On 9 September 2024, the Ministry of Corporate Affairs (MCA) notified the much-awaited substantive merger control provisions which were introduced by the Competition (Amendment) Act, 2023 (Amendment Act) in April 2023. The MCA has also notified certain allied rules that supplement the amended merger control framework. Further, the Competition Commission of India (CCI) also issued revised implementing regulations for the revamped merger control regime (Combination Regulations).

The notified provisions, allied rules and Combination Regulations come into force from 10 September 2024. The Combination Regulations clarify that the notified provisions will apply to all transactions that have been signed but are yet to close completely. Those transactions which have partially closed (on account of not being notifiable in the earlier regime) may attract gun-jumping penalties only for the remaining steps of the transaction that are pending closing.

The key updates are below:

v  Deal value thresholds: An additional jurisdiction test for merger control notification in India for transactions with a ‘deal value’ of more than INR 2,000 crores (approx. USD 240 million), if the target enterprise has ‘substantial business operations’ in India (i.e., local nexus). The local nexus test would be met if any of the following conditions are satisfied:

S. No	Criteria	Thresholds in India
1.	Digital service users (as an average of the preceding 365 days from the signing of the transaction documents)	10% or more of its global digital service users
2.	Gross merchandise value (in the last 12 months from signing of the transaction documents)	10% or more of its global value AND more than INR 500 crore (approx. USD 60 million)*
3.	Turnover (in the preceding FY)	10% or more of its global turnover AND more than INR 500 crore (approx. USD 60 million)*

*Not applicable in case of digital services.

Computation of deal value – The value of a transaction includes every form of valuable consideration i.e., direct or indirect, immediate or deferred, cash or otherwise, including any consideration separately agreed for imposition of restrictions/covenants on parties, incidental agreements, call options, or consideration payable on the occurrence of a future event.

Such transactions would not benefit from the small target / de minimis exemption.

v  Expedited merger review timelines: With a view to improve efficiency and ease of doing business in India, the CCI is now mandated to form its prima facie view (phase I) within 30 calendar days and complete its review of a notified transaction within 150 days (210 days earlier), failing which the transaction will be deemed approved. Other review / investigation timelines have also been revised.

v  Derogation of stand-still obligations for stock market purchases: Parties undertaking open market purchases can claim an exemption from the stand-still obligations (subject to timely notification and non-exercise of beneficial / voting rights). Such on-market purchases have earlier resulted in gun-jumping proceedings by the CCI (attracting penalties on the notifying parties).

v  Increase in Filing Fees: The filing fees for notification forms have now been increased – for Form I (short from), INR 20 lakh (approx. USD 24,000) to INR 30 lakh (approx. USD 36,000); and for Form II (long form), from INR 65 lakh (approx. USD 78,000) to INR 90 lakh (approx. USD 107,000).

v  Rules for exemptions from notification, green channel route, and de minimis: While the green channel and de minimis rules largely codify existing functions of the CCI, the exemption rules overhaul the existing framework under the merger control regulations.

1. Exemption Rules introduce to exemptions for minority share acquisitions, intra-group transactions, and a new exemption has been added for de-mergers.
2. Green Channel Rules: The rules codify the existing practice on the applicability of this ‘fast track’ route of approval.
3. De Minimis Rules: The rules codify the recent MCA notification exempting transactions involving small targets from the requirement to notify the CCI for its approval.

Authors: Sonam Mathur – Partner, Shubhang Joshi & Dhruv Dikshit – Managing  Associates

Disclaimer: This alert only highlights key issues and is not intended to be comprehensive. The contents of this alert do not constitute any opinion or determination on, or certification in respect of, the application of Indian law by Talwar Thakore & Associates (“TT&A”). No part of this alert should be considered an advertisement or solicitation of TT&A’s professional services.