Regulation of combinations: mergers, acquisitions and the deal value threshold - Competition Law

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1. What is a combination: section 5
2. Notification and standstill: section 6
3. The AAEC assessment: section 20(4)
4. Procedure: sections 29, 29A, 30 and 31
5. Gun-jumping and penalties
6. Problem
How this is examined

Cases checked to exist. Read the judgment before quoting a holding.

Every case cited here has been checked to exist — the citation resolves and names the right parties. The propositions attributed to each case have not been verified line by line against the judgment. Case names link through to the full judgment: read it before quoting a holding in an examination answer, and never carry a proposition from notes into court on trust.

The examinable core. Three questions, in order. Is it a combination (section 5 thresholds, including the deal value threshold since 10 September 2024)? If so, it must be notified and may not be consummated until approved or until 150 days pass (section 6(2), (2A)). Will it cause an appreciable adverse effect on competition in the relevant market in India (section 6(1), with the factors in section 20(4))? A combination that does is void.

1. What is a combination: section 5

The acquisition of one or more enterprises by one or more persons, or a merger or amalgamation of enterprises, is a combination if it falls in one of these clauses:

(a) Acquisition of control, shares, voting rights or assets, where the parties jointly, or the group to which the target will belong, cross the asset or turnover thresholds.
(b) Acquisition of control by a person who already controls an enterprise in similar, identical or substitutable goods or services, above the thresholds.
(c) Merger or amalgamation where the resulting enterprise or its group crosses the thresholds.
(d) Deal value (inserted 2023): the value of the transaction exceeds Rs. 2,000 crore, provided the target has substantial business operations in India as specified by regulations.

The thresholds. As enacted, the parties test is assets in India above Rs. 1,000 crore or turnover above Rs. 3,000 crore, or worldwide assets above US$500 million (including at least Rs. 500 crore in India) or turnover above US$1,500 million (including at least Rs. 1,500 crore in India); the group test is Rs. 4,000 crore assets or Rs. 12,000 crore turnover in India, or US$2 billion assets or US$6 billion turnover worldwide with the same Indian minimums. Section 20(3) requires the Central Government to revise these by notification; by notifications of 7 March 2024 the figures stand enhanced (to Rs. 2,500 crore and Rs. 7,500 crore for the parties test in India, with proportionate increases elsewhere). Quote the statutory figures and state that they are revised by notification under section 20(3).

De minimis exemption (section 5(e), 2023): notwithstanding clauses (a) to (c), there is no combination if the target’s assets or turnover in India do not exceed the prescribed value. The Competition (Minimum Value of Assets or Turnover) Rules, 2024 fix it at assets of Rs. 450 crore or turnover of Rs. 1,250 crore. The deal value clause (d) is designed to catch exactly those deals, typically in digital markets, where a small-turnover target is bought for a very high price.

Key definitions (Explanation to section 5, substituted 2023):

Control — the ability to exercise material influence, in any manner, over the management, affairs or strategic commercial decisions of an enterprise or group. Material influence is the lowest level of control and can arise from minority shareholding with veto rights.
Group — enterprises where one can exercise 26 per cent or more of voting rights (or a higher prescribed percentage), appoint more than half the board, or control the management or affairs of the other.
Value of transaction — every valuable consideration, direct, indirect or deferred.

2. Notification and standstill: section 6

Section 6(1) — no person or enterprise shall enter into a combination that causes or is likely to cause an AAEC within the relevant market in India; such a combination is void.
Section 6(2) — a person proposing a combination shall give notice to the Commission after board approval of a merger or execution of an agreement or “other document” for acquisition, but before consummation. (The old 30-day deadline was replaced in 2023.)
Section 6(2A) — no combination shall come into effect until 150 days have passed from notice or the Commission has passed an order under section 31, whichever is earlier (210 days before 2023). This makes Indian merger control mandatory and suspensory.
Section 6(4) to (6) — the green channel: a combination meeting prescribed criteria (broadly, no horizontal, vertical or complementary overlaps) can be notified in a short form and is deemed approved on acknowledgement; if the declaration proves materially incorrect, the approval is void ab initio.
Section 6(7) — categories exempted by rules (such as acquisitions of small minority stakes solely as investment).
Section 6(9) — share subscriptions, financing facilities or acquisitions by public financial institutions, foreign portfolio investors, banks or Category I AIFs under a loan or investment covenant are outside the section.
Section 6A — open offers and on-market purchases may proceed if notified and the acquirer does not exercise ownership rights until approval.

3. The AAEC assessment: section 20(4)

The Commission has regard to: actual and potential competition through imports; barriers to entry; level of concentration in the market; countervailing power; likelihood that the parties can significantly and sustainably raise prices or margins; extent of effective competition likely to remain; availability of substitutes; market share of the parties individually and together; likelihood of removal of a vigorous and effective competitor; vertical integration; the possibility of a failing business; nature and extent of innovation; relative advantage by contribution to economic development; and whether the benefits outweigh the adverse impact. The last factor makes efficiencies part of the test.

4. Procedure: sections 29, 29A, 30 and 31

The Commission must form its prima facie opinion within 30 days of notice (section 29(1B)); if it does not, the combination is deemed approved (proviso to section 31(1)).
If it is prima facie of the view that an AAEC is likely, it issues a show-cause notice (response in 15 days), may call for a DG report, directs publication of the combination, and invites objections from the public (section 29).
If concerns remain, it issues a statement of objections and the parties may offer modifications (remedies) (section 29A); modifications may also be accepted at the early stage (section 29(7)).
Final order (section 31): approve; approve with modifications; or direct that the combination shall not take effect, declare it void, or frame a scheme. If no order is passed within 150 days, the combination is deemed approved (section 31(6)).
For combinations not notified, the Commission may inquire on its own knowledge or information, but not after one year from the date the combination took effect (section 20(1) proviso).

5. Gun-jumping and penalties

Failure to notify, or consummating before approval (“gun-jumping”), attracts a penalty of up to 1 per cent of total turnover, assets or deal value, whichever is higher (section 43A as substituted in 2023). False statements or omission of material particulars: Rs. 50 lakh to Rs. 5 crore (section 44). In Competition Commission of India v. Thomas Cook (India) Ltd., 2018 INSC 352, the parties notified a demerger and amalgamation but not inter-connected share purchases forming part of the same transaction. The Supreme Court upheld the section 43A penalty: inter-connected steps are to be looked at as a composite combination, by substance and not form, and the failure to notify them was a contravention.

Trap. A combination is not prohibited because it is large. Crossing the section 5 threshold only triggers notification. The prohibition in section 6(1) applies only if the combination causes or is likely to cause an AAEC in the relevant market. Most notified combinations are approved, many within the 30-day phase.

6. Problem

A foreign technology company agrees to buy 100 per cent of an Indian food-delivery app for Rs. 3,500 crore. The app has Indian turnover of Rs. 400 crore and assets of Rs. 300 crore, but 20 million monthly users in India. The buyer wants to close in two weeks. Advise.

Issue. Whether the deal is a combination requiring prior approval, though the target falls below the asset and turnover thresholds.

Law. Section 5(d): deal value above Rs. 2,000 crore with substantial business operations of the target in India; section 5(e) de minimis exemption is expressly “notwithstanding clause (a), (b) or (c)” and so does not exclude a clause (d) combination; sections 6(2), (2A) and 43A.

Application. The value, Rs. 3,500 crore, exceeds Rs. 2,000 crore. An app whose business is in India, with 20 million Indian users, is very likely to have substantial business operations in India under the Combination Regulations, 2024, which look at Indian users and business activity, not only turnover. The target’s small turnover and assets would have kept the deal outside clauses (a) to (c), but not outside clause (d).

Conclusion. The deal is a notifiable combination. The buyer must notify the CCI before consummation and cannot close in two weeks unless the CCI approves earlier; closing without approval would attract a penalty of up to 1 per cent of the deal value under section 43A. If there are no overlaps, the green channel route under section 6(4) may be available.

How this is examined

January 2026: “Write a note on Regulation of Combination” (Unit IV); June 2025: “Investigation into combination” (Unit III). The first is sections 1 and 2; the second is sections 3 and 4. Add the deal value threshold to any answer on combinations, since it is the change of most recent effect.