M&A rules to be notified by first week of May: MCA

NEW DELHI: The Competition Commission will finalise rules for corporate merger and acquisitions by the first week of May, following which it will be mandatory for companies to seek the Commission's approval for such deals.

"The notification will be finalised in the first week of May and would be implemented from June 1, 2011," Secretary in the Ministry of Corporate Affairs D K Mittal told reporters on the sidelines of a FICCI event here.

The Competition Commission of India ( CCI) has notified sections 5 and 6 of the Competition Commission Act, 2002, dealing with Mergers and acquisition (M&A) last month, but it is yet to finalise the rules.

The norms when implemented from June 1 would require companies to seek CCI's approval for domestic and cross-border M&As.

The CCI is already working with corporate law experts and industry representatives to get their feedback on the draft merger regulations.

"The regulations are being reviewed by the Commission. The date of implementation remains June 1," Corporate Affairs Minister Murli Deora said.

He said the approval of CCI will help "check mergers that end up in creating monopolies or abuse of dominance, harmful to consumers and small producers and impede orderly economic growth."

Deora had earlier said that the industry would be heard first before the CCI finalises the regulatory provisions in the new competition regime.

It is in this regard that representatives from CCI and MCA are meeting industry chambers in the cities of Bangalore, Hyderabad, Mumbai and New Delhi.

According to the provisions in the Act, companies with a turnover of over Rs 1,500 crore will have to approach the CCI for approval before merging with another firm.

Among other things, CCI would take a prima facie view on the proposed combinations within a month of filing by companies, addressing a major concern of industry about the time limit the body would take to vet mergers.

Also, the maximum time limit the CCI would take to vet mergers has been reduced to 180 days from the earlier 210 days, after facing opposition from the industry.

Only those proposals would need the CCI's nod where the companies have combined assets of Rs 1,000 crore or more, or a combined turnover of Rs 3,000 crore or more.

Also, the target company's net assets have to be a minimum of Rs 200 crore or it should have a turnover of Rs 600 crore for CCI intervention.