this article contains a view of merger control in India by way of analysing the clearances given by the competition agency of India and the time taken in different stages. It looks at all the competition review done by CC I and finds out the average clearance time. This is a two-part article. Part one deals with the performance and the outcome in terms of the quickness of clearance. Second part deals with the lessons learnt after the experience of merger review in India for the first time.

1. 2012] B-31
Section B
Articles
Combination Review in India: A Mid-year Review (Part I)
K.K. Sharma*
In this two-part article, the first part of which appears here, the author, the chief
architect behind the review format of Merger Review in India, takes a look at the
performance of the Competition Commission of India (CCI) in handling the
regulations of combinations (merger review) in India and how does it compare
with international standards. The stark contrast between the anxious reactions
before the regulations of combinations came into force and the deafening silence,
even after 19 approvals have been given by the CCI, has also been briefly touched
upon. The next part, to follow, shall deal with the lessons arising from the
journey of merger control in India so far.
The thought for this write up has been with neutral viewpoint taken. I wanted to keep
me for quite some time. To succumb or not away from this matter for the fear of being
to succumb to the temptation of sharing accused of blowing my own trumpet. This
my thoughts was an extremely difficult hesitation emanated, essentially, from the
dilemma. “Damn if you do and damn if fact that I was entrusted by the Competition
you don’t.” Not agreeing to the call from Commission of India (CCI) with the job of
within would have meant an extremely bringing the procedural and analytical
important milestone being missed out format for combination review (also more
without as much as a whimper despite popularly known as “merger review”) into
having such a stormy legacy. At the same existence in India. The difficulty in this
time giving in to my internal desire was assignment was that no such template
also a really tough call-primarily because existed which could suit the requirements
of the apparent conflict of interest or of the factors of determination given in
something which can be alleged to be a Section 20(4) of the Competition Act,
conflict of interest irrespective of the most 2002(the Act). No doubt, the Act has
* Commissioner of Income Tax, Govt of India, Kochi, India. He was Director General & Head
of Merger Control, in CCI till recently. The views in this article are personal. He can be
reached at kksharmairs@gmail.com
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2. B-32 Competition Law Reports [Vol. 1
attempted to collect nearly all the factors enacted. This period begins with the
either given in the laws of developed resolve of the nation being reflected in the
jurisdictions or the ones which came to declaration, in the parliament, by the then
be recognised as a result of the Finance Minister that the country needed
development of the competition law a new modern competition law and any
jurisprudence in the jurisdictions which further patch work on the then existing
have been practicing this craft for a longer Monopolistic and Restrictive Trade
time in comparison. Even those Practices Act, 1969 (MRTPCA), as had
jurisdictions from where some of these been done in the past, a number of times,
factors have come from either did not have would not suffice. After going through
a documented analytical framework (as various motions, finally, on the
it had evolved over a period of time recommendation of the Raghvan
without a due documentation of this Committee report, the Act was enacted on
evolution) or did not want to share it in 13th January, 2003. The second period
the name of confidentiality. For these begins from 13 th January, 2003 till
reasons, starting from the first principles, 20th May, 2009. In this period, for various
a procedural and analytical framework reasons relating to the background of
rooted in the ethos and principles litigation, the Act had to be amended in
embodied in the Act was developed. Sept 2007 so as to fulfil the assurances
Naturally, any applause, from me, may given to Hon’ble Supreme Court by the
have the potential to be viewed as suspect, Government. This ensured that the matter
as self-praise, despite the fact that I am no was not litigated any further. Thereafter,
longer with the CCI. till 28th February, 2009, the CCI functioned
as a one Member body till July, 2008 (not
However, completion of a half-year term really a Commission in true legal sense
with quiet but resounding success is too because of the stipulation, in section 8 of
big a landmark to be missed. If nobody else, the Act that the Commission shall consist
competition law history of the country will of one Chairperson and at least two
never forgive someone who, despite having Members appointed under the Act). From
some germination of ideas, let this historic July, 2008 till 28th February, 2009, the CCI
moment pass without any record. It is often only consisted of staff and no Member /
said that 100 days is a big time in politics. Chairperson was in office. On
May be, borrowing the same analogy, we 28th February, 2009, one Chairperson and
can say that 180 days is a long enough one Member entered office and, soon
period in the history of a competition thereafter, on 1st March, 2009, the second
agency to have a look at the performance, Member entered the office and the CCI was
in any chosen area of its functioning, as it duly constituted for the first time. The duly
gives an idea of the trends so badly needed constituted CCI had a look at the
to assess its effectiveness as well as preparatory material prepared by the
proclivities, if any, for helping the attorneys earlier formations and, after due
as well as business to navigate the deliberations, approved the
combination review tunnel with grace and implementing regulations for various
minimum regulatory burden. After waiting aspects of the functioning of the CCI.
for nearly a month, despite tremendous Simultaneously, the Government also
resistance from within, I have gathered brought enforcement provisions relating
enough courage to put the record straight to the anti-competitive agreements /
and give devil its due. cartels and abuse of dominant position
In the history of competition law in India, (Sections 3 and 4 of the Act) with effect
there are four distinct periods. The first from 20th May, 2009. That is the beginning
period began from 26th February, 1999 till of the competition law enforcement in
13th January, 2003 the day the Act was India—albeit partially. The third period
94 COMPETITION LAW REPORTS ™ FEBRUARY, 2012

3. 2012] Combination Review in India: A Mid-year Review (Part I) B-33
began from 20th May, 2009. In this period the lull after the storm. For one who has
the duly constituted CCI started enforcing been at the near centre of this storm before
the provisions relating to anticompetitive the lull, nothing can be more surprising
agreements/cartels and abuse of but still satisfying. None of those who
dominant position of the Act. were a part of the chorus, or anyone else
In this third period, the efforts to bring for that matter, is admitting that those
into force the provisions relating to fears and misgivings were wrong, that
regulations of combinations by the CCI the CCI is doing its job very diligently or
and the Government on the one hand and whatever. In comparison, the
equally strong efforts/manoeuvres to stall international press-legal press or
them by a wide spectrum of business and otherwise has been highly appreciative
other interest groups, represented through of the spectacular performance of the CCI
various formations, continued till as late in this area of activity.
as 4th March, 2011 when the notification If we recall, the concerns of the business,
bringing the provisions relating to voiced on different platforms, at various
regulation of combinations into force, with times were, broadly, as under:
effect from 1st June, 2011, was issued. Not • Mandatory pre-merger notification
that the opposition to the provisions is burdensome. Voluntary regime
relating to merger control was particularly preferred by industry
subdued even earlier but, after the part • Asset/turnover thresholds are too
enforcement of the competition law low
provisions, it certainly became much more
• The time period for review,210
vociferous. It was nearly at its peak in this
days, is too long
third period ending on 1st June, 2011. This
was a period of mad cacophony. • No minimum thresholds for
Everyone, who was someone, or who acquisition of shares/assets.
could make him / her heard as someone Burden on big enterprises.
before those who matter, questioned the • Concept of “group” consisting of
credibility of the CCI on whichever count enterprises puts additional burden
he or she considered feasible. The alleged on big enterprises
reasons, of lack of faith in CCI to handle • Likely adverse affect on the growth
review of combinations, ranged from lack of a developing economy by
of capacity, resources of material kind, regulating combinations
“sarkari”(read “bureaucratic”) attitude, • Separate higher thresholds for
the unduly long period of clearance telecom, infrastructure, energy,
provided under the law, high fees and banking and insurance sectors
what have you. Actually, some efforts to • Regulation of combinations be
get it postponed, preferably indefinitely, taken up by CCI only after gaining
after 4 th March, 2011 and before experience of several years
1st June, 2011 also continued in the name
• Regulating acquisitions would
of lack of preparedness as the finalisation
deny Indian business the
of the implementing regulations by the
opportunity to take-over and
CCI took some time not entirely because
reviving failing enterprises
of the fault of CCI. The fourth period of
full enforcement of competition law in Indeed a look at the track record of CCI in
India began from 1st June, 2011. treading this forbidden territory has been
such that none of the fears has come true.
Surprisingly, in contrast, now after a
The following table summarises the salient
passage of more than seven months there
aspects of the approvals of combinations
is an unusual lull. Interestingly, it is not
by CCI as of the time of writing:
the proverbial lull before the storm but
COMPETITION LAW REPORTS ™ FEBRUARY, 2012 95

4. 96
S. Combination Notice Under Intra Filed Decision Date of Total Time Net
B-34
No. Registration Description Section Group or on Order Days Out Days
No. Otherwise (Days)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
19 C-2012/01/25 Notice for merger of NRL and RITL 5(c) Intra 24/01/2012 Approved 2/02/2012 9 – 9
Group
18 C-2012/01/18 Notice for merger of TACOCL 5(c) Intra 2/1/2012 Approved 2/2/2012 31 21 10
and TACO. Group
17 C-2011/12/17 Notice for acquisition by Isuzu 5(a) 22/12/2011 Approved 2/2/2012 42 24 18
Motors Ltd, SML Isuzu Ltd and
Sumitomo Corporation.
16 C-2012/01/21 Notice for merger of GSSPL 5(c) Intra 13/01/2012 Approved 24/01/2012 11 – 11
and PIPL. Group
15 C-2012/01/20 Notice for merger of SHMPL 5(c) Intra 10/1/2012 Approved 17/01/2012 7 – 7
and STFC. Group
14 C-2011/12/16 Notice for merger of EAPL 5(c) Intra 16/12/2011 Approved 17/01/2012 32 10 22
Competition Law Reports
and BBTCL. Group
13 C-2011/12/13 Notice for merger of IVRCL Ltd. 5(c) Intra 12/12/2011 Approved 17/01/2012 36 23 13
and IVRCL Assets & Holdings Ltd. Group
12 C-2011/12/12 Notice for merger filed by TCL 5(c) Intra 9/12/2012 Approved 28/12/2011 19 – 19
and Wyoming I Group
11 C-2011/12/15 Notice for Acquisition filed 5(a) 12/12/2011 Approved 28/12/2011 16 – 16
by SCB India
10 C-2011/12/11 Notice for Merger filed by 5(c) Intra 1/12/2011 Approved 28/12/2011 27 5 21
AN India Ltd., AN Chemicals Ltd., Group
COMPETITION LAW REPORTS ™ FEBRUARY, 2012
[Vol. 1

5. (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
2012]
9 C-2011/10/07 Notice for Merger filed by Nippon 5(c) 14/10/2011 Approved 27/12/2011 74 64 10
Steel Corporation and Sumitomo
Metal Industries Ltd.
8 C-2011/11/10 Notice for Acquisition filed 5(a) 25/11/2011 Approved 13/12/2011 18 8 10
by KKR FII
7 C-2011/11/09 Notice for Merger filed by 5(c) Intra 21/11/2011 Approved 13/12/2011 22 10 12
SL, SVAI and Morgan Group
6 C-2011/10/05 Notice for Acquisition filed by 5(a) 5/10/2011 Approved 4/11/2011 30 7 23
NHK Automotive Components
India Private Limited and
NHK Spring Co., Limited
5 C-2011/10/06 Notice for Merger filed by 5(c) Intra 12/10/2011 Approved 19/10/2011 7 – 7
AHIL and APIL Group
4 C-2011/09/04 Notice for Acquisition filed by 5(a) 7/9/2011 Approved 30/09/2011 15 8 15
COMPETITION LAW REPORTS ™ FEBRUARY, 2012
AICA Kogyo Company Limited
and Aica Laminates Indian
Private Limited
3 C-2011/08/03 Notice for Acquisition filed by 5(a) 24/08/2011 Approved 15/09/2011 22 7 15
G&K Baby Care Private Limited
2 C-2011/08/02 Notice for Acquisition filed by 5(a) 1/8/2011 Approved 25/08/2011 24 6 18
Combination Review in India: A Mid-year Review (Part I)
The Walt Disney Company
(Southeast Asia) Pte. Limited
1 C-2011/07/01 Notice for Acquisition filed 5(a) 7/7/2011 Approved 26/07/2011 21 4 17
by RIL and RIIL
97
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6. B-36 Competition Law Reports [Vol. 1
The above table analyses the On an average, in the cases of regulations
combinations handled by the CCI as of of combinations approved by the CCI so
the time of this writing. In total, 19 far, the time to approve a combination
combinations have been approved by under Section 31 of the Act has been a
CCI, spread over a period of a little over mere 14 (or 14.36 to be exact) calendar
seven months from 1 st June, 2011 to days. This would translate to a little less
2nd February, 2012. In the combinations than 10 working days if we keep even
handled so far by the CCI out of a total the list of scheduled holidays in India in
19 matters, 10 cases have involved mind leaving aside the frequent
intra-group mergers/amalgamations. disruptions of work on many other
In all these cases, the mergers/ counts. This is indeed a rare feat for a
amalgamation did not change the control new competition agency.
dynamics of the enterprises on a macro For a comparison of the numbers, in
level except the contours of control nearly the same period, from June 2011
undergoing some change. Had the to January, 2012, the EU DG Competition
notification issued by the Government handled 225 cases. Let us not forget that,
on 4th Mach, 2011,1 as amended later on in addition to EU DG Comp, the national
27th May, 2011, 2 included the mergers competition authorities, within the
and amalgamations along with the European Union, also clear mergers.
acquisitions, perhaps, many of these Comparatively, a similar economy, South
notifications would not have come before Africa Competition Commission passed
the CCI. judgement in 41 cases in the month of
Nine cases of notifications, other than January, 2012 alone. In the United States
the intra-group combinations, for an of America, being a different procedure
economy of the size of India are not too as no approval order is required to be
many notwithstanding the not too bright passed, the comparison would not be
patch which the global economy, in appropriate. Although the figures of
general, is going through. All the merger filings in USA for the same period
combinations, including the 10 cases of are much higher bur these are not being
intra-group combinations have been discussed for lack of comparative merit.
approved by the CCI. This is not to say These numbers do not indicate that the
that if the situation so requires the CCI capacity of CCI to handle work is less
would shy away from asking the parties but the fact that, through various means,
to the combinations for modifications the work load of the CCI under this head
under Section 31(3) of the Act or even been reduced to a bare minimum because
block the combinations under of the forceful effects of the noise in the
Section 31(2) of the Act on a case to case third phase of evolution of competition
basis as and when the situation so law in India as discussed in the
demands. Nonetheless, the track record, preceding paragraphs.
so far, brings one inference in bold relief The performance of the CCI, so far, shows
and that is that the CCI is not trigger that neither the requirement of
happy as would have been the normal mandatory pre-merger notification has
impression if one were to believe the fears dissuaded any business from going
expressed before the provisions relating ahead with any transaction nor has any
to merger control became a reality in transaction been killed as a result of the
India. feared immature, inept and
1 Notification SO 482(E) (No. 412) dated 4th March, 2011
2 Notification SO 1218(E) (Corrigendum No. 1017)
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7. 2012] Combination Review in India: A Mid-year Review (Part I) B-37
unprofessional handling of the even before the sector regulators have
notification by CCI. So the fears about cleared some of the transactions where it
the lack of professional capacity of CCI was needed.
to handle complex merger transactions
remain what they were: fears— that too
imaginary. A minimum threshold for the Nobody is having any
acquisition size has been provided by the grievances from the
Government through executive
notifications.3 The group linkage has also functioning of CCI in this
been relaxed a little more by the area of functioning
Government through notification.4 The
sectors covered so far include insurance,
media, telecom, infrastructure etc. with This would indicate to us the hollowness
the same thresholds without any of the noises made or the fears expressed
excessive regulatory burden on any before the merger review became reality
sector. Bringing into force of the in India. The comparison also shows that
regulations of combinations with effect the bogey of the thresholds for
from 1st June, 2011 has not dampened the regulations of combinations being too
spirit of Indian business either to make low was not really based on reality. It
acquisitions abroad or take over less was a claim made with vigorous
performing/ailing enterprises within its forcefulness and, unfortunately, had
fold if that makes commercial sense. adequate impact. The fear that the whole
Nobody, so far, has experienced the much economy would be adversely impacted
maligned 210 days taken in approval by because of the negative impact of merger
CCI whereas this is not a very unusual control on the economy is nowhere to be
time, sometimes, taken by enterprises in seen. The miniscule transactions being
the mergers/amalgamations or captured under filing requirement are too
acquisitions under the hitherto existing small to make any difference to the
regulatory mechanism under the economy even if the handling of the
Companies Act, 1956 and SEBI Act, regulations of combinations by CCI were
1992. 5 not to be as professional and prompt as
Nobody is having any grievances from it, in reality, is.
the functioning of CCI in this area of Thus, the implementation of the law and
functioning. The mandatory pre-merger the performance of the regulator have not
filing requirement has been truly created the kind of mayhem as would
accepted by the industry as the have seemed a distinct possibility if the
mandatory way of doing transactions fears about dangers of the provisions
above the thresholds given under the relating to the regulations of the
Act. This goes to the credit of the business combinations being brought into force
that except for the noises prior to the were to be believed. However, there are
regulations coming into force, it has been lessons to be learned in the journey of
accepted as a way of doing business regulation of combination so far. These
without much ado. The CCI has been will be discussed in the (Part II) in the
prompt enough to approve transactions following issue.
Copyright © K.K. Sharma
3 Notification S.O. No 482(E) dated 4th March, 2011 read with S.O.1218(E), dated 27th May, 2011
4 Notification S.O. No 481(E) dated 4 th March, 2011
5 The Securities and Exchange Board of India Act, 1992, No 15 of 1992
COMPETITION LAW REPORTS ™ FEBRUARY, 2012 99