Competition Law in Practice
Merger Control: Reviewing Big Deals
How the CCI reviews mergers and acquisitions before they happen, what the deal value threshold changed, and how remedies work.
When companies merge or one buys another, competition may be reduced. Competition authorities review large deals before they are completed.
Which deals need approval
Under the Competition Act, deals called combinations must be notified to the CCI if the parties’ assets or turnover exceed set thresholds. Smaller deals are exempt.
The deal value threshold
A problem arose with digital deals. A start-up may have little revenue or assets but be very valuable because of its users or technology. Large firms could buy such start-ups without review.
The 2023 amendment introduced a deal value threshold: from September 2024, deals worth more than 2,000 crore rupees need approval if the target has substantial business operations in India, even if its assets and turnover are small.
The review process
- The CCI must form a prima facie opinion within 30 days.
- The overall time limit was reduced to 150 days by the 2023 amendment.
- Most deals are approved quickly without changes.
- Deals that raise concerns get a detailed investigation.
Remedies
If a deal raises concerns, the CCI may:
- Approve it with remedies, such as selling certain businesses or brands, called divestitures, or commitments on behaviour.
- Block it entirely, which is rare.
Examples
- In December 2014, the CCI approved the Sun Pharma and Ranbaxy merger on the condition that several overlapping drug products be sold to other companies.
- In 2024, the CCI approved the merger of Air India and Vistara with voluntary commitments on routes.
- Large deals in media, cement and telecom have been approved with modifications.
Gun jumping
Completing a deal before approval, called gun jumping, can lead to penalties.
Two drug makers merge. Together, they would control most sales of a particular medicine. The competition authority approves the merger on the condition that one of them sells its brand of that medicine to a rival. Competition in that medicine is preserved while the merger goes ahead.
Most mergers are approved, often quickly. Only a small share raise concerns, and even these are usually approved with remedies.
- Mergers above asset or turnover thresholds need CCI approval.
- Since 2024, deals over 2,000 crore rupees with substantial Indian operations also need approval.
- Most deals are approved; some need remedies such as divestitures.
- Completing a deal before approval, called gun jumping, is penalised.
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