On 29 June 2017, the Indian Government (MCA) issued a notification doing away with the thirty-day deadline for pre-merger notification. With this move, the Government hopes to improve India's 130th position in the World Bank's Doing Business for ease of doing business.
Per the earlier merger control regime, if a transaction was subject to a notification requirement under the Competition Act, 2002 (Competition Act), it had to be notified within thirty (30) days from the date of execution of definitive documents.1 Failure to make a timely notification or implementing a transaction prior to approval attracted significant penalties, ranging up to 1% of the combined value of total assets or turnover (whichever is higher) of the parties.2
The notification now exempts parties from this 30 days deadline. A pre-merger notification can now be made at any time prior to implementing the transaction. This exemption is applicable for a period of five years – i.e. till 28 June 2022.
Nevertheless, the Indian merger control regime still remains suspensory – i.e. implementation of a transaction is still prohibited till an approval is received from the Commission (or a period of 210 days has lapsed from the date of making the notification).3
This notification is yet another demonstrable step to converge Indian merger control with the well-recognized international practice. Recently in March 2017, the MCA made significant changes to the target based exemptions which also aligned the Indian merger control rules with set international principles.
This amendment would predictably make the filing process less onerous. The notification form, required to be filed with the CCI is relatively long with extensive information requirements. Failure to provide all the necessary information can result in the notification form being invalidated, resulting in the parties having to refile and go through the entire review process again. With the relaxation of this 30 days period, the parties would now have more time to collect the requisite information and file a comprehensive form. It would also permit the existing mechanisms of informal consultations4 and draft filings5 to be utilized more effectively.
Originally published June 2017
Footnotes
1. Competition Act, §6(2)
2. Competition Act, §43A
3. Competition Act, §§6(2A) and 43A
4. See: http://cci.gov.in/sites/default/files/cci_pdf/ConsultationPrior250511.pdf
5. See: http://cci.gov.in/sites/default/files/cci_pdf/ConsultationPrior250511.pdf
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