach from such behavioural to structural modifications in Phase I was first witnessed in the case involving ZF Friedrichshafen (ZF) and TRW Automotive (TRW), where the Commission accepted ZF’s commitment to exit (through divestment of shares) from a joint venture operating in steering system products thereby significantly diluting the horizontal overlap between ZF and TRW. A key difference between the ZF and Abbott cases is that while ZF had already decided to terminate the joint venture prior to notifying the Commission, in the Abbott case, the parties appear to have proposed the divestiture post the Commission identifying concerns over the significant overlap in the relevant market.

Continue Reading CCI’s Roulette with Remedies

The Indian merger control regime is a suspensory one which means that, any acquisition, merger or amalgamation that is notifiable to the Competition Commission of India (CCI) may be consummated only after the CCI grants approval, or until a certain waiting period has lapsed.

Section 6(2) of the Competition Act (Act), provides that when an enterprise proposes to enter into a combination, it is required to give a notice to the CCI, disclosing the details of the proposed combination, within 30 days of executing the ‘trigger document’. Further, Section 6(2A) of the Act provides that no combination shall come into effect until 210 days have passed from the day on which the notice has been given or unless the CCI passes orders under Section 31 of the Act, whichever is earlier. In sum, the suspensory regime is an absolute one. Combinations cannot be consummated, in part or full, before either the CCI grants approval or until 210 days post the notification. Continue Reading Part Consummation of M&A Transactions: The Rhetoric of Gun Jumping

In August of 2016, the Competition Commission of India (CCI) passed an order in the case of Builder’s Association of India (2016 Order) predominantly re-affirming its earlier order of June 2012 in the same matter (2012 Order).

By way of a brief background, the case originated from a complaint filed in 2010 by the Builders Association of India (BAI) against the Cement Manufacturers’ Association (CMA) and 11 Indian cement manufacturing companies[1] (collectively, the Opposite Parties). In June 2012, based on an inquiry conducted by it, the CCI imposed a penalty of INR 63.17 billion (approximately USD 933.68 million[2]) on the Opposite Parties. This penalty was imposed for using the platform provided by the CMA to fix cement prices as well as limit and control production and supply of cement in the market, thereby contravening the relevant provisions the Competition Act, 2002 (Act). This 2012 Order was challenged before the Competition Appellate Tribunal (COMPAT), primarily on grounds of due process and violations of principles of natural justice and was set aside on these grounds. The matter was remanded to the CCI for fresh adjudication. Consequently, the CCI re-heard the Opposite Parties and passed the 2016 Order. Continue Reading The Curious Case of the Cement Cartel

The Office of the Director General (DG), being the investigative arm of the Competition Commission of India (CCI), has conducted two search and seizure operations thus far. The first of these, more popularly known as dawn raids, was on the offices of JCB India Limited (JCB India) on 22 September 2014. More recently, the DG carried out a dawn raid on the premises of Eveready Industries Limited (Eveready), a leading dry cell manufacturer.

Dawn raids such as these signify the resolve of the CCI to actively conduct intrusive operations to enforce the provisions of the Competition Act, 2002 (Competition Act). In light of such a pro-active approach, and given that the DG enjoys wide (and mostly untested) powers whilst conducting such operations, companies in India must be aware of what they should do in the course of a dawn raid to contain the consequences and fallout. Continue Reading CCI Dawn Raids – How to Act and Contain Operations

We take a look at recent re-notification and revised merger control thresholds to the Competition Act, 2002, and how they will reduce regulatory hurdles for smaller transactions and facilitate ease of doing business in India.

The Competition Act, 2002 (Act), requires mandatory notification to and prior approval of the Competition Commission of India (CCI) for transactions wherecertain prescribed asset or turnover thresholds (Jurisdictional Thresholds) are exceeded. By way of a notification dated 4 March 2011 (2011 Notification), the Ministry of Corporate Affairs (MCA) enhanced the value of asset and turnover as provided in Section 5 of the Act by 50 per cent. In addition to the above, the MCA by way of notification on the same date (including a corrigendum dated 27 May 2011) also introduced a de minimis exemption in case of an acquisition. The said notifications contained a validity period of five years and were set to expire on 3 March 2016.

Continue Reading Recent Changes to Merger Control