The Competition (Amendment) Bill, 2022: A Study On The Amended Law Of Combinations

• Published date: 10 August 2022
• Subject Matter: orporate/Commercial Law, Anti-trust/Competition Law, M&A/Private Equity, Antitrust, EU Competition
• Law Firm: Obhan & Associates
• Author: Ms Ashima Obhan and Shuchi Dutta

The Competition (Amendment) Bill, 2022 (Bill No. 185 of 2022) (the "Bill") was introduced in the Lok Sabha on August 5, 2022. It seeks to, "carry out certain essential structural changes in the governing structure of the Competition Commission of India and changes to substantive provisions to address the needs for new age markets,"¹ and amend the Competition Act, 2002 (the "Act"), following the circulation of the draft Competition (Amendment) Bill, 2020 and the 2019 report issued by the Completion Law Review Committee. The Bill, in its current form, aims to make several amendments to the Act and we have summarized several key developments related to the regulation of combinations under the Bill below:

Introduction of Deal Value Thresholds for Combinations.

Under the Act, in order for an acquisition or a merger to be considered a "combination," and thus mandatorily requiring notification of the transaction to the Competition Commission of India ("CCI"), the assets and turnover of the various parties to the combination would have to be assessed with respect to the threshold limits set out in the Act. The Bill has now introduced another test to determine whether a transaction will be a combination under the Act: deal value thresholds. Under the Bill, all transactions (that cannot claim any exceptions enumerated under the Act) will require notification to the CCI if: (i) the global deal value exceeds Rs. 2,000 crores; and (ii) the party or parties involved in the transaction have "substantial business operations in India."² However, the Bill is silent on what constitutes "substantial business operations in India," and leaves it up to the CCI to specify the same by way of regulations. Further, the computation of the "value of transaction" as per the Bill will now include every valuable consideration (direct, indirect or deferred) provided for any merger, acquisition or amalgamation.

Amended Definitions for Control and Group.

The Bill also introduces new definitions for "control" and for "group" for the purposes of determining whether a transaction qualifies as a combination under the Act. Under the Bill, "group" is now defined as two or more enterprises, wherein one enterprise is in a position (directly or indirectly) to: (i) exercise 26% (or such prescribed higher percentage) of the voting rights in the other enterprise; (ii) appoint more than 50% of the members of the board of directors of the other enterprise; or (iii) control the affairs or management of...