New merger regulations welcome but don’t fulfill all needs: CII

May 22nd, 2011 - 5:26 pm ICT by IANS  

New Delhi, May 22 (IANS) The Confederation of Indian Industry (CII) said Sunday it appreciated the new mergers and acquisitions regulations released by the competition watchdog, but added they rules still did not fulfill all the industry needs and had to be brought in line with international standards.

“The government has displayed in action its forward-thinking consultative approach in finalizing the combinations regulations by accepting many of the CII recommendations presented during dialogue with industry,” said Chandrajit Banerjee, director general, CII.

The regulations, released by the Competition Commission of India (CCI) provide a list of transactions for which the short form filing would be permitted. The industry lobby is optimistic that the commission would clear such transactions within the 30 day phase I period.

However CII said some concerns had not been addressed by the commission despite being highlighted by the industry.

“While there is clarity now on what would constitute a ‘combination’, transactions which were not intended to be covered by the competition act viz transactions where control is not being acquired still remain subject to the notification requirement,” CII said in a statement.

Combinations refer to combining businesses of two or more companies by way of mergers or acquisitions.

“A transaction, which is not an acquisition, should qualify as a combination only on change in control over an enterprise, which on meeting the turnover criteria prescribed under the act, would be required to be notified to CCI,” it added.

CII advocates exemption of the inter-group mergers and amalgamations from notification.

“While acquisitions of control or shares or voting rights or assets within the same group have been exempted from the notification requirement, mergers or amalgamations have not been specified, which appears to be an oversight,” the statement added.

All forms of combinations which are amongst entities that are within the same group must be exempted, it says.

These transactions are extremely common, and are undertaken only for internal restructuring and efficiency purposes.

The industry body also suggests that in line with almost all international jurisdictions, there should be a short and effective period for determination of whether or not a combination would have an appreciable adverse effect on competition.

Currently, this concept of deemed approval has not been provided which introduces uncertainty regarding the timelines for the approval process.

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