MCA notifications impacting Combination Filings before CCI

Ministry of Corporate Affairs (MCA) on March 4, 2016 issued three notifications impacting the notification of combinations before the Competition Commission of India (CCI) on,

1. modifying jurisdictional asset/turnover thresholds (Increase in value of jurisdictional asset/turnover thresholds by 100%);
2. extending the small target exemption (increased the threshold requirement for assets and turnover for notification before CCI); and
3. continuing with the definition of the term ‘group’ as notified in earlier MCA notification.

All the above three notification will continue for a period of 5 years (the above changes come into force from March 4, 2016 and will be effective till March 3, 2021).

All three notifications are discussed in brief below. I am also attaching the gazette notification copy of these amendments for your perusal.

• Increase in value of jurisdictional asset/turnover thresholds by 100%

MCA has increased the jurisdictional asset/turnover thresholds under Section 5 of the Competition Act, 2002 (Competition Act) by 100%, in exercise of its powers under Section 20(3) of the Competition Act, on the basis of the wholesale price index.

The thresholds, as revised by the new notification, are set out in the table below: 

• Small target exemption limits increased and duration extended for 5 years

 MCA has extended the life span of the de-minimis/ small target exemption by another 5 years and has also increased the value of the relevant monetary thresholds.

 The small target exemption now applies where an enterprise, whose control, shares, voting rights or assets are being acquired, has either assets of less than INR 350 crores in India or turnover of less than INR 1000 crores in India. However, please note that the de-minimis/ small target exemption would continue to be available to transactions structured as “acquisitions” alone and not extend to mergers or amalgamations.  

• Extension of the 50% voting right rule for determining “group”

MCA has also extended the earlier notification that effectively increased the voting right threshold for determining whether two or more enterprises are part of a “group” for an assessment under Section 5 of the Competition Act, for a period of another 5 years.