Team Blitz India
IN alignment with India’s vision to become a developed nation by 2047, the Corporate Affairs Ministry (MCA) is on the cusp of finalizing the ‘deal value threshold’ (DVT) rules for mergers and acquisitions (M&A) that require approval from the Competition Commission of India (CCI).
This move is crucial for operationalizing the Competition (Amendment) Act 2023, which has been pending implementation since receiving the Presidential assent on April 11, 2023.
Global tech giants like Google, Amazon, and Apple, through the USIndia Business Council (USIBC), have urged India to reconsider its proposed EU-like ex-ante competition law approach. Despite this international pressure, the CCI has underscored the necessity of issuing the relevant merger control rules.
Transaction Value Threshold
The “deal value threshold” (DVT) is a critical criterion used to determine whether a merger or acquisition must be notified to the CCI for review and approval. Unlike traditional thresholds based on turnover or market share, the DVT is based on the total value of the transaction.
By requiring transactions above a certain deal value to be notified to the CCI, the DVT aims to capture highvalue transactions in sectors where data or intellectual property drive valuations. This ensures that significant deals receive appropriate regulatory scrutiny.
The process of finalizing these rules has seen contributions from a range of stakeholders:
Corporate Affairs Ministry (MCA): The primary regulatory body responsible for drafting and notifying the DVT rules, the MCA has been actively incorporating feedback from various stakeholders.
Competition Commission of India (CCI): The CCI has been vocal about the need for the DVT rules for a competitive market landscape. Domestic Start-Ups: Start-up communities and industry bodies have emphasized the need for clear regulatory guidelines to navigate the competitive landscape. Competition Law Experts: Legal experts have played a significant role in reviewing and providing feedback on the draft rules.
The MCA is integrating stakeholder feedback into the draft rules, which were previously made available for public consultation.
A representative from the start-up community highlighted that regulatory uncertainty could hinder the growth of new ventures. A competition law expert noted that industry consultations on the DVT have been completed, and it is time for the Government to formalize these rules into law.
The EU’s approach, which India is considering, seeks to create a fairer digital market by imposing specific obligations on “gatekeeper” companies. These include rules on data sharing, interoperability, and fair competition practices.
