Competition Act 2002: Regulation of Combinations
The Competition Act, 2002 uses the word combinations to cover acquisition of control, shares, voting rights and assets, and mergers and amalgamations.
Section 6 of the Competition Act, 2002 prohibits any person or enterprise from entering into a combination which causes or is likely to cause an appreciable adverse effect on competition within the relevant market in India and if such a combination is formed, it shall be void.
Further Section 6(2) provides that any person or enterprise, who or which proposes to enter into any combination, shall give a notice to the Competition Commission of India, disclosing details of the proposed combination, in the form, prescribed and submit the form together with the prescribed fee within 30 days of –
Approval of the proposal relating to merger or amalgamation, by the Board of Directors of the enterprise concerned with such merger or amalgamation, as the case may be;
Execution of any agreement or other document for acquisition, acquiring of control.
The Competition Act, 2002 also sets a threshold below which a merger, acquisition or acquiring of control is not regarded as a combination.
Section 30 of the Competition Act, 2002 empowers the Competition Commission of India to determine whether the disclosure made to it under section 6(2) of the Act is correct and whether the combination has, or is likely to have, an appreciable adverse effect on competition in India. Upon receipt of notice for a proposed combination, the Commission must review the combination within tight time limits or else the combination is deemed to have been approved.
According to Section 31 of the Act, the Competition Commission of India may allow the combination if it will not have any appreciable adverse effect on competition in India or pass an order that the combination shall not take effect, if in its opinion, such combination has or is likely to have an appreciable adverse effect on competition.
The provisions of Section 6 do not apply to share subscription or financing facility or any acquisition, by a public financial institution, foreign institutional investor, bank or venture capital fund, pursuant to any covenant of a loan agreement or investment agreement.