Good idea to put more eyes and ears on M&As

Government of India proposed overhaul of the anti-trust law, giving the regulator wider authority over global mergers and acquisitions (M&As), trimming approval timelines and tightening oversight, makes sense. It will help align competition law with the changing business environment. Hopefully, the reform, accompanied by a trust-based system, will thwart anti-competitive practices without unsettling businesses. The amendments allow the Competition Commission of India (CCI) to examine transactions based on their value. All deals with a transaction value over ₹2,000 crore will require CCI's nod if the firms have 'substantial business operations' in India. The existing rules allow the regulator to examine deals based on asset size and turnover of the companies involved. The proposed change is expected to discourage predatory behaviour in the digital economy. So, the rules on the 'local nexus' must be clear and transparent.

Penalties on companies for incomplete or false disclosures, ranging from ₹50 lakh to ₹1 crore, are proposed to be raised to ₹5 crore. Trimming the timelines for CCI to form its prime facie view on a merger notification (from 10 days to 20 days), and also the overall timeline (from 210 days to 150 days) is fine. But it will increase CCI's and the notifying parties' workload. The regulator must expand human resources capacity, especially in technology and legal affairs.

Control is now proposed to be defined as the ability to exercise 'material influence' over management, or the company's affairs, or strategic commercial decisions. These amount to codifying the existing law and will provide certainty to market participants. Other changes include a settlement provision in the law (except for cartels) to reduce litigation. The 'leniency-plus' regime - which allows companies that provide sufficient information about a cartel in which they have participated to lower their penalties - is in sync with global practice. The Parliament's Standing Committee must swiftly give its recommendations on the Competition Amendment Bill, 2022.