The
Competition Commission of India (CCI)
on July 1, 2015 amended the Competition Commission of India (Procedure with
regard to the transaction of business relating to combinations) Regulations,
2011 (Combination Regulations) for the fourth time[1]
keeping in view some of the issues it faced while dealing with some of the
recent combination transactions and in line with some of the best international
practices in other jurisdictions.
This blog
piece seeks to summarize certain substantive and procedural changes made in the
Combination Regulations.
Revised Form I for notifying
combinations
In
Schedule II of the Combination Regulations, a new Form I (wherein certain
information is required to be filed by the notifying parties as to the
combination transaction (Combination)
to the CCI) has been substituted.
Form I
now comprise of eight parts, namely:
Part I: Basis Information – Information about each party
to the Combination for e.g., legal name, registration number, address, date of
pre-filing consultation (if any) etc.,;
Part II: Proof of payment of fees – Details of fees deposited and
mode;
Part III: Authorization regarding
communication –Information
to be provided is similar to information provided under Part I (but for an
individual);
Part IV: Meeting the thresholds – Describing the nature of the
combination and breach of threshold in a specified format;
Part V: Summary of Combination – Parties to a Combination are
required to file a short and a long summary in the prescribed formant;
Part VI: Description of the
Combination – Information
to the furnished as regards structure and purpose of the Combination,
furnishing the copies of the merger filings in other jurisdictions, information
and justification on non-compete agreements etc,;
Part VII: Details about parties
to the combination and sector overview
– Information about details of the products (manufactured/ sold) and/ or services
of the parties to Combination, details of horizontal overlaps and vertical
relationships, details of supply chain, customers etc,;
Part VIII: Relevant Market – Information regarding the
relevant product market and relevant geographic market of the products/
services involved in the Combination.
Guidance notes for filing of Form
I and Form II
CCI on
its website has published fairly detailed guidance notes (Guidance Notes) for filing of Form I on the information it requires
from the parties to the Combination to be submitted for its review of the
transaction. CCI has also published an introductory note on its website giving
details on purpose of Combination filings, filing requirements, requirement of
correct and complete information and notification process. Guidance Notes for
Form II is not yet published on its website.
Trigger event for notification of
Combination: Limiting the definition of “other documents”
In case
of acquisition transaction, the requirements for filing the notification under
the Competition Act, 2002 (Competition
Act) and Combination Regulations occurs, when the parties to a Combination
executes, a definitive agreement or any ‘other document’. The parties are
required to file the notification within 30 days of execution of such agreement
or other document. Under the requirements of the older Combination Regulations,
‘other documents’ included the documents submitted to the Central or the State
Governments indicating the intention of the parties to enter into a Combination
transaction.[2]
The definition of ‘other document’ is now limited to intimation of the
intention to acquire another enterprise to a statutory authority (for e.g.,
public announcement under the Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeovers) Regulations, 2011).
Number of copies required to be
filed
CCI has
reduced the filing copies to be submitted from two copies to one copy in case
of submission of Form I, Form II and Form III.
Failure to file notice
CCI has
now clarified that in case of failure to file the requisite notification within
prescribed time limits, the parties shall be required to file the notification
in Form I or Form II (along with requisite fees) as directed by the CCI.
Earlier the requirement was to file only Form II as per the directions of the
CCI.
Authorised signatory to the
notifications
CCI has
amended the requirement for signing of the notification by the managing
director, director or company secretary of an enterprise. Now, any person duly
authorized by the board of directors of the company for the purposes of
Combination can sign the notification (Form I or Form II) to be submitted to
the CCI.
Combination filing in case of
inter-connected transactions
CCI has
clarified that in case of series of inter-connected or inter-dependent
transactions/ composite transactions, comprising of several steps or smaller
transactions, a single notification (Form I or Form II) is mandatorily required
by the parties to the Combination to be filed with the CCI.
Confidential treatment of
information
CCI has
codified the practice currently being followed in relation to the request of
the parties to the Combination for confidential treatment of the price
sensitive and commercially sensitive information files by the parties to the
CCI. In terms of the Competition Commission of India (General) Regulation,
2009, parties to the Combination are required to also file a public version of
the notice (and an electronic version) to the CCI. The parties are also
required to clearly state the reasons, justifications and implications for
keeping the information disclosed to the Commission as confidential.
Summary of the Combination and
publication on summary on CCI website
The
parties to Combination are now required to file a summary of the Combination in
not more than 500 words comprising details among other things of type of
combination, area of activities of the parties to Combination and relevant
market to which the Combination relates to. The summary submitted shall be
published on the website of the CCI. According to Ministry of Corporate Affairs
press release dated July 3, 2015, such publication will provide stakeholders an
opportunity to submit their comments to CCI regarding the proposed Combination.
Treatment of invalid notices
CCI has
been expressly granted the power to invalidate the incomplete notification
(Form I or Form II) filed with it. The CCI may do so (such invalidation) after
recording reasons for the invalidation which shall be communicated to the
parties to Combination with 7 days of such decision by the CCI.
Termination of the proceedings in
cases of modifications
In case
a modifications or structural changes (as regards the Combination), suggested
by the CCI to the parties, the proceedings for review of Combination by the CCI
will be terminated upon acceptance of the compliance report submitted by the
parties to the CCI. This amendment clarifies the position already existing in
the old Combination Regulations.
Timelines for Phase-I review
CCI has
modified the timelines for Phase-I review of Combination from 30 calendar days
to 30 working days and have also given itself a clock stop of 15 working days
during Phase-I review for seeking comments from the third parties.
Exemption from filing of
notification
The
amendment exempts the purchaser/acquirer (of shares control, voting rights or
assets) for filing the notification (Form I or Form II) for review by CCI, in
case such acquisition has been approved by the CCI in terms of the Competition
Act. For e.g., acquisition of certain divested assets by the purchaser, in case
where CCI directs the parties to a primary Combination transaction to divest
certain products in a relevant market before approving the transaction.
[1] The
gazette notification for the amended Combination Regulation was published on the
CCI website on July 6, 2015
[2] There were cases where the
details of the transaction were not even clear to the parties as their
submission for approval were pending before the government agency such as
Foreign Investment Promotion Board (FIPB). In the case of Tesco/ Trent
(C-2014/03/162), CCI treated the FIPB submission of the parties to Combination
as ‘other document’ and since the parties had not filed the notification within
30 days after FIPB submission the Tesco was fined with Rs. 30,000,000 for delay
in filing of the notification.
