Merger Control Notes

Prof. Sidharth Chauhan

Why do Mergers happen?

Synergies
From where does Comp Law emerge? Constitution

Indian Comp Act goes beyond MRT

Economic Justice and concentration spoken about in the constitution

Day 2
Learn the skill of asking the right questions

Synergy theory
Why companies do MnA
Understanding the semantics behind it

In Mergers v acquisition decisions most of the scenarios will depend on the taxation/ value
derived from the merged entity
Not solely based on the financial due diligence that companies do
If company uses SPVs, they are protected from liability from directly investing in the
company
If this ship sinks, it won't pull the whole fleet down with it
You are not dipping into the financials of the company if the contingency fund moves quiet a
bit
If you invest directly, much more reputational costs and much more at stake.

Why do companies do mergers and not acquisitions sometimes?

Bank acquiring NVFC Scenario

Why did cci allow JIO to give data for free?

Vodafone Idea merger reduced a competitor

onerous conditions in contracts

it will first be assessed according to contract law analysis
Day 3

Anti-trust law- US
Anti-Monopoly Law
Until MRTP (monopolies and restrictive trade practices act 1969) , which outright said that
monopolies have no place in the market- until that period of time anti-monopoly law and
competition law was the same
Companies functioning in a certain sector will always feel heat

US prefers a model w less regulatory framework, unlike EU

Organic vs Inorganic growth

Analyse goals of the company

Short term, mid term or long term?

Competition is a state of rivalry between different firms in the market. This rivalry leads to
better products and higher value to consumers as these firms compete for consumer’s money.
Comp law trying to ensure there is consumer welfare
Dynamic efficiencies being create
USA

Anti-trust law

Why was an act like prohibition of monopolies ok to have in 1990s in India?

India was a socialist state. Under Indira Gandhi

Why did MRTP not survive? LPG Reforms
Trade laws and IP got impacted
Understand the economic conditions which are prevalent to understand how law evolved and
impacted from that point of time

Ficci, Assocham
Industry Associations
]
Legal transplantation- borrowing the laws from another jurisdiction and implementing it in
another – this is an issue of corporate governance
Why is the law, if it is being amended specifically, what was the previous version and what
arguments have been presented by the persons

3 Major developments
FDI
LPG, LPG Reforms
Opening of Trade

Competition Act 2002- established CCI

Preventing activities having an adverse effect on competition
Promote and sustain competition in the market
Protect interests of the consumer
Ensure freedom of trade in india

Comp law uses the word “COMBINATION”

Agreements that distort competition

Any MnA activities that distort competition
 Anti-Competitive Agreements

Any agreement + likely to cause appreciable adverse effect on competition (AAEC) = anti-
competitive agreement

Agreement - Meeting of minds

Any agreement coming out of a teach player or anything like that will be held under Section
3 sub clause 3 because of the wording- “any agreement”

Abuse of Dominant Position

Company operating independent of competitive forces in the market or with the ability to
affect its competitors, consumers or relevant market in its favour + Uses its position to the
detriment of its competition, consumers or competition in the market = Abuse of Dominant
Position

Combinations
Any MnA activity + AAEC = CCI to evaluate and decide whether to allow or deny the
transaction

Factors to determine AAEC

Creation of barriers to new entrants
Driving existing competitors out of market
Foreclosure of competition
Accrual of benefits to consumers
Improvements in the production or distribution of goods or provision of services
Promotion of technical, scientific and economic development by means of production or
distribution of goods or provision of services
Can a government regulation be a barrier?
Bank acquiring business of NVFC
Company A already has agreements with Company C for logistics
A decides when they will have a 10% stake in Company B in Dec 2025, they also want a 15%
stake in Company D in Feb 2026

Will there by any impact of the stake on the agreements

First question- Are they receiving additional information rights in the company
Logistics here will only be questioned when they have board seats or voting rights

Don’t assume industry facts

Abuse of dominant position

Company operating independent of competitive forces in the market or with the ability to
affect its competitors, consumers or relevant market in its favour + uses its position to the
detriment of its competition, consumers or competition in the market = abuse of dominant
position

Collective Dominance not recognized in India

Asset and turnover test
26% and special resolutions

CCI is like a civil court, it has the authority to investigate any actions outside india that have
adverse effects on comp within India.

Why was CCI punishments decriminalized? Why are there only monetary/civil punishments
(compensations or fines)? Jan Vishwas bill- to increase ease of doing business in India, and to
attract investment.

Cartelization
Application of Comp Law
Form Based Approach- Prima facie anti-competitive agreements
Effects Based Approach- Those alleging infringement of competition rules must determine
theory of harm to demonstrate veracity of their allegation

Having access to current pricing/information is always more problematic because companies

can act on it rather than historic information
Day 5

Research paper assignment

Savar Verma- don’t cite

Relevant Markets
2 major components-
Products and geographical

Consumer preference vs consumer choice

Relevant product market and relevant geographical market, without this u cannot assess the
anti-component bit
If you don’t define the market in which they are actually dominant, then u have a wrong
comp law analysis- DEFINE the market u are talking about, look at the product and services
they provide

Sec 2 (r) defines relevant market

Why analysing relevant markets is complex and is required-

For how many products do you have an actual overlap
In certain services, they may differ or may be complimentary or may be the same service
Post Merger, how much

The analysis is done to understand the issue of how many overlaps are there and what kind of
issues they present
1. AAEC test- if there is AAEC or not. Whether negatives are outweighing positives or
positives are outweighing negatives.
2. If there is a wrong assessment, then that means the whole market power and market share
analysis is incorrect, so merger filing is not correct
3. See the kind of competition in the market-
If there are close substitutes available, then enough comp is there in market
Relevant markets are assessed based on substitutability and interchangeability which are of
two types-
Supply substitution- ability of the manufacturers of similar goods to switch to the production
of relevant products
See whether other manufacturers are producing similar goods- ability if manufacturers of
similar goods to switch to the production of the relevant products
Demand Substitution- ability of the product’s consumers to switch to an alternate product,
thereby replacing them

It will be incorrect to say this particular player is dominant without looking at close
substitutes

Suppliers will create a broader market, consumers create a subset of it

Check if there are enough customers for every segment

Form 1

For case of holding companies- have to check if the parent group is involved or not, if it’s a
party to the transaction or not

Diversification helps to increase number of competitors

SSNIP Test
Small but significant non-transitory increase in price

Would a small price increase cause a large number of customers to turn to another product
Test not only provides an estimation of the specific product segment but also provides an
indication of a particular geographical sector.

Problem is when pricing is increasing but I am not able to choose another product

The Cellophane Fallacy case

Famous US Case
Taught us important bits of relevant market
When u define relevant market as too broad- u will have problems with comp law

In this case SC defined relevant market as too broad and failed to detect the market power of
du Pont
They considered aluminium foil, polythene, wax paper etc as equal substitutes of cellophane

Switching Costs
Why do u have to have a stable market? Each time u lose a customer, u incur double costs to
recover one
Incur high switching costs so that customers don’t choose other brands over their products
Characteristics and intended use can be considered to be at the initial stage tp figure out the
possible substitutes of the product, however this cannot be considered to be an important
aspect while determining substitutability, as many products can possess similar characteristics
but cannot substitute each other. Example- budget and high end cars might have similar
characteristics but cannot substitute one another

Relevant Geographical market

Section 2(s) of competition act
Ridiculously drafted language

Particular issues in Market Definition

1. Distinct groups of customers and price discrimination
2. Structure of supply and demand
3. One market or two
4. Market in new economy
5. Multi-sided market

CCI did market study on e-commerce companies in 2020 and figured out that they are in
different markets

Meru travel solutions v Uber India Systems

Meru filed a complaint on pricing of Uber- rejected. Court said- choice still existed
Whether Uber was dominant in a relevant geographical market?
Ola also existed w similar pricing
Relevant market of Kolkata being unique and yellow taxis also existed

Barriers to entry
Sunk Cost
Structural Barriers
Strategic Barriers

Readings-

1. United States: The Clayton Act

The Clayton Act of 1914 was designed to supplement the Sherman Act by addressing specific
practices that "substantially lessen competition" or tend to "create a monopoly."
The Sections as Written
 Section 4 (15 U.S.C. § 15): Suits by persons injured; amount of recovery.
 Section 7 (15 U.S.C. § 18): Acquisition by one corporation of stock of another.
 Section 7A (15 U.S.C. § 18a): Premerger notification and waiting period.
 Section 8 (15 U.S.C. § 19): Interlocking directorates and officers.
 Section 16 (15 U.S.C. § 26): Injunctive relief for private parties.
Detailed Description
 Section 4 (Private Right of Action): This is the "teeth" of U.S. antitrust law for private
citizens. It allows any person injured in their business or property by an antitrust
violation to sue for treble damages (three times the actual damages) plus attorney fees.
 Section 7 (Merger Control): This prohibits mergers or acquisitions where the effect
may be to substantially lessen competition. It is the primary tool the FTC and DOJ use
to block anticompetitive "horizontal" or "vertical" mergers.
 Section 7A (HSR Act): Added by the Hart-Scott-Rodino Act of 1976, this requires
companies to notify the government before completing large M&A deals. It creates a
"waiting period" (usually 30 days) to allow regulators to investigate.
 Section 16 (Injunctive Relief): While Section 4 is about money, Section 16 allows
private parties to seek a court order (an injunction) to stop a harmful practice before it
causes irreparable damage.

2. European Union: TFEU Articles 101 & 102

These two articles are the bedrock of EU competition policy, aimed at ensuring the "Internal
Market" functions without distortion.
The Articles as Written
 Article 101 (ex Article 81 TEC): Prohibits all agreements between undertakings,
decisions by associations of undertakings and concerted practices which may affect
trade between Member States and which have as their object or effect the prevention,
restriction or distortion of competition within the internal market.
 Article 102 (ex Article 82 TEC): Any abuse by one or more undertakings of a
dominant position within the internal market or in a substantial part of it shall be
prohibited as incompatible with the internal market in so far as it may affect trade
between Member States.
Detailed Description
  Article 101 (Anti-Competitive Agreements): This targets collusion. It forbids "cartels"
(price-fixing, market sharing, or limiting production). If companies cooperate to keep
prices high, they face fines up to 10% of their global turnover. It includes an
exception (Art 101(3)) if the agreement improves production or promotes technical
progress while benefiting consumers.
 Article 102 (Abuse of Dominance): It is not illegal to be dominant in the E.U., but it is
illegal to abuse that power. Examples include:
o Predatory pricing: Selling at a loss to drive out rivals.

o Tying: Forcing customers to buy a second product they don’t want.

o Refusal to supply: Denying rivals access to "essential facilities."

3. India: The Raghavan Committee Report (2000)

The High-Level Committee on Competition Policy and Law, chaired by S.V.S. Raghavan,
was the catalyst for moving India from a "Command and Control" economy to a market-
oriented one.
The Core Mandate
The committee was tasked with examining the MRTP Act, 1969 (Monopolies and Restrictive
Trade Practices Act) and proposing a new legal framework aligned with modern economic
realities and globalization.
Detailed Description
The Report’s recommendations led directly to the repeal of the MRTP Act and the enactment
of the Competition Act, 2002. Key shifts included:
 From "Size" to "Conduct": The old MRTP Act viewed "bigness" as inherently bad.
The Raghavan Report argued that being large is fine; only anti-competitive conduct
should be punished.
 Abolition of the MRTP Commission: It recommended replacing the old body with the
Competition Commission of India (CCI), a pro-active regulator with "suo motu"
powers (the power to start investigations on its own).
 The Three Pillars: The report suggested the law focus on three specific areas:
1. Prohibition of Anti-Competitive Agreements (like cartels).
2. Prohibition of Abuse of Dominant Position.
3. Regulation of Combinations (Mergers and Acquisitions).
 Advocacy: It emphasized that the regulator shouldn't just be a "policeman" but also an
advocate for competition, educating the public and the government.
Week 4-

1. Statutory Provisions: The Competition Act, 2002

These sections form the "Combination" (Merger Control) regime and the enforcement
mechanism of the Act.
The Sections as Written (Summary of Legal Text)
 Preamble: An Act to provide for the establishment of a Commission to prevent
practices having adverse effect on competition, to promote and sustain competition in
markets, to protect the interests of consumers, and to ensure freedom of trade.
 Section 2: Definitions (e.g., "Acquisition," "Agreement," "Cartel," "Relevant
Market").
 Section 5: Definition of "Combination" (Thresholds based on assets/turnover).
 Section 6: Regulation of Combinations (Prohibits combinations which cause an
Appreciable Adverse Effect on Competition (AAEC)).
 Section 20: Inquiry into combinations by the Commission.
 Section 26: Procedure for inquiry on complaints (under Section 19).
 Section 29: Procedure for investigation of combinations.
 Section 31: Orders of Commission on combinations (Approval, Modification, or
Rejection).
 Section 43A: Power to impose penalty for non-furnishing of information on
combinations (Gun-jumping).
 Section 44: Penalty for making false statements or omission of material facts.
 Section 53A: Establishment of the Appellate Tribunal (COMPAT, now replaced by
NCLAT).
Detailed Description
 The Thresholds (Section 5): Not every merger is a "combination." A transaction only
enters the CCI’s jurisdiction if the parties meet specific financial thresholds (assets or
turnover) in India or globally.
 The Suspensory Regime (Section 6): India follows a "Mandatory and Suspensory"
regime. You must notify the CCI, and you cannot "close" or "consummate" the deal
until you receive approval or 210 days pass.
  Gun-Jumping (Section 43A): If companies proceed with a merger before getting CCI
clearance, they face a penalty of up to 1% of the total turnover or assets—whichever
is higher.
 The Inquiry Process (Sections 20, 29, 31): * Phase I: The CCI does a preliminary
check (30 working days).
o Phase II: If the CCI believes the deal might cause an AAEC, it launches a
detailed investigation, inviting public objections.
 Adjudication (Section 26): This sets the procedural clock in motion. It requires the
CCI to form a prima facie opinion before ordering the Director General (DG) to
investigate.

2. The Competition Commission of India (CCI)

The CCI is the statutory body responsible for enforcing the Act. It consists of a Chairperson
and Members (currently a minimum of 2 and maximum of 6).
 Role: It acts as a quasi-judicial body. It has the power to oversee M&As, penalize
cartels, and strike down abuse of dominance.
 The Director General (DG): The DG is the investigative arm. While the CCI identifies
potential issues, the DG conducts the actual "raids" (search and seizure) and detailed
evidence gathering.
 Advocacy: Beyond enforcement, the CCI is mandated to "Competition Advocacy,"
advising the Central Government on the competition impact of new policies.

3. Combination Regulations, 2011

While the Act provides the "What," these Regulations provide the "How." They have been
amended several times to make India a more business-friendly jurisdiction.
Detailed Description
 Form I vs. Form II: Most deals are filed under Form I (short form). Form II (long
form) is required only if the parties have a high combined market share (usually
>15% horizontal or >25% vertical).
 Green Channel (2019 Amendment): This is a revolutionary "automatic approval"
route. If there are no horizontal overlaps, vertical linkages, or complementary
businesses between the parties, the deal is deemed approved the moment the filing is
acknowledged.
 Exemptions (Schedule I): The regulations list transactions that "ordinarily" do not
need notification, such as minor acquisitions (<5%) or intra-group reorganizations.
  Divestitures/Remedies: If the CCI finds a deal is anti-competitive, the Regulations
provide the framework for "modifications." For example, the CCI might approve a
merger only if the companies sell off a specific factory or brand to a competitor to
maintain market balance.

Day 6
Missed
Day 7

Introduction to the Indian merger control doctrine

There was a delay in merger control regimes bec of industry associations

Section 5 of Competition Act provides jurisdictional thresholds for notification that

comprises of two broad sets of test-
Parties test and Group test
DVT aswell now
Test of notifiability

Does not necessarily mean AAEC exists

Deal Value Threshold

DVT was originally meant to be only for the digital sector, but CCI ended up applying this to
all sectors- their objective was to look at killer acquisitions
Substantial business operations- not an objective test, kind of a grey area- prof says might
create issues

If combined value exceeds INR 2000 crores and there is substantial commercial activity in
India (substantial business operations in India (SBOI))

Target Exemption
First it was there only for acquisitions but now its there for both mergers and acquisitions
De-Minimis exemption- When target’s asset value is not more than INR 450 Crores in india
or turnover is not more than INR 1250 crores in India

Target Exemption does not apply to DVT, If DVT matches, you have to notify

Abstract for paper

In the race to make India a global economic powerhouse, the government has increasingly
leaned into a "National Champions" strategy, which is---- encouraging massive
conglomerates to scale up so they can compete on the world stage. But this push for size
comes with a hidden cost: the "Gatekeeper Problem." As these giants merge and consolidate,
they often end up owning the "essential facilities", which are:
the ports, the data networks, or the railway lines…..that every other business needs just to
survive.
This paper dives into the Essential Facilities Doctrine (EFD), a legal tool that basically
says: "If you own the only bridge in town, you have to let others cross it." Even though this
doctrine isn't explicitly written into India's Competition Act, this research shows how the
Competition Commission of India (CCI) has been forced to use it "behind the scenes" to stop
monopolies from choking out smaller players.
I argue that our current system is too reactive. We wait for a "gatekeeper" to act like a bully
before we step in. Instead, the CCI should be proactive during the merger review process
itself. By making "fair access" a mandatory condition for approving big mergers, we can
ensure that the "Ease of Doing Business" in India isn't just a benefit for the top 1%, but a
reality for the entire market.

What year was target exemption introduced?

To what categories of transaction was it applicable?
When did mergers get added in this?
Why?
EXERCISE-
First para- popularity of game
Second- relevant market
Third- They entered into negotiations with other players on the market
Fourth- Possible exposure penalty

MEMORANDUM

DATE
RE: Apt Subject line
QUESTIONS PRESENTED
STATEMENT OF FACTS
(Do not simply copy paste from the facts presented above, do not simply use AI)
OPINION
(Your Analysis)

Should you have any questions, please let us know.

Best Regards,
XYZ

There is a licensor and a license, licensor is giving license in upstream market

Exclusive agreements defined under section 3(4)

Homework: Go to MCA Website, look at any company of interest- MCA21 costs around 100
Rs
Look at what kind of decisions are being recorded in those minutes

Bec to give a perfect commercial advise, u need to go through all of these

Do it for yourself
Know that if a company is going through a transaction, what kind of activity is happening in
those minutes

Look at a deal which went through and look at what commercial activity is being recorded in
the minutes

READ CASES

11th April Workshop

For any turnover even a firm outside India, its Indian nexus is calculated
Deal Value is commercial consideration of parties- depending on the consideration of the deal
(Target exemption does not apply to DVT)
Asset Turnover test is completely linked to the financials
Distinction between tests-
Frist on basis of target exemption
Second on basis of consideration
Third on basis of killer acquisitions (When a bigger company buys smaller companies before
they become big)

Substantive test :
Section 20(4)- For the purposes of determining whether a combination would have the effect
of or is likely to have an appreciable adverse effect on competition in the relevant market, the
Commission shall have due regard to all or any of the following factors, namely:—
(a) actual and potential level of competition through imports in the market;
(b) extent of barriers to entry into the market;
(c) level of [concentration] in the market;
(d) degree of countervailing power in the market;
(e) likelihood that the combination would result in the parties to the combination being able
to significantly and sustainably increase prices or profit margins;
(f) extent of effective competition likely to sustain in a market;
(g) extent to which substitutes are available or are likely to be available in the market;
(h) market share, in the relevant market, of the persons or enterprise in a combination,
individually and as a combination;
(i) likelihood that the combination would result in the removal of a vigorous and effective
competitor or competitors in the market;
(j) nature and extent of vertical integration in the market;
(k) possibility of a failing business;
(l) nature and extent of innovation;
(m) relative advantage, by way of the contribution to the economic development, by any
combination having or likely to have appreciable adverse effect on competition;
(n) whether the benefits of the combination outweigh the adverse impact of the combination,
if any
20(4) is the bread and butter for merger control because this is what determines AAEC
It is the substantive test

From minutes you can get a sense of what kind of economic decisions are being made
Lets say an inefficient player gets remove out of market bec of a combination- not necessarily
AAEC, it would mean there are less number of efficient actors in the market

3 trenches Company Y
Company X acquired 5 percent stake in company Y in 2019, then 9.9% + board seat in 2022+
15 percent stake in 2024
Advising company X, if they come to u with the problem
3 Questions that u will ask them-
What are the special rights you got along with the shares?

Question should be- Look I have done my diligence, I know that there are these overlaps but
please tell me if there are more. Are there any close substitutes which we may have missed?
Also check- the kind of investments the company has done before

The first trench is ok, the other two tranches are strategic in nature- they might be notifiable

Combination Regulation 9- If they are interconnected in some way, you have to notify- you
cannot see investments as an individual transaction

Here it was clear that it is strategic in nature

Shivi Bhattacharya- Adani’s buying spree article

2023 amendment act- control at what stage

Read Cases for tomorrow

Looking at each transactions individually and their course of business- passive in nature or
strategic in nature?

Distinguish between three trenches- which part of transaction is ordinary and which isn’t
CCI is looking at lowest threshold of control which is material control and it is now in the
competition act itself (amendment 2023)

Whatever questions we discussed about knowing what to ask the client- go back and re read
the questions that have to be asked and think why the questions have been asked to develop
your commercial sense

In the SCM Soilfert case,11 SCM Soilfert acquired the share capital of Mangalore Chemicals
through two seemingly separate transactions. The first one involved share purchase of 24.6%
of the paid-up share capital of Mangalore Chemicals on the Bombay Stock Exchange through
bulk and block deals. The second step included open market purchase of 1.7%. While
notifying the second step to the CCI, a disclosure was made about the first step. The CCI
imposed a penalty on SCM Soilfert holding that the two steps were interconnected and should
have been notified to the CCI before consummating the first step. The Competition Appellate
Tribunal and subsequently the Supreme Court of India upheld the penalty of INR 20,000,000
(approximately USD 300,000) imposed by the CCI.

In case C-2014/05/175, the Competition Commission of India (CCI) penalized SCM Soilfert
Ltd (a Deepak Fertilizers subsidiary) for "gun-jumping" by failing to notify the acquisition
of Mangalore Fertilizers and Chemicals Limited (MCFL) shares in a timely manner. The
2015 order found they consummated a 0.8% open market purchase before notifying the
regulator, despite the overall, interconnected acquisition strategy.

Public Information

Key details regarding this case (C-2014/05/175):

 The Parties: SCM Soilfert Limited (wholly owned subsidiary of Deepak Fertilizers
and Petrochemicals Corporation Limited - DFPCL) and Mangalore Fertilizers and
Chemicals Limited (MCFL).
 The Transaction: SCM acquired 24.46% of MCFL equity through bulk/open market
purchases in 2013 and planned further acquisitions. Subsequently, on April 23, 2014,
they acquired another 0.8% and announced an open offer for 26% more.
 Violation ("Gun Jumping"): The CCI held that the 0.8% open market purchase was
consummated 29 days before notifying the commission.
 Penalty: In February 2015, the CCI imposed a penalty under Section 43A of the Act
for failure to notify the combination (the initial 24.46% and subsequent 0.8%).
 Supreme Court Involvement: The Supreme Court of India upheld the CCI's penalty
against SCM Soilfert (along with the Thomas Cook case) regarding the violation of
mandatory notification requirements fo

It held, in its 2012 order in SAAB/Pipavav, that even a 3.329% acquisition by SAAB AB
(Publ.) in Pipavav Defence and Offshore Engineering Co. Ltd. was notifiable and could not
avail the Item 1 Schedule I exemption due to the strategic nature of the technology
partnership and due to the acquisition of certain affirmative rights such as the right to
nominate a director on the Board of Pipavav.

as per the information provided in the notice, the proposed acquisition is in the nature of a
strategic technology partnership between SAAB and Pipavav whereby SAAB and Pipavav
would jointly bid for projects within the scope of co-operation prescribed under the Strategic
Technical Partnership Agreement dated 23rd August, 2012 entered into between SAAB,
Pipavav & other(s). Further, under the SSSA, certain affirmative rights including the right to
nominate one director on the Board of Pipavav have been granted to SAAB to enable it to
preserve the value of its investment in the company and prevent misuse of intellectual
property rights with respect to the projects. The proposed combination is, therefore, not an
acquisition in the ordinary course of business or solely for the purpose of investment. 6. The
proposed combination falls under section 5 (a)

Sector was sensitive in nature, Priorities of the government, is it influencing decision making
in a certain way which is

Political economy is a branch of social sciences looking at understanding issues about

political interference or backing or any social causes which makes the application of the law
when our economy is completely social, what kind of regulations have come up after we
moved from social to private economy

Two what interest groups is the law favouring

Who want the law to be in a certain way to meet their interests? Who are these interest
groups?
Interest group theory in corporate law
Who is getting impacted and who is benefitting
What framework did we have here what framework do we have here?
What factors have shifted the modern competition law? Why has the law shaped up the way it
has?
Know the sector well
Sumitomo Mitsui Trust Bank Limited / Reliance Capital Limited (C-2014/12/235)
1. Background of the Parties
 SMTB: A Japanese trust bank providing a wide range of financial services including
commercial banking, asset management, and real estate services.
 RCL: A prominent Indian non-banking financial company (NBFC) with interests in
asset management, life and general insurance, commercial finance, and other financial
services.
2. Strategic Intent
The investment was part of a broader strategic alliance between the two entities. The goal
was to collaborate on various financial services in India, leveraging SMTB’s global expertise
and Reliance Capital’s extensive Indian network.
3. Competition Assessment
The CCI examined whether the acquisition would lead to an Appreciable Adverse Effect on
Competition (AAEC) in the Indian market.
 Horizontal Overlap: The CCI found that SMTB had a very limited presence in India
at the time, primarily through a representative office. Therefore, there was no
significant horizontal overlap in any relevant market (such as banking or asset
management) that would lead to a concentration of market power.
 Vertical Linkages: No significant vertical relationships existed between the parties
that could lead to market foreclosure.
  Market Share: Given that the acquisition was for a small minority stake (under 5%),
it did not grant SMTB any "control" or "decisive influence" over RCL's operations.
CCI Conclusion
The Commission approved the transaction on January 20, 2015. It concluded that the
proposed combination was not likely to have an appreciable adverse effect on competition in
India because the parties' market shares were negligible and the increment resulting from the
transaction was minimal.

In its 2015 order in Caladium/Bandhan, the CCI found that though Caladium Investment Pte.
Ltd. has only subscribed to 4.99% equity shares in Bandhan Bank Ltd., the transaction was
notifiable on account of certain rights acquired by Caladium.23 That same year, the CCI
found that even a 1.1% acquisition of Mankind Pharma Ltd. by Cairnhill CIPEF Limited and
Cairnhill CGPE Limited amounted to control as a board seat and certain affirmative voting
rights were attached to the acquisition.

For Caladium (GIC), the stake was 4.99%, but the notification was mandatory due to the
acquisition of control:
 Veto Rights (Joint Control): While 4.99% is low, the Shareholders Agreement
(SHA) and the Participating Agreement (PA) granted Caladium rights over certain
"GIC Reserved Matters."
 Strategic Decisions: These reserved matters included decisions on joint ventures,
partnerships, and liquidations. Under the CCI’s interpretation, the power to block or
approve such strategic commercial decisions constitutes joint control.
 Exemption Disqualified: The "solely as an investment" exemption is only available
if there is no acquisition of control. Since Caladium gained "material influence"
through these veto rights, the exemption was legally unavailable.
Since the acquisition was for a stake of less than 5%, and Caladium did not acquire any
special rights (like board seats or veto rights) that would grant it "control" over Bandhan’s
management or policies, the CCI viewed the investment as purely financial and non-strategic
in terms of market behavior.
India Infoline Finance Limited / CDC Group Plc. (C-2016/07/417), we see another classic
application of the "control" test that disqualifies a minority investment from the Item 1,
Schedule I exemption.
Case Overview
 Acquirer: CDC Group Plc (the UK’s development finance institution, now British
International Investment).
 Target: India Infoline Finance Limited (IIFL Finance).
 Nature of the Transaction: CDC proposed to acquire approximately 15% of the
equity share capital of IIFL Finance.

Key Aspects & Analysis

1. Why was it Notified? (The "Control" Trigger)
Despite the stake being well below a majority, this transaction was notified because it
involved the acquisition of "Material Influence." Under the Shareholders Agreement
(SHA), CDC was granted certain Affirmative Voting Rights (Veto Rights) over "Reserved
Matters." These matters typically include:
 Changes to the business plan.
 Appointment/removal of key managerial personnel.
 Significant changes in the capital structure.
 Entry into new lines of business.
The CCI consistently views these rights as more than just "standard protection for minority
shareholders." Because these rights allow an investor to participate in the strategic
commercial decisions of the target, they constitute "control" under the Competition Act.
2. Strategic Overlap & Horizontal Assessment
The CCI also looked at the activities of the CDC Group in India. Since CDC is a prolific
investor, it already held interests in various other financial services firms.
 Overlap: The Commission examined potential horizontal overlaps in the market for
lending services (specifically gold loans, SME loans, and mortgage loans) where
IIFL had a strong footprint.
 Finding: The CCI concluded that the combined market share of CDC’s portfolio
companies and IIFL Finance in these segments was not high enough to cause an
Appreciable Adverse Effect on Competition (AAEC).
3. The "Solely as an Investment" Argument
The parties could not claim the exemption for acquisitions made "solely as an investment"
because the intent was strategic. CDC’s role as a development finance institution often
involves a level of governance and oversight that exceeds the "passive investor" role required
for the exemption.

CCI Conclusion
The Commission approved the transaction on September 22, 2016. It held that the
investment would not lead to any competition concerns as the market remained fragmented
with numerous players (NBFCs and Banks) providing competitive pressure.

These cases together demonstrate that the CCI looks far beyond the percentage and focuses
on the underlying rights and commercial intent.
Case Overview
 Acquirer 1: [Link] Singapore E-Commerce Private Limited (Alibaba).
 Acquirer 2: eBay Singapore Services Private Limited (eBay).
 Target: Jasper Infotech Private Limited (the parent company of Snapdeal).
 Nature of the Transaction: Alibaba and eBay proposed to acquire certain preference
shares and equity shares in Snapdeal.

Key Aspects & Analysis

1. Why was it Notified? (The "Combined" Trigger)
This wasn't just about one investor. The filing involved a Series G funding round for
Snapdeal.
 Alibaba's Entry: Alibaba was making a significant strategic entry into the Indian
B2C e-commerce space.
 eBay's Follow-on: eBay was already an existing investor in Snapdeal and was
increasing its stake.
 Material Influence: Both Alibaba and eBay were granted certain information
rights, observer rights, and affirmative voting rights (veto rights) over strategic
commercial decisions. Under the CCI’s strict interpretation, these rights constituted
the acquisition of "control" (specifically, material influence), which disqualified the
"solely as an investment" exemption.
2. Market Definition: The E-commerce Debate
A critical part of this case was how the CCI defined the market. The parties argued for a
broad market including offline retail, but the CCI focused on:
 B2B and B2C E-commerce: The market for the provision of an online marketplace
platform for the sale of goods/services in India.
 Relevant Market: The Commission recognized that while online and offline markets
might have some overlap, online marketplace platforms constituted a distinct
relevant market due to their unique features (convenience, 24/7 access, and
searchability).
3. Competition Assessment (Horizontal & Vertical)
The CCI examined potential overlaps because Alibaba, eBay, and Snapdeal were all players
in the global or Indian e-commerce ecosystem.
 Horizontal Overlap: Alibaba (through its B2B platform and investment in Paytm)
and eBay (through its Indian operations) had overlapping interests with Snapdeal.
However, the CCI noted that:
o The Indian e-commerce market was highly competitive and rapidly evolving.

o Major players like Amazon and Flipkart provided significant competitive

constraints.
 Vertical Linkages: The CCI looked at whether Alibaba's dominance in global
wholesale/logistics could lead to Snapdeal having an unfair advantage in India. It
concluded that the market was fragmented enough that foreclosure was unlikely.
CCI Conclusion
The Commission approved the transaction on September 15, 2015. It concluded that the
transaction was not likely to cause an Appreciable Adverse Effect on Competition (AAEC)
because the combined market shares were not dominant, and the presence of aggressive
competitors ensured a level playing field

New Moon

The CCI has clearly adopted a strict approach towards notifiability and the subsequent
standard of review for transactions involving parties who may not be directly involved in the
same line of business. The consistency of its approach is more significant when dealing with
parties engaged in the same or similar products and/or services, whether by way of horizontal
or vertical overlap. It is for this reason that the CCI’s decision in New Moon is relevant where
it unequivocally states that: 25 an acquisition of shares or voting rights, even if it is of less
than 25 per cent, may raise competition concerns if the acquirer and the target are either
engaged in business of substitutable products/services or are engaged in activities at different
stages or levels of the production chain. Such acquisitions need not necessarily be termed as
an acquisition made solely as an investment or in the ordinary course of business, and thus
would require competition assessment, on a case to case basis, under the relevant provisions
of the Act.

While the New Moon case was concerning an indirect acquisition by one party (Mylan Inc.)
of shareholding of a competitor (Abbott Laboratories) through a special purpose vehicle,
(New Moon BV) this reasoning of horizontal and/or vertical overlaps has been extended to
private equity investors as well.

Case Overview
 The Acquirer: New Moon B.V. (a Dutch subsidiary created by Mylan Inc. for the
transaction).
 The Target: Abbott Laboratories’ non-U.S. developed markets specialty and
branded generics business.
 Nature of the Transaction: This was a two-step "inversion" and acquisition. Mylan
acquired Abbott's non-U.S. generics business in exchange for Abbott receiving a 22%
equity stake in the newly combined entity (New Moon B.V., which would later
become the new publicly traded Mylan).

Key Aspects & Analysis

1. Why was it Notified? (The "Strategic Stake" Test)
While the acquisition involved Abbott taking a 22% stake in the new Mylan entity (below
the 25% threshold that usually triggers a mandatory filing), it was not exempt under the
"solely as an investment" category (Item 1, Schedule I) because:
 Asset Transfer: The transaction involved the transfer of an entire business division
(Abbott’s generics), making it a strategic combination rather than a passive financial
investment.
 Interconnected Steps: The CCI viewed the various steps—the creation of the new
holding company and the issuance of shares to Abbott—as a single, composite
combination.
  Market Position: Both parties were global pharmaceutical giants with significant
overlapping footprints in India, which inherently disqualified a "passive investment"
claim.
2. Market Definition and Overlaps
The CCI conducted a deep dive into the Active Pharmaceutical Ingredients (API) and
Formulations markets.
 Relevant Market: The Commission looked at the market for pharmaceutical products
at the ATC-3 level (Anatomical Therapeutic Chemical classification), which groups
drugs based on their therapeutic indications.
 Horizontal Overlap: The CCI identified overlaps in several specific molecules in the
Indian market, including:
o Colecalciferol (Vitamin D3)

o Progesterone (Hormone replacement)

o Human Menopausal Gonadotrophin

 Vertical Overlap: The Commission also looked at whether one party supplied APIs
that the other used to manufacture finished formulations.
3. The "Material Influence" Check
An interesting finding in this case was that despite the 22% stake, the CCI noted that Abbott
did not have affirmative voting rights or veto rights over the strategic commercial
decisions of the new Mylan entity. This is a contrast to your previous cases (like Caladium or
CDC) where veto rights were the primary "control" trigger. Here, the notification was driven
primarily by the strategic nature of the asset swap and the high market shares in specific
therapeutic categories.
CCI Conclusion
The Commission approved the transaction on November 10, 2014. It concluded that there
was no Appreciable Adverse Effect on Competition (AAEC) because:
1. The market shares for the overlapping molecules were either low or there were
enough strong competitors (like Sun Pharma, Cipla, and Dr. Reddy's) to maintain
competitive pressure.
2. The "increment" in market share caused by the merger was not significant enough to
lead to market dominance.
Case Overview
 Acquirer: [Link] NV Investment Holdings LLC (a subsidiary of [Link],
Inc.).
 Target: Shoppers Stop Limited (a major Indian brick-and-mortar department store
chain).
 Nature of the Transaction: Amazon acquired a 5% equity stake (non-controlling) in
Shoppers Stop through a preferential allotment.
 Commercial Context: The investment was accompanied by a strategic commercial
agreement where Shoppers Stop would list its entire catalog on Amazon’s
marketplace, and Amazon would establish "experience centers" within Shoppers Stop
physical stores.

Key Aspects & Analysis

1. Why was it Notified? (Strategic Interdependence)
Even though the 5% stake was well below the 25% threshold, the notification was necessary
because:
 Commercial Cooperation: The investment was inextricably linked to a long-term
Strategic Commercial Agreement. The CCI often views such agreements as
evidence that the investment is not "solely as an investment" but is meant to create a
strategic nexus.
 The "Control" Question: While Amazon did not get a board seat, the CCI
scrutinized whether the commercial arrangement gave Amazon any "material
influence" over the target’s business strategy.
2. Relevant Market Definition
The CCI had to determine if online and offline retail were part of the same market:
 Product Market: The Commission looked at the retail market for various product
categories (primarily apparel, footwear, and accessories).
 Segmented Approach: It assessed the market both broadly (overall retail) and
narrowly (B2C e-commerce marketplace services vs. traditional brick-and-mortar
retail).
 Finding: The CCI ultimately left the precise market definition open, noting that even
under the narrowest definition (online marketplace vs. physical department stores),
there were no competition concerns.
3. Competitive Assessment
 Horizontal Overlap: Amazon (via its marketplace) and Shoppers Stop (via its
physical stores and website) both retailed similar products. However, their combined
market share in the fragmented Indian retail sector was very low (less than 1%).
 Vertical Linkages: The Commission examined the vertical relationship between
Amazon (as an Online Marketplace Provider) and Shoppers Stop (as a Seller on
that marketplace).
o It concluded that since Amazon provides a marketplace for thousands of
sellers, and Shoppers Stop is just one of many, the transaction wouldn't lead to
"foreclosure" or unfair advantages that would hurt other sellers.
CCI Conclusion
The Commission approved the transaction on December 19, 2017. It held that the investment
was unlikely to cause an Appreciable Adverse Effect on Competition (AAEC) because:
1. The Indian retail market is highly competitive with numerous players (Reliance
Retail, Future Group, Flipkart, etc.).
2. The transaction was seen as "pro-competitive" as it integrated offline and online retail,
potentially benefiting consumers through better access and variety.

Reliance Jio Infocomm Limited/ Reliance Communications Limited/ Reliance Telecom

Limited, Order under S. 43A (C- 2017/06/516)

acquisitions of the right to use spectrum without seeking prior approval of the CCI
The case of Reliance Jio Infocomm Limited / Reliance Communications Limited /
Reliance Telecom Limited (C-2017/06/516) is a pivotal enforcement order regarding "Gun
Jumping" under Section 43A of the Competition Act.
While your previous cases focused on whether a minority stake triggers a filing, this case
focuses on the timing of the filing and the definition of "assets" in the telecom sector.
1. Case Overview
  The Transaction: Reliance Jio (RJIO) entered into a "Spectrum Trading Agreement"
with Reliance Communications (RCom) and Reliance Telecom (RTL) to acquire the
right to use spectrum in the 800 MHz band across several circles.
 The Issue: The parties consummated the transfer of the spectrum (after receiving
DOT approval) before notifying the CCI or receiving its clearance.
 The Defense: RJIO argued that spectrum is a "license to use" a natural resource and
not an "asset" in the traditional sense. They also contended that since the DOT (the
sectoral regulator) had already cleared the trade, a separate CCI notification was
unnecessary.

2. The Ruling: Why it was "Gun Jumping"

The CCI rejected RJIO’s arguments and imposed a penalty under Section 43A, establishing
several key legal precedents:
 Spectrum as an Asset: The CCI clarified that the "right to use" spectrum is a
valuable, transferable, and intangible commercial asset. Therefore, its acquisition falls
squarely under Section 5 (Combinations) if the asset/turnover thresholds are met.
 Mandatory & Suspensory: The Commission reiterated that the Indian merger
control regime is "suspensory." Even if another regulator (like the DOT or SEBI)
approves a deal, the parties cannot finalize the transaction until the CCI provides its
clearance.
 Item 1, Schedule I (Ordinary Course of Business): RJIO tried to claim the
exemption for acquisitions made in the "ordinary course of business." The CCI ruled
that acquiring spectrum—the core infrastructure for a telecom business—is a
strategic acquisition, not a routine "ordinary course" purchase.

3. The Penalty (Section 43A)

The CCI has the power to impose a penalty of up to 1% of the total turnover or assets of
the combination.
 In this specific case, the CCI took a relatively balanced view. It noted that this was a
nascent area of law (spectrum trading) and that the parties had eventually filed a
notice (though late).
 Penalty Imposed: The CCI imposed a nominal penalty of INR 5,00,000 (5 Lakhs)
on Reliance Jio for the failure to notify the transaction on time. While the amount was
small compared to Jio's scale, the legal precedent was massive.

Summary for Your Research

Aspect Legal Determination

Asset Definition Spectrum "rights to use" are intangible assets under Section 5.

Strategic infrastructure (like spectrum) is not an "ordinary course of

Exemption Claim
business" purchase.

Regulatory
DOT approval does not substitute for CCI clearance.
Overlap

Violation Consummating the deal before CCI approval is Gun Jumping.

Summary of Key CCI Merger Control Cases

Case Name & Acquirer / Nature of Primary Notification CCI Outcome / Key
Ref. No. Target Stake Trigger Ruling

Sumitomo Mitsui Sumitomo 2.77% Strategic Intent: Approved.

Trust / Reliance Mitsui / Equity Viewed as part of a Established that
Capital (C- Reliance broader alliance to set "strategic intent"
2014/12/235) Capital up a bank, not a passive overrides low
investment. shareholding for
Case Name & Acquirer / Nature of Primary Notification CCI Outcome / Key
Ref. No. Target Stake Trigger Ruling

exemptions.

Veto Rights: Rights

Caladium Approved. Clarified
Caladium / over "Reserved
(GIC) / 4.99% that veto rights over
Bandhan Bank Matters" granted
Bandhan Equity strategic decisions
(C-2015/05/278) "Material Influence"
Bank constitute control.
(Joint Control).

Approved.
Material Influence:
Emphasized that
India Infoline / Affirmative voting
CDC Group / 15.00% institutional
CDC Group (C- rights in the SHA went
IIFL Finance Equity investors' governance
2016/07/417) beyond standard
rights trigger
minority protection.
notification.

Multi-party Approved. Focused

Alibaba / Alibaba & Governance: on market definition
Strategic
Snapdeal / eBay eBay / Jasper Affirmative rights and in digital
Minority
(C-2015/08/301) Infotech global overlaps in the e- marketplaces and
commerce ecosystem. global tech overlaps.

Asset Swap: The Approved.

transfer of a business Highlighted
New Moon / New Moon 22.00%
division made it a therapeutic overlaps
Abbott / Mylan (Mylan) / Equity
"composite (ATC-3 level) and
(C-2014/08/202) Abbott (Inversion)
combination" rather global restructuring
than a passive stake. triggers.

Approved. Proved
Commercial
that commercial tie-
Amazon / Amazon / Cooperation: Stake
5.00% ups disqualify the
Shoppers Stop Shoppers was tied to a long-term
Equity "solely as an
(C-2017/12/538) Stop strategic commercial
investment"
agreement (O2O).
exemption.

Gun Jumping (S.

Reliance Jio / Reliance 43A): Consummated
Spectrum
RCom / RTL (C- Jio / RCom the deal (spectrum
Acquisition
2017/06/516) & RTL transfer) before CCI
clearance.
Running themes on all cases-
Focus on Market share
Focus on competitors

1. Institute Strict "Chinese Walls" and Information Protocols: Because you frequently
invest in the specific sector of renewable energy and electricity setups, you likely hold stakes
in competing entities. The CCI views common directorships among competitors as a
significant competition concern due to the risk of competitively sensitive information flowing
between them. You must immediately implement strict protocols limiting who within your
fund can access commercially sensitive information from these portfolio companies, and
construct robust "Chinese walls" between the competing entities. Furthermore, you must be
highly careful in your selection of nominee directors to manage these internal information
flows.
2. Scrutinize Internal Documentation: The CCI is increasingly adopting a strict "substance
over form" and "effects-based" approach during its assessments. You must be extremely
cautious regarding your internal documentation for these transactions, as the CCI may rely on
internal files to infer whether your firm had an "intention" to acquire "control".
3. Reassess Board Seats and Minority Rights: Do not assume that your transactions are
safe simply because they might be minority acquisitions (under 25%). The CCI has recently
diluted the standard of "control" to the lowest threshold of "material influence". If your
investments in these energy companies included the acquisition of a board seat, special rights,
or access to target information, the CCI will likely view this as conferring control, thereby
depriving the deals of the Item 1 Exemption.
4. Do Not Rely on the "Ordinary Course of Business" Exemption: Even though you
frequently do similar transactions in this space, you cannot use the "ordinary course of
business" (OCB) exemption. The CCI has recently interpreted PE investments narrowly,
effectively eliminating the possibility of a PE transaction using the OCB route, meaning
frequent transactions do not grant you an exemption from notification.
5. Prepare for Extensive Overlap Mapping and Data Gathering: Because your
investments are heavily concentrated in horizontally overlapping or vertically related markets
(electricity and renewable resources), the CCI will rigorously assess overlaps. You should
prepare for the operational challenge of procuring detailed, accurate information from your
various portfolio companies—which may have little incentive to share it—and you must
budget extra time for navigating this complex data extraction process with the CC

Section 20(4)

Air india had many exemptions available

New Day Post RP submission

Company A is making cement which was a market share of 25%

Company B has transportation agreements, it’s a logistics based company with coordination
in the southern part of the country
Company C has distribution of cement in northern india with a 29% market share

Now, Company A located in southern part of country wants to acquire Company B

Imagine a Govt Body now does tendering bec they want to construct highways and roads and
they give out an ad that they are inviting various companies to bid for a contract for providing
services to the govt

First assume you are advising the govt, what are the factors you will point out to the
government

Diff scenario:
Second, you are also advising company A on the transaction
Create Advisory on both categories, point out key areas in the transaction

Advisory Scenario 1

Main Aim of Govt:

Ensure enough bidders in the market- so ensure that the transaction does not remove any
players from market
Factors such as barriers to entry, removal of effective competitors, and extent of vertical
integration fall under Section 20(4) AAEC analysis.

Government should ensure the merger does not result in:

Reduced number of effective bidders
Higher prices due to concentration
Preferential control over distribution channels
1. Assess Whether the Acquisition Creates Competitive Distortions
Company A (25% cement market share) acquiring Company B (logistics provider in the
South) may create a vertical integration between cement production and logistics.
This could affect bidding behaviour and market access for other players.

2. Examine Potential Foreclosure Concerns

  Input Foreclosure: If Company B controls logistics in the southern region, Company
A may deny or worsen access for other cement producers.
 Customer Foreclosure: Company A may use the integrated logistics chain to offer
bundled competitive advantages that reduce choices for government procurement.
Factors such as barriers to entry, removal of effective competitors, and extent of vertical
integration fall under Section 20(4) AAEC analysis.

3. Check Relevant Market Dynamics

You must define the relevant product market (cement) and relevant geographical market
(southern and northern India), since competition analysis is meaningless without proper
market definition.

Government should ask:

 Are close substitutes available?
 What is concentration before and after the merger?

4. Analyze Barriers to Entry

The government should identify:
 Structural barriers (capital-intensive cement & logistics industry)
 Strategic barriers (exclusive agreements, coordination advantages)

5. Evaluate Impact on Government Tendering

Since Company A may combine its cement production with Company B’s logistics strength:
 Could this create undue advantage in competitive bidding?
 Would it limit the government’s ability to receive competitive bids from multiple
suppliers?
Government should ensure the merger does not result in:
 Reduced number of effective bidders
  Higher prices due to concentration
 Preferential control over distribution channels

6. Consider Public Interest and Economic Efficiency

The government must assess:
 Does the merger promote efficiency in distribution?
 Does it improve production or supply chain efficiencies that benefit public tenders?

Advise the government to evaluate:

 AAEC risks
 Vertical integration and foreclosure
 Barriers to entry
 Market concentration
 Impact on fair tendering

Scenario 2: Advising Company A (Acquirer)

1. Identify Whether the Transaction is Notifiable

Company A must determine:
  Whether thresholds under Section 5 (Parties test, Group test, DVT) are crossed.

 Whether the transaction qualifies as a combination requiring CCI approval.

Remember:
 Deal Value Threshold (DVT) applies to strategic acquisitions even outside digital
markets.

2. Assess Strategic vs Ordinary Course of Business

If the logistics acquisition enhances Company A’s competitive position in a strategic way, it
will not qualify for “solely as an investment” exemptions.

3. Evaluate Competition Risks Proactively

Company A should conduct:
 Market overlap analysis
 Vertical integration assessment
 AAEC risk study

Since Company A has 25% cement share and Company B controls logistics in the same
region, CCI may examine:
 Whether logistics access gives A a dominance-like strategic edge
 Whether competing cement firms would face discriminatory logistics pricing

4. Identify Special Rights or “Control” Elements

If the acquisition includes:
 Board seats
 Veto rights
 Significant information rights
then it may amount to material influence, making the filing mandatory regardless of stake
size.
5. Check for Interconnected Transactions
If Company A has other pending or future acquisitions related to logistics or distribution, they
may form a composite transaction, triggering earlier notification duties.

6. Prepare Commercial and Legal Strategy

Company A should:
 Conduct due diligence on logistics overlaps
 Evaluate exclusivity agreements

 Prepare to justify that benefits outweigh harm (Section 20(4)(n))

✅ Final Consolidated Summary

Government Should Focus On:

 Impact on competition in tendering
 Market definition (cement + logistics)
 Vertical integration consequences
 Barriers to entry
 Fairness in bidding
Company A Should Focus On:
 Notifiability under Section 5
 Whether acquisition grants control/material influence
 AAEC analysis
 Interconnected transaction risks
 Preparing efficiency justifications
If there is an intention of the company to go into a sort of transaction
Look at the terms and conditions of the contract

RFI- Ask them about future investment pipelines

Any public information to be vetted by the legal representatives until the transaction is closed

What value do you add to the client

What will raise regulatory concerns
Don’t assume industry facts

The cement transaction was for public purpose

Two imp things-
Bridge what combination regulations are stating in practice what that becomes the advisory
for client- we are translating theory into practice

Iam situating each party w different goals e.g- a govt body will have diff goals for looking at
transaction and they will avoid risk appetite

For a client’s perspective my interests are changing- for that we need to do the substantive
test given to us- 20(4)

We have already received too much info on second assessment

Second one will take time

ONE CLASS MISSED

XYZ is a rural bank acquiring stake in another rural bank over a period of 2 years
One year 5%
Second year 12%

How will we go about this transaction? What are the ways we will address the query of the
client? What info do we require

XYZ acquiring ABC: 7.8% stake + Board seat

XYZ merges with YAK to form XYY

Differentiating factor in these 2 transactions:

In first, Acquirer holds all responsibility in the first scenario to file forms pay fees etc
But in second, Both parties involved have to ensure collective responsibility of paying fees,
looking at overlaps etc

How is a transaction between two competitors where they are only acquiring one business of
it, a part of it. What are the commercial considerations here?

X and Y are competitors

Considerstions-

Look at the close substitute possible

Relevant market- does that business fall within the same relevant market
Are there any overlaps- look at combined overlaps
Does this acquisition give X any info rights, affirmative voting rights, seat etc

Commercially sensitive information

Why the transaction is happening, exemptions available to transactions through which they
may not be notifiable
Three core points-
Looking at exemptions available each time
Assessing the role of parties in the transaction
Look at commercial sense of the transaction to assess the relevant market to understand
overlaps

Novelty is not about bringing in new arguments but also about assessing the existing
arguments with a new lens

This article explores the evolving landscape of Indian merger control and its specific impact
on private equity (PE) investors. The authors highlight how the Competition Commission
of India (CCI) has increasingly adopted a lower "material influence" threshold for
defining control, which often traps minority investments under regulatory scrutiny. Key
traditional exemptions, such as those for acquisitions made in the ordinary course of
business, are effectively being narrowed or eliminated by recent administrative
interpretations. The text also outlines operational hurdles for PE firms, including the
complexity of mapping overlaps across diverse global portfolios and managing common
directorships. Ultimately, the source serves as a cautionary guide for financial investors to
navigate a more stringent regulatory environment in India.

Navigating the Regulatory Minefield of Indian Merger Control in Private Equity

1. The Strategic Landscape of Indian Merger Control
Since its inception in June 2011, the Indian merger control regime has operated as a
mandatory and suspensory system, requiring the Competition Commission of India (CCI) to
conduct ex-ante reviews of "combinations" to prevent an Appreciable Adverse Effect on
Competition (AAEC). For Private Equity (PE) investors, who infused USD 46 billion into the
Indian economy in 2022, regulatory certainty is the cornerstone of deal viability. The regime's
suspensory nature means no transaction can close until CCI approval is granted or the
statutory 210-day waiting period has elapsed without an order. This "long-stop" date is a
critical variable for PE strategists managing compressed exit timelines and internal rates of
return (IRR).
While the zero-blockade record suggests a pro-business environment, institutional stability
remains a structural risk. The 2022–2023 quorum crisis, sparked by the retirement of
Chairperson Ashok Kumar Gupta, left the CCI unable to approve over 20 notified deals.
Although the "Doctrine of Necessity" was eventually invoked in February 2023 to clear the
backlog, this episode highlighted a systemic vulnerability: PE deal certainty remains hostage
to administrative vacancies. Moving forward, navigating the "Green Channel" or standard
clearance pathways requires a granular understanding of the CCI's increasingly sophisticated
procedural demands.
2. Procedural Framework: Notification Pathways and Thresholds
The strategic choice between Form I (short form) and Form II (long form) dictates not only
the speed of clearance but the depth of sensitive disclosure. Miscalculating the notification
pathway can lead to significant delays or even penalties for "gun-jumping" if a transaction is
deemed incorrectly filed.
Types of Notifications
 Form I (Short Form): The default for transactions where combined market shares
are below:
o 15% for horizontal overlaps (direct competitors).

o 25% for vertical relationships (supply chain links).

 Form II (Long Form): Recommended whenever the above thresholds are exceeded.
Strategists must note that the April 2022 revisions increased the "compliance burden"
by extending the required market-facing data from three to five years, demanding
exhaustive analysis of vertical and complementary activities.
The "Green Channel" and the Affiliate Trap Introduced in 2019, the Green Channel offers
"deemed approval" upon filing for deals with no overlaps. However, for PE firms with
sprawling portfolios, this route is frequently blocked by the CCI’s expansive definition
of "Affiliates." An entity is considered an affiliate if the acquirer has:
 >10% shareholding or voting rights;
 A board seat (nominee director); or
 Special rights not available to ordinary shareholders. This low bar often disqualifies
PE players from fast-track clearance, as any overlap between any affiliate of the fund
and the target entity necessitates a standard filing.
3. The Erosion of Exemptions: Minority Acquisitions and the Item 1 Dilemma
The "Item 1 Exemption," once a reliable safe harbor for non-strategic minority acquisitions
(<25%), has effectively been rendered a "mirage." The CCI has moved toward a rebuttable
presumption of strategic intent for PE investors, viewing their participation as inherently
geared toward influencing market dynamics.
The Item 1 Exemption relies on three pillars: (1) Investment <25%; (2) Intent being "Solely
as an Investment" (SIP) or in the "Ordinary Course of Business" (OCB); and (3) Absence of
Control. Recent rulings in the Trian Cases and PI Opportunities have "annihilated" the OCB
and SIP limbs for PE. The CCI now holds that PE investments, by their nature, are strategic
capital allocations that rarely qualify as "frequent, routine, or usual" business revenue
transactions.
Precedent Alert: Caladium Investment / Bandhan Bank The most potent example of this
erosion is the Caladium/Bandhan Bank case, where a mere 4.99% shareholding required
notification. The "poison pill" for the exemption was not the equity stake, but the acquisition
of affirmative voting rights on reserved matters (veto rights). This confirms that standard
PE minority protection rights are now viewed as strategic triggers for mandatory notification.
4. The "Material Influence" Standard: Redefining Control
The CCI has codified the "material influence" standard as the lowest possible threshold of
control, shifting away from the higher "decisive influence" test. Under the revised FAQs,
control exists regardless of degree, covering de jure (holding >50% voting rights) and de
facto (controlling >50% of votes cast) scenarios.
The "Board Seat Rule" The most disruptive development for PE governance models is the
CCI’s stance on board representation. In the Trian and PI Opportunities cases, the regulator
established that the acquisition of even a single nominee director constitutes material
influence. The CCI’s logic is that a board seat grants information access and the ability to
"participate in the affairs" of the target, which facilitates influence over management even
without a majority vote. Consequently, the appointment of a nominee director—a standard PE
requirement for oversight—now almost universally disqualifies a deal from the Item 1
Exemption.
5. Competitive Overlaps and the "Paternity Test" Challenges
The information mapping obligation for PE acquirers is uniquely onerous. The CCI requires
data on all downstream affiliates of the Ultimate Parent Entity (UPE), regardless of
whether those affiliates are part of the specific fund making the investment.
The Technical Paternity Test Identifying the UPE within complex fund structures is often a
"paternity test" that PE firms are ill-equipped to pass. The challenge is amplified by:
 Blind Pool Vehicles: These structures make it nearly impossible to map the ultimate
layers of control and affiliates to the satisfaction of the regulator.
 Unrelated Funds: The CCI currently fails to distinguish between the specific fund
involved in a deal and unrelated funds housed under the same parent umbrella,
creating an "overlap net" that is excessively wide.
 PI Opportunities Precedent: This case highlighted the CCI's stringent view
of "Common Directorships." The regulator views the potential flow of
Competitively Sensitive Information (CSI) through a common director in competing
portfolio companies as a significant AAEC risk, necessitating robust "Chinese walls."
6. Future Outlook: The Competition Amendment Bill and Evolving Oversight
The regulatory landscape is shifting toward a "substance over form" and "effects-based"
philosophy. The most significant change is the proposed Deal Value Threshold (DVT) of
INR 2,000 crore. Combined with an "India Nexus" element, this will capture high-value PE
acquisitions of asset-light, high-growth tech companies that previously escaped oversight
under the de minimis asset/turnover-based exemptions. This DVT will make the "Paternity
Test" even more complex, as the valuation of global deals must now be mapped against
Indian operations.
Strategist’s Checklist: Best Practices for the C-Suite
 [ ] Document Intent Early: Maintain internal records clearly defining "investment
intent" to rebut presumptions of strategic control where possible.
 [ ] Budget for the "Data Hunt": Adjust deal timelines to account for the
"operational pain" of extracting 5-year data from portfolio companies that have no
legal obligation to cooperate.
 [ ] Review Affirmative Rights: Treat veto rights on "reserved matters" as a certain
trigger for notification, regardless of the equity percentage.
 [ ] Enforce Information Barriers: Establish strict Chinese walls and protocols for
nominee directors to prevent CSI flow between competing portfolio companies.
 [ ] Anticipate Thematic Oversight: Monitor the (as yet) unpublished PE Market
Study (commissioned Dec 2020), which is expected to signal a new era of thematic
investigations into "common ownership" risks.
In this regulatory minefield, the days of circumventing scrutiny through creative structuring
or "passive" labels are over. PE dealmakers must now assume that any degree of governance
participation will require a "mandatory visit" to the CCI. Treading softly is no longer just an
option; it is a tactical necessity.

X, a PE investor invests in these companies which is

1: running renewable resources of energy
2: Focused on only electricity related setups

They have frequently done similar transactions in this space

Something like this gets flagged to the CCI, and CCI is doing investigation on this
PE Space gets lesser exemptions

Prof says Green channel is useless

Competition acts sections 5 and 6 are mandatory and suspensory regime

If u meet the thresholds and you breach any of the thresholds without getting any exemption
under a regime that means it has to be mandatorily filed.

The framework says- until I approve the transaction, you cannot close it.

Competition Amendment Act- DVT

De Minimis Exemption available

Quicker update on the case

Almost 1200+ Notifications filed, none blocked, only handful were subject to remedies

Remedies of 3 categories- structural in nature, behavioural in nature

97% unconditionally, only a handful involved conditions

Right now there is no quorum

Director General (the investigative arm of the CCI) of CCI has now come under the same
budget which CCI gets, before this he got a separate

Prof Leela will do a fact pattern on whatever we have done till now
Read orders, see what are some real deficiencies with the orders
Prepare questions, say a practicing lawyer or a cci professional- what kind of questions will
you ask them, don’t give ai questions, think and read properly, think about 4-5 questions
Prof might divide us in teams or we can do this individually
Read Orders --------------FOR 8th April

2023 Amendment Act read and u will see this is to enhance ease of doing business in India

Stricter gun jumping penalties, 5 decisions in 2025 alone CCI took. They took only one in
2024

Even signing definitive document is a trigger point, u need CCI approval, it cannot be closed
without the approval.

Why green channel is useless acc to prof’s opinion- look at stats, there is a sharp decline
It’s a reputational risk for companies as well (being under the radar of CCI)
Companies end up doing more filings than taking the green channel risk
Even miniscule overlap exhausts the green channel route

DVT key rules

2000 crores
10%
12.36%
SBOI

PE and Merger Control: Key Issues

Minority Investment Exemption

Definition of Control and Material Influence
Limited Partner Overlaps
Green Channel Route: Shrinking Window
Structural Finance and Convertible Securities
Gun-Jumping in PE Deals

CCI extended to such a level that it even looked at entities in the portfolio, CCI established
what ‘affiliates’ look like

PE funds must audit their LP base to look at overlap and assess their rights for filing

Case Study 2: Manipal Health Systems/ Aakash Educational Services

Green Channel Misuse: Motilal Oswal and CA Plume Cases

CCI has a zero tolerance stance on gun jumping

Compliance Imperatives for PE Dealmakers

Early Merger-Control Assessment Review
LP Overlap Audits
Instrument Structure Review
Re-evaluate Green Channel Eligibility
Clean Team Arrangements
DVT’s jurisprudence- it will be a changemaker
Digital and Tech are anyways a priority sector

Remedies could be structural or behavioural

CCI is looking for regulatory collaborations with other nations- converging some of the
practices
Memorandum of Advice
To: Executive Management, Zephyr Cloud Solutions Inc.
Subject: Competition Law Assessment – Acquisition of BharatBot & Anti-Competitive
Conduct by MegaCorp
This memorandum addresses the regulatory requirements for the proposed acquisition of
BharatBot and evaluates actionable strategies against MegaCorp’s exclusionary conduct
under the Competition Act, 2002, and the Digital Competition Act, 2026.

1. Assessment of the BharatBot Acquisition (Section 5, DVT, and SBOI)

The proposed acquisition of BharatBot constitutes a notifiable "Combination" under Section
5 of the Competition Act, 2002. Despite the target's low revenue, the transaction cannot
bypass Competition Commission of India (CCI) scrutiny due to the Deal Value Threshold
(DVT).
 The Deal Value Threshold (DVT): The DVT mandates notification if the
transaction's combined value exceeds INR 2,000 crores and the target has Substantial
Business Operations in India (SBOI). Zephyr's acquisition is valued at INR 3,500
crore, clearly breaching this threshold. The DVT was specifically introduced to
capture "killer acquisitions" in the digital and tech sectors where highly valued targets
might have low immediate turnover.
 Substantial Business Operations in India (SBOI): While the definition of SBOI can
be a grey area , metrics such as a 10% user base concentration are critical indicators.
Given that 16% of BharatBot’s global end-users (8 million out of 50 million) are
based in India, it comfortably satisfies the SBOI test.
 Inapplicability of the De Minimis Exemption: Zephyr's assumption that the
transaction is exempt due to BharatBot’s low assets (INR 120 crore) and turnover
(INR 150 crore) is legally flawed. While these figures fall below the traditional Target
Exemption limits (INR 450 crore for assets and INR 1,250 crore for turnover) , the
Target Exemption explicitly does not apply to the DVT. Because the DVT is met,
notification to the CCI is mandatory.

2. Gun Jumping Penalties & Clearance Strategy

India’s merger control regime is strictly mandatory and suspensory; a transaction cannot be
consummated until CCI approval is granted or the statutory waiting period elapses.
Proceeding without clearance constitutes "Gun Jumping."
 Penalty Exposure (Section 43A): The CCI maintains a zero-tolerance stance on gun
jumping and has increasingly imposed stricter penalties. Under Section 43A, the CCI
can levy a penalty of up to 1% of the total turnover or assets of the combination,
whichever is higher.
 Global Turnover Implications: Under the modernized 2026 regime indexing
penalties to global turnover, Zephyr’s exposure is immense. A 1% penalty calculated
against Zephyr’s USD 40 billion global turnover would be financially catastrophic, far
exceeding penalties calculated under the older, narrower "relevant turnover"
frameworks.
 Commitments and Settlements: To navigate the compressed 150-day merger
clearance timeline (down from the traditional 210 days ), Zephyr should proactively
utilize the Commitment and Settlement Framework. By offering preemptive structural
or behavioral remedies (e.g., ensuring interoperability or data ring-fencing), Zephyr
can alleviate potential CCI concerns regarding data concentration, thereby expediting
approval and securing deal certainty.

3. MegaCorp’s Conduct (Section 4 & Digital Competition Act, 2026)

MegaCorp’s market behavior leverages its ecosystem to stifle competition, violating both
traditional antitrust principles and ex-ante digital regulations. As a designated Systemically
Significant Digital Enterprise (SSDE), MegaCorp is subject to heightened scrutiny.
 Self-Preferencing & Anti-Steering: By ranking MegaAudit higher on MegaSearch
and restricting BharatBot from notifying users of cheaper out-of-app payment options
on MegaOS, MegaCorp is engaging in self-preferencing and anti-steering. This
directly violates the ex-ante obligations of an SSDE, which are designed to prevent
"gatekeepers" from manipulating essential digital facilities (like data networks and OS
ecosystems) to choke out smaller players.
 Tying and Bundling: Offering MegaAudit as a "free mandatory update" bundled
with its Enterprise Cloud package mirrors classic tying arrangements—forcing
consumers to acquire a second product they may not want. This forecloses the market
for independent SaaS providers like Zephyr.
 Abuse of Dominant Position (Section 4): Under the Competition Act, 2002,
MegaCorp is operating independently of competitive forces and using its dominance
in the search and OS markets to the detriment of its competitors in the compliance
tools market.
Strategic Recommendation: Zephyr has strong grounds to file an antitrust information with
the CCI. Relying on the Digital Competition Act, 2026, will be highly effective, as the ex-
ante rules explicitly prohibit SSDEs from tying, bundling, and self-preferencing, allowing for
faster regulatory intervention without the burden of a protracted, effects-based Section 4
investigation.
Part I: Regulatory Assessment of the Zephyr Acquisition
As the target entity, BharatBot has a joint responsibility to ensure compliance with India’s
merger control regime under the Competition Act, 2002. The primary issue is whether the
INR 3,500 crore transaction is a notifiable "Combination" to the Competition Commission of
India (CCI), despite BharatBot’s relatively low current revenue and asset base.
1. The Deal Value Threshold (DVT) Trigger
 The transaction qualifies as a notifiable Combination because it breaches the Deal
Value Threshold (DVT) introduced by the Competition (Amendment) Act, 2023.
 The DVT mandates notification if the combined global value of the deal exceeds INR
2,000 crores and the target has Substantial Business Operations in India (SBOI).
 Zephyr’s acquisition is valued at INR 3,500 crore, which easily crosses the financial
threshold.
 Regarding SBOI, the CCI heavily scrutinizes user base metrics for digital and "deep-
tech" startups. Since 16% of BharatBot’s global end-users (8 million out of 50
million) are based in India, the CCI will undoubtedly conclude that BharatBot
possesses SBOI.
2. Inapplicability of the De Minimis (Target) Exemption
 Zephyr's preliminary assumption that the deal is exempt is incorrect.
 It is true that BharatBot’s Indian assets (INR 120 crore) and turnover (INR 150 crore)
fall below the traditional De Minimis thresholds of INR 450 crore and INR 1,250
crore, respectively.
 However, the law explicitly states that the Target Exemption does not apply if the
DVT is met. The DVT was specifically enacted to capture exactly this scenario:
"killer acquisitions" of high-value, high-growth digital startups that have low current
turnover but massive market potential.
3. The Risk of "Gun Jumping" and Penalties
 India operates on a "Mandatory and Suspensory" merger control regime. This means
the deal absolutely cannot be closed or consummated until CCI approval is formally
granted, or the statutory waiting period passes.
 If Zephyr and BharatBot consummate the deal without clearance, the CCI will initiate
"Gun Jumping" proceedings under Section 43A of the Act.
 The CCI has a zero-tolerance stance on gun jumping and takes a strict approach to
enforcement. For example, in the Reliance Jio case, the CCI penalized parties for
transferring telecom assets before obtaining CCI clearance, reinforcing that the
regime is strictly suspensory. Similarly, in the SCM Soilfert case, the Supreme Court
 upheld a severe penalty for consummating interconnected transaction steps prior to
notifying the regulator.
 Counsel's Directive: We must formally advise Zephyr's legal team that a CCI
notification is mandatory. We must not take any steps to integrate operations, transfer
shares, or share competitively sensitive information outside of a highly sanitized
"clean team" arrangement until approval is secured.

Part II: Actionable Claims Against MegaCorp Digital

MegaCorp is utilizing its ecosystem to unlawfully stifle BharatBot’s growth. We have robust
grounds to file an antitrust information with the CCI, leveraging both traditional competition
law and the newly enacted Digital Competition Act, 2026.
1. Abuse of Dominant Position (Section 4 of the Competition Act, 2002) MegaCorp is
operating independently of competitive forces in the search engine and mobile OS markets
and is using that dominance to the detriment of competitors in the compliance tools market.
 Tying and Bundling: MegaCorp’s strategy of offering MegaAudit as a "free
mandatory update" bundled with its Enterprise Cloud package forces consumers to
acquire a second product they may not want. This effectively forecloses the market
for independent SaaS providers like BharatBot.
 Denial of Market Access: MegaCorp is acting as a "gatekeeper". By restricting
BharatBot’s ability to use its own payment gateway, MegaCorp is creating structural
barriers. We can argue the "Essential Facilities Doctrine" (EFD)—since MegaCorp
owns the essential digital infrastructure (MegaOS), they cannot legally choke out
smaller players by denying fair access.
2. Violations under the Digital Competition Act, 2026
Because MegaCorp has been officially designated as a Systemically Significant Digital
Enterprise (SSDE), they are subject to strict ex-ante (preventative) obligations.
 Self-Preferencing: MegaSearch artificially ranking MegaAudit higher than
BharatBot when users search for "AI compliance tools" is a textbook violation of
SSDE anti-steering and self-preferencing prohibitions.
 Anti-Steering: Preventing BharatBot from notifying users about cheaper subscription
plans outside of the MegaOS ecosystem directly violates SSDE obligations designed
to promote consumer choice and market fairness.
Counsel's Strategic Recommendation: I recommend that BharatBot immediately prepare a
comprehensive Information to be filed with the CCI against MegaCorp. Running this
offensive strategy simultaneously with our merger filing may actually aid the Zephyr
transaction by highlighting to the CCI that BharatBot requires Zephyr’s scale and resources to
survive against an abusive gatekeeper like MegaCorp.
Relevant turnover

If you have violated an act or committed an act or entered into a combination and cci has
found out that this combination has aaec-

We are going to global turnover position

Legislative correction
Turnover used to mean relevant turnover- This is changing- penalty wise now we take global
turnover

De Minimis-

Whole idea is that there are certain transactions which do not need to be looked at

If a particular product capitalizes on a certain idea of communication, net worth starts to kick
in- once that happens, you cannot replicate it and get money

Commitment
Settlement: after investigation has taken place and cci has yet to take a call on it- But there
was a clear cut finding of anti-competitive practice- u can ask the cci to settle this matter and
ask cci if it wants us to implement any measures and if they agree w it, we can go through
without being penalized

If u don’t give any commitments- DG starts investigating- DG gives investigation report-

Then u can go and plead settlement

DG Report is sent to the enterprise as well