Tech

The Government proposes to amend the Competition Law; Looking to tighten rules on antitrust testing


The government aims to tighten rules around closely monitoring mergers and acquisitions activities under the proposed law that could particularly affect global tech companies doing a lot of business in India. . The proposal is part of a revamp of the country’s competition law in a bill that was introduced in parliament on Friday and could be passed as soon as next week.

Under applicable law, the Competition Commission of India, or CCIconsider mergers and acquisitions that cross the asset or revenue threshold.

But many high-value deals between tech companies with large domestic presences have escaped scrutiny because the companies involved have few assets and low revenues there.

Facebook’s repurchase WhatsApp in 2014 for $19 billion (approximately Rs 1,50,900), for example, does not require CCI clearance, even if WhatsApp considers India a major market, the lawyers say.

The draft law proposes all transactions valued above Rs. 2,000 crore must be subject to antitrust scrutiny if the companies have substantial business operations in the country.

Anisha Chand, partner specializing in antitrust law at the law firm Khaitan & Co.

“If passed in the current form, the upcoming amendment could lead to an increase in (number of) transactions, especially in new age markets that require pre-clearance,” she added. .

Public policy consulting firm Koan Advisory says the agreed threshold for monitoring is in line with antitrust regulations in Germany and Austria.

CCI did not respond to a request for comment.

New regulations from the CCI will lay out the process to determine if an organization has “substantial business activity” in the country, according to a bill enacted Aug.

As part of the amendments to the competition law, the government also proposed reducing the merger approval period from 210 days to 150 days.

In addition, it plans to introduce a mechanism for entities seeking to reach an agreement with the CCI, the bill said.

© Thomson Reuters 2022




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