No M&As on competition panel's plate

The Competition Commission of India (CCI) will not take up local as well as foreign mergers and acquisitions immediately, as it looks to fine-tune its merger regulations before assuming the role of a full-fledged regulator. However, the commission, which will be operational in the next few days, will take up cases of anti-competitive practices, cartelisation and abuse of dominance, as the competition law allows the government to notify its various provisions in phases, said a CCI official, who asked not to be named. The commission got its third member on Tuesday and a fourth member is expected to be sworn in on Wednesday, taking the quasi-judicial body to its full strength. CCI’s revised regulations on mergers and acquisitions —combinations, in legal parlance—will make the application of competition law more rational by excluding from regulation the deals which do not adversely affect competition but are covered by the asset-turnover criteria. The idea is to further fine-tune the merger regulation drafted earlier by CCI during the tenure of its former member and acting chairman Vinod Dhall. Considering its impact on corporate deals, the full commission, chaired by former World Bank executive director Dhanendra Kumar, will do some more consultation with the corporate world before finalising it, the official said. Competition law says that any deal where the combined entity meets an asset-turnover criteria has to be vetted by the regulator. This implies that an insignificant acquisition by a big company, which does not impact competition, too has to be vetted by the regulator. Based on suggestions from the corporate world, the draft merger code prepared by Mr Dhall sought to prescribe individual asset and turnover threshold for at least two parties in the deal. It also prescribed such individual threshold for a cross-border deal: at least two parties should have assets of minimum Rs 200 crore or turnover of Rs 600 crore in India to attract CCI scrutiny. The draft regulation also sought to reduce the time to clear an M&A deal to 30 days while the law allows CCI to take up to a maximum 210 days. These norms are expected to be fine-tuned now. The model code of conduct in force ahead of national polls does not prevent the government from notifying competition law provisions as it is merely operationalising a statutory body, the CCI official said. Competition law was amended in 2007 to give adjudication powers to the CCI