M&A Deals May Get More Time To Seek Competition Regulator’s Approval
CCI Chairman D K Sikri says deal filing deadline under review.
In a move that will offer relief to companies striking merger and acquisition deals, DK Sikri, chairman of the Competition Commission of India (CCI) said that the regulator is reviewing the 30-day timeline for companies to notify the transaction. The CCI Chairman was speaking at a competition law conference on Friday, organised by the Confederation of Indian Industry (CII).
The Competition Act requires parties involved in mergers and amalgamations to notify the CCI within 30 days of the proposal being approved by their board of directors. In the case of acquisitions, a filing to the CCI is triggered within 30 days from the date of execution of a binding agreement or other such document.
The 30-day timeline is difficult to adhere to and parties often submit incomplete information. As a result, the CCI has to either invalidate the notice or issue defect notice which prolongs the process. We have initiated steps to revisit this timeline.DK Sikri, Chairman, CCI
Zia Mody, leading lawyer and managing partner at AZB, welcomed the move. “I think there have been representations to the CCI to show that the 30-day timeline is unduly burdensome in terms of collecting all the data and an ineffective form is just brain-damage for everybody- the CCI, its staff, for clients and intermediaries like us,” she said in an interview to BloombergQuint.
Given that this was probably a legacy of a voluntary regime rather than a mandatory regime i.e. you went for permission if you thought you needed it. May be now since you have to wait for clearance before the CCI and you can’t close before that, no party will wait around for the clock to keep ticking unnecessarily and if you take longer than 30 days, whose loss is it- it’s yours.Zia Mody, Managing Partner, AZB & Partners
Amitabh Kumar, partner at law firm JSA said that changing the filing deadline will require the competition law to be amended. He also cautioned this may prompt CCI to also extend the its approval timelines under the Combinations Regulations.
Currently, as per the Regulations, CCI gets 30 working days to form a prima facie opinion on a notification. Will the next move be that if the parties are getting, for example, 60 days to do a filing, CCI should also get a longer period for the approval process?Amitabh Kumar, Partner, JSA
Kumar and other lawyers are concerned that if the CCI extends its approval timelines and deals take longer to close, that may offset any good achieved by giving India Inc. a breather.