MCA raises merger filing thresholds under competition law to boost ease of doing business

In an industry-friendly move, the Centre has revised upwards the merger filing thresholds under the competition law for ‘combination’ transactions.  

The Corporate Affairs Ministry (MCA) has in two separate notifications revised the ‘de-minimis’ or small target exemption threshold for exempting M&As from the purview of Competition Act. It has also simultaneously revised upwards the ‘jurisdictional’ thresholds that trigger notification to and approval of the Competition Commission of India (CCI) before the deals are consummated. 

Currently, not every M&A activity requires notification (merger filing) to the Commission. M&As that meet the asset and turnover thresholds — prescribed under Section 5 of the Competition Act — would be termed as combinations.  

Only those M&As that qualify as a combination require notification to and approval of the Commission prior to their consummation. 

Absolute exemption 

The Ministry has now revised upward the de-minimis threshold to ₹450 crore from ₹350 crore in case of assets or in case of turnover from ₹1,000 crore to ₹1,250 crore. Combinations below this threshold will be exempted from merger filing. 

Hitherto de-minimis or small target exemption is an absolute exemption available to transactions where the asset value in India does not exceed ₹350 crore or the revenue from India does not exceed ₹1,000 crore. 

For the jurisdictional thresholds, the MCA has revised the thresholds — from the year 2016 specified levels — both at the enterprise level as well as Group level (see table) in line with wholesale price index (WPI) changes.  

‘A positive step’ 

Amit Agarwal, Partner, Nangia & Co LLP, said: “This is a significant development with respect to ease of doing business as well as mergers and acquisitions in India towards ease of mergers and acquisitions in India.” 

Published in Hindu Business Line